UNIT 1: PERSPECTIVE OF ENTREPRENEURSHIP

TITLE OF THE LESSON 2:

● Entrepreneurship and the Philippine Economy

INTRODUCTION:

The Philippines is considered a developing country and its level of development

is considered as medium development. It is ranked #112 out of 187 countries.
According to the Millennium Development Goals, the Philippines is doing well in the
attainment of some its goals, particularly hunger reduction, However, a cause of
concern are the indicators referring to jobs, which snow that most Filipinos do not have
enough access to the necessary well-paying jobs that will help bring them out of
poverty. Entrepreneurship is thus, seen to be a possible way of addressing this problem
by encouraging the people to start businesses and be self-employed, as well as create
jobs for others.

OBJECTIVES:
● identify the factors that affects the business establishments in the Philippines
● explain how the economy grows
● discuss how entrepreneurship could improve the quality of life

THE PHILIPPINE ECONOMY: HOW DOES AN ECONOMY GROW

The Philippine Economy
1. The Philippine economy is composed of business enterprises, household, and the
government.
2. There are economic freedoms, like free competition, free choice of investments, and
the prices, which are determined by the interface between demand and supply.
3. In economic development, knowledge, skills, values, and the quality of people are the
main determinants of economic growth.
4. There were inhabitants in the Philippines about 250,000 to 300,000 years ago. They
arrived from other countries through the land bridges. They had primitive economic
existence. More civilised migrants came in later years.
5. Our country was a slave of three colonial masters: The United States, Japan, and
Spain. Nevertheless, the Chinese subjugated the retail trade even earlier the Spanish
time. The Spanish rule introduced the tobacco monopoly and galleon trade for the
benefits of top-ranking Spanish citizens. Similarly, the Americans exploited our
agricultural economy. Japan completely ruined our economy.
6. The Philippine government got its political independence un 1946, but not economic
independence from the US. The import control for program of President Carlos Garcia
gave a breathing space for Filipino entry. However, they did not last because the US
had its own of dominating the Philippine economy.
7. Under Martial rule, the friends of the Dictator controlled the Philippine business.
Democracy was reinstated finally upon the assumption of Corazon Aquino as president.
Under her administration. The engine of economic development has been given to the
private business sector. The Ramos government has continued most of the good
programs of the Aquino administration.
8. The national government, in its effort to lessen poverty, has been encouraging the
growth of the entrepreneurship. It has some financial and technical assistance programs
for the unfortunate who are interested in putting up their micro businesses. Even some
NGOs are enthusiastically involved in entrepreneurial projects for the poor.

HISTORY OF ENTREPRENEURSHIP

A Brief History of Entrepreneurship;

● Earliest Period
● Middle Ages
● 17th Century
● 18th Century
● 19th Century & 20th Century

Figure 1
History of Entrepreneurship

RESOURCES USED IN BUSINESS

● Raw materials are the inputs that a business uses to manufacture its finished
products. These is the unprocessed materials like metal stock or unrefined natural
resources that businesses use in the manufacturing processes to produce finished
goods to sell to consumers.

● Capital is a term for financial assets. These are funds detained in deposit accounts
and/or funds gained from distinct financing sources. Capital can also be linked with
capital assets of a company that entails significant sums of capital to finance or
expand.

● Market is simply the buyers and users of the entrepreneurs’ product. Technically,
people who buy the product are called customers, while people who use the
product are called consumers or end-users.
● Manpower, it can mean "labor force," "workforce," "workers," or simply "people,"
and applies to both men and women. In business we need manpower who is right to
the job. It is the utmost important resource used in business.

● Technology is science or knowledge put into practical use to solve problems or

invent useful tools. It is important in the business enterprise because it increase the
production.

● Supplier person or business that offers a product or service to another entity. The
part of a supplier in a business is to offer high-quality products at a good price from
a manufacturer to a distributor or retailer for resale.

● Information, it helps the entrepreneur to manage the business enterprise.

Information is valued because it can affect behavior, a decision, or an outcome.

● Interest. It is individual attention and focus on his business. In order to succeed in

your business owners shall give his full effort in managing his venture.

SOCIO-ECONOMIC BENEFITS FROM ENTREPRENEURSHIP

● Promotes self- help and employment

● Mobilizes capital
● Provides taxes to economy
● Empowers individual
● Enhances national identity and pride
● Enhances competitive consciousness
● Improves quality of life
● Enhance equitable distribution of income and wealth
 Figure 2
Best Business Ideas in the Philippines: The Ultimate List

BARRIERS TO GROWTH OF PHIPPINE SMEs

Over the years, the following have been determined to be the major reasons why
entrepreneurship has not really developed in the country:
● Poor access to finance
● Obsolete technology
● Low productivity
● Lack of skills upgrading
● Lack of information
● Inability to make entrepreneurial transition
● Poor linkage among small, medium and large industries
● Inappropriate location
● Management incompetence
● Poor market access
● Lack of infrastructure
● Bureaucratic/cumbersome procedures
● Severe global competition
The Role of Entrepreneurship in Economy Development

1. Entrepreneurship bids an economical and faster technique of distributing goods and

services that hastens economic development.
2. Entrepreneurship is capable of generating jobs, income, goods, and services.
3. Entrepreneurship improves the quality of life.
4. Entrepreneurship contributes to more reasonable distribution of income, and
therefore, comforts social unrest.
5. Entrepreneurship uses and mobilizes resources to make the country fruitful.
6. Entrepreneurship brings social benefits through the government.
7. Entrepreneurship has several definitions. Any person who takes the risks and invest
his resources to make something new or better is engaged in entrepreneurship. This
applies not only to business; it can also be applied to social services.
8. Economic development is a process, while economic growth is a product of economic
development, both economic and non-economic factors constitute the determinants of
economic development. In less developed countries, economic human conditions by
reducing or eliminating poverty, disease, injustice, illiteracy, and exploitation.
9. Development and Growth Theories.

A. Laissez-Fare Theory explains that the government should not interfere in

economic activities.
B. Keynesian Theory explains that the government should play the key role in
economic development.
C. Ricardian Theory this is the theory of David Ricardo focusing on agriculture
playing the major role in economic development.
D. Harrold-Domar Theory, conceptualized by Sir Harrold of England and Prof.
Domat of the US claims more products can be produced through the use of machines.
E. Kaldor Theory, by Nicholas Kaldor, maintains that the key factor is technology.
This theory explains that the use of modern technology in the production of goods and
services has been accountable for the economic success of the highly developed
countries.
F. Innovation Theory, developed by Joseph Schumpeter, stresses the role of
innovators or entrepreneurs in economic development.
10. The contributions of entrepreneurship are:
1) Development of new markets
2) Discovery of new source of materials
3) Mobilization of capital resources.
4) Introduction of new technologies
5) Creation of employment.

11. There is need for a Filipino entrepreneurial economy. This means our productive
resources should be on the hands of Filipinos for their own paybacks.
12. The government can help entrepreneurs from their several assistance programs on
the following: Peace and Order, Political, stability, Taxes, Infrastructure, Education and
training, Public administration, Production technology, Marketing Assistance, And
Financial Assistance.
13. We have seen that entrepreneurship directly affects the social and economic
development of people. The more society engages in entrepreneurial undertakings, the
more it is likely to develop economically and socially. Our country still has a long way to
go in order to catch up with more developed countries.

How does an economy grow?

A. Theories of economic growth may be classified into three broad groups. One group
consists of theories viewing economic growth as a natural and inevitable process.
The second group of theories explains economic development as a rational process
brought about when men respond to opportunities in the environment so as to
promote views economic development as a result of seemingly economically
irrational yet physically and sociologically satisfying activities of enterprising men. We
shall labour these groups as general, economic, and socio-psychological theories.

B. General explanations of economic development

1. Economic development proceeds conferring to a master plan or "Law of Nature"
2. Economic development is brought about an "Invisible Hand"
3. Economic development is brought by "Cultural Diffusion"
4. Racial heritage limits the economic development of people.
5. Climatic conditions determine the energy levels of people and in turn its rate of
development.
6. The challenge of the natural environment is responsible for the rise of civilization.
C. Economic explanations of economic development.
1. Technology improvements and division of labour lead to development.
2. Population changes affects development.
3. Entrepreneurship is an important factor in development.

D. Socio-Psychological explanation of economic development.

1. According to the work of Talcott Parsons, Individuals in modern societies are:
A. Unemotional
B. Interested in themselves
C. Able to relate to others in terms of their social roles or their ability to do a job
D. Known for their accomplishments
E. Able to relate to others in specific economic terms.

2. In contrast, member of traditional societies tends to:

A. Be emotional
B. Be more interested in the general welfare of the community
C. Relate to others in terms of their unique qualities
D. Be known for who they are: and
E. Tie up economic relationships with all sorts of other relationships. Involving kinship
and political, religious and other social structures.