ICT-ED INSTITUTE OF SCIENCE AND TECHNOLOGY LIPA

Mercedes Bldg. P. Torres St. Lipa City, Batangas 4217

(043) 757-4445 / (043) 757-5944

SHS DEPARTMENT
12 - ABM
Learning Module
In
APPLIED ECONOMICS
(SY. 2020-2021)

Instructor:
Jojie R. De Ramos

APPLIED ECONOMICS Basic Economic Problems and The Philippine Socioeconomic Development in the 21st Century
 WEEK 4
LESSON 3
Basic Economic Problems and the Philippine Socioeconomic Development in the 21st Century
A nation's progress is measured by the quality of life of
its citizens. Indicators such as GDP per capita income,
health and education are among those used by
economists to evaluate development. Challenges to
economic progress are addressed by an understanding of
economic principles and its application to real-life
situations, Knowledge of economic theories are useful in
formulating solutions to economic problems that a nation
faces.
Poverty is a significant socioeconomic problem in
the country.
What is poverty?
What are its causes?
How can a nation alleviate its people from
poverty?
In 1995, the United Nations adopted two
definitions of poverty. 1. Absolute poverty is a condition
characterized by severe deprivation of basic human
needs, such as food, safe drinking water, health, and
education. It depends on income as well as access to
services. 2. Overall poverty goes further to include factors
such as participation in decision making either in civil,
political, social, and cultural life.
One common cause of poverty is low productivity.
A society's standard of living or quality of life is determined
APPLIED ECONOMICS Basic Economic Problems and The Philippine Socioeconomic Development in the 21st Century
by the productivity of its citizens. Productivity in turn is
determined in large part by the factors of production: land
or natural resources, labor, capital and technology.
Human capital are the knowledge and skills workers
acquire through education and training that enable them to
produce. Physical capital are the tools, machinery, and
equipment that are used to produce goods and services
For example, a man who does not know how to work or
produce cannot feed himself and so remains poor. If he is
taught how to fish, then he can catch fish and feed himself.
If he is provided with fishing equipment, then he can catch
more fish which he can sell to earn a living. If he invests
some of his earnings on a fishing boat, can go to deeper
parts of the sea and catch even more fish. In this example,
the fish are the natural resources, the skill and know-how
to fish are human capital, the fishing equipment is physical
capital, and the fishing boat is technology. With each
additional factor of production, his productivity increases,
and he catches more fish which he can sell to increase his
wealth.
Another common cause of poverty is the unequal
distribution of wealth. The economy may be growing but
not everyone benefits. Some may do well while others may
be left behind. For example, if there is an investment
opportunity that yields a high rate of return, it is only the
capitalists or those with resources, who can invest and
profit from that opportunity. Meanwhile the poor, who
have no skills or resources, resort to borrowing and paying
at exorbitant interest rates to make ends meet. This is a
case of the rich getting richer and the poor getting poorer.
In a study conducted by the Asian Development
Bank (ADB) in 2009, it was found that the country's
economic growth does not translate to poverty reduction.
In the last six years, the Philippines recorded higher Gross
Domestic Product in comparison to preceding years, as a
result of its program of inclusive growth and poverty
reduction. This is under the five-year development plan
from 2011-2016. However, many Filipinos complained of
non-inclusive growth, claiming that they remain to live
below the poverty line.

Source: Tradingeconomics.com World Bank

PHILIPPINES GDP
320

300

280

260

240

220

200

180

160
2008 2009 2010 2011 2012 2013 2014 2015 2016

Estimated Poverty and Subsistence Incidence in the Philippines for 2006, 2009, 2012 and 2013

35

30

25

20

15

10

0
APPLIED ECONOMICS Basic Economic Problems and The Philippine Socioeconomic Development in the 21st Century
2006 2009 2012 2013

Subsistence Incidence Poverty Incidence

Quality Education, Overpopulation, and
Unemployment
Poverty is closely linked to the lack of quality education,
aggravated by poor population management. Quality
education is a form of human capital. The lack of quality
education coupled with a large population causes
unemployment, another socioeconomic problem the
country faces. Quality human resource corresponds to
productive workers. Labor productivity is dependent on the
health and level of education or training of a worker. An
educated or trained worker can generally easily adopt to
new technologies and make effective use of capital,
For most developing countries, the rise in GDP is
accompanied by high birth rates. High population growth
increases the total labor force which increases productivity
in the long run. However, when the population grows too
rapidly, economic resources may not be enough to support
the population in the short run. The lack of job
opportunities, due to failure of the economy to sustain
growth, deprives the population of opportunity to earn
income, making them susceptible to poverty.
Over two hundred years ago, the 19th century
economist Robert Malthus argued that food supply
expansion is linear while human growth is exponential.
Thus, there must be a point when food supply is not
enough to feed the growing population Malthus predicted
that continued population growth would doom mankind to
poverty and starvation as there would not be enough
resources to feed everyone.
Fast-forward to the present, the world population
has risen more than sevenfold, and living standards have
APPLIED ECONOMICS Basic Economic Problems and The Philippine Socioeconomic Development in the 21st Century
actually risen, not fallen. In general, people now live longer
and better than ever before. So, where did Malthus go
wrong? Malthus failed to account for the advances in
technology which enabled the global economy to increase
productivity, that is, to produce more and better goods and
services with less resources. Technological
advancements enabled societies not only to keep up with
the growing population but improve their quality of life."
AmBisyon Natin 2040 and the Philippine Development
Plan 2017-2022
Having identified poverty and unemployment as
the main economic problems of the country, applied
economics can be used to address the causes of these
problems. To alleviate poverty, the government should
increase the productivity of its people by providing capital-
human, physical, and financial. It can raise human capital
by providing education, skills training, and livelihood
programs that will help workers find jobs or start a
business. It can provide physical capital in the form of
machinery and equipment for agriculture and industry. It
can provide financial capital in the form of collateral free,
low-interest loans. These initiatives come at a cost and can
be funded by taxing the rich and the middle class. Thus,
contributing to a more equitable distribution of the benefits
from economic growth.
The National Economic and Development
Authority (NEDA), the country's socioeconomic planner,
released the five-year Philippine Development Plan (PDP)
for 2017-2022 anchored on the 25-year long-term vision
called AmBisyon Natin 2040.
 AmBisyon Natin 2040: matatag, maginhawa, at
panatag na buhay represents the collective long-term
vision and aspirations of the Filipino people for themselves
and for the country in the next 25 years: The country is a
prosperous middle-class society where no one is poor.
People live long and healthy lives and are smart and
innovative. The Philippines is a high trust society where
families thrive in vibrant, culturally diverse, and resilient
communities. The long-term plan aims to eradicate poverty
through sustained and inclusive strong economic growth,
there are four areas of action cited in PDP to realize the
vision.
1. Building a prosperous, predominantly middle-
class society where no one is poor by ensuring
conditions for growth of enterprises that generate
high-quality jobs and produce high-quality goods
and services at competitive prices.
2. Promoting a long and healthy life, by providing
quality and affordable universal health care and
social protection.
3. Becoming smarter and more innovative labor
force through the K to 12 program, strong intellectual
property rights, and better research and
development program
4. Building a high-trust society by ensuring a
government that is people-centered, effective, and
accountable.
One goal of the 5-year PDP 2017-2022 is to
reduce the poverty incidence by 7.6% from 21.6% in 2015,
or alleviating about 6 million Filipinos from poverty. The
PDP 2017-2022 also aims to make the population more
resilient through risk exposure reduction, risk impact
mitigation, and risk recovery acceleration. Lastly, it intends
to encourage innovation
The programs to achieve these targets are
grouped under three pillars: Malasakit or enhancing the
social fabric, Pagbabago or reducing inequality, and
Patuloy na Pag-unlad or increasing growth potential

APPLIED ECONOMICS Basic Economic Problems and The Philippine Socioeconomic Development in the 21st Century
 Name:___________________________________

Activity 3

ESSAY:

1. What is the basis of a nations progress?

2. What causes poverty?

3. Why do we perceive the idea that the rich are getting richer while the poor are getting poorer?

4. How is quality education, overpopulation and unemployment correlates with each other?

5. How these 3 factors (item #4) linked itself to poverty?

6. What is wrong in Robert Malthus’ prediction?

7. Do you think that AmBisyon Natin 2040 will meet its objective? Why or why not?

Specific Instruction:

1. Write in a yellow pad of paper

2. Minimum of 200 words each essay

Note: I will be deducting points for late submissions. (-5 points per day)

APPLIED ECONOMICS Basic Economic Problems and The Philippine Socioeconomic Development in the 21st Century