BATANGAS STATE UNIVERSITY

Rizal Avenue, Ext., Batangas City

COLLEGE OF TEACHER EDUCATION
SECONDARY EDUCATION DEPARTMENT

Subject Comparative Economic Planning (SSEd 314)

Year Level 3rd

Semester First

Section SSTU-3102

Course Facilitator Dr. S. Pagcaliwagan

Group Number: 3

Group Members: Cabus, Zarina Anne Joy. – Facilitate the activity and discussion
Cortez, Kyla Joy. - Facilitate the activity and discussion
De Chavez, Angelen. - Facilitate the activity and discussion

Topic: The Determinants of Economic Development

Objectives:

1. To recognize and understand the different determinants of economic development.

2. To be able to give example situations of each determinant.

3. To relate the topic to the present situation of the Philippines' economy.

INTRODUCTION In the first module, we talked about economic development. Although

the term is sometimes interchanged with economic growth, these two are two
different concepts. Krueger & Myint (2022) refers to it as the transition of poor
and primitive economies into a complex and prosperous one. Denison (1962)
affirmed that economic growth is the increase of real GDP or GDP per capita,
an increase of national product that is measured in constant prices. And in
this module, we will be focusing on the factors that not only the economists,
but also the citizens can monitor, to determine if there is development in their
country’s economy.

Why do we need to know the determinants of economic development?

1. Those help us determine if a country's economy is growing.

2. These determinants are also the areas that the administrators,

business sectors, economists and even the simple consumer, like us,
should focus on to achieve development in our economy.

THE DETERMINANTS OF
ECONOMIC
DEVELOPMENT
Technology As scientific and technological knowledge advances, man discovers
more and more sophisticated techniques of production which steadily raise
productivity levels. As a determinant of economic development, technology
pertains to the better techniques of methods of production. When economists
talk about technology, they’re thinking more broadly about new ways of doing
things. In this sense, processes like assembly line production or creating
medical vaccines are considered technologies. To incorporate new
technology in the production process or in order to modify the existing plants,
a larger investment to procure or produce new equipment is required, hence
a higher rate of capital formation is necessary to support technological
progress. Since technology has now become highly sophisticated, still
greater attention has to be given to Research and Development for further
advancement.
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Rizal Avenue, Ext., Batangas City
COLLEGE OF TEACHER EDUCATION
SECONDARY EDUCATION DEPARTMENT

Examples:
1. Smart Factories- An interconnected network of machines,
communication mechanisms, and computing power, the smart factory
is a cyber-physical system that uses advanced technologies such as
artificial intelligence (AI) and machine learning to analyze data, drive
automated processes, and learn as it goes.

2. Additive manufacturing - the construction of a three-dimensional

object from a CAD model or a digital 3D model.

Even social or political things like language, money, banking, and

democracy are considered technologies. Social technology is concerned with
the improvement of attitudes and values of the people.
Public administration technology deals with the improvement of social
goods in order to maximize the satisfaction of social wants

Technology for the Less Developed Countries

The less developed countries merely copy or imitate Western

technology but there is nothing wrong with the importation of technology. For
instance, many years ago, Japan was a notorious imitator of Western
technology. But look at where they are now. Professor Gunnar Myrdal, author
of Asian Drama, noted that Western technology has been adopted in
Southeast Asia without proper consideration of the local climate and soil
conditions. In the case of the industrial countries, they use machines or
capital-intensive technology, because labor is scarce and therefore
expensive. For the poor countries, they have an oversupply of unemployed
and underemployed individuals.

Markets These are a type of institution or mechanism that exists to facilitate

exchange and allocate resources, goods and services. Market is an important
place where parties can gather to facilitate the exchange of goods and
services. The parties involved are usually buyers and sellers. The market
may be physical like a retail outlet, where people meet face-to-face, or virtual
like an online market, where there is no direct physical contact between
buyers and sellers. Buyers, sellers, and producers are the three most
significant market participants.
Buyers are those hired to buy or purchase a good or piece of
merchandise. They are also referred to as "purchasers." The term "sellers"
refers to a person who provides or sells goods to customers. Producers are
also referred to as the maker and are in charge of designing, making, or
generating items or products.
When more individuals buy more products, the market grows. Many
companies are eager to increase production if there is a high demand for the
things they offer. If that occurs, the development of markets indicates a
growing economy, especially if all economic sectors benefit equally. This
would indicate that the economic growth is genuine and long-lasting.

Conditions in Foreign
Trade Trade is considered beneficial for both the countries as suggested by
the theory of comparative advantages. Less developed countries should
specialize in production of primary products as they have comparative cost
advantage in their production. The developed countries, on the contrary,
have a comparative cost advantage in manufactures including machines and
equipment and should accordingly specialize in them. Developing countries
should not totally rely on the import substitution policy but should also develop
its manufacturing sector.
Political Condition
The government’s primary responsibility is to ensure that its citizens
have a high level of living. And this may be done through increasing
investment, which leads to increased employment and production, as well as
by distributing income and wealth fairly. It is possible for a country to have
 BATANGAS STATE UNIVERSITY
Rizal Avenue, Ext., Batangas City
COLLEGE OF TEACHER EDUCATION
SECONDARY EDUCATION DEPARTMENT

economic progress if the political system is in good shape, has fair economic
policies, no corruption, and the elected candidates are respected. If a political
climate is stable, we may be able to draw both domestic and foreign
investment or it will attract more investors which will support the ongoing
economic growth of your nation. Only when there is a trustworthy and
competent administration, economic development will occur.

Corruption in Public
Administration According to an economics professor in Singapore, government
corruption is the number one obstacle to economic development in Southeast
Asia. Government corruption is present in any society. In dealing with
government offices, bribery has been a common practice. Asian
governments have taken measures and actions to weed out inefficient and
corrupt employees and officials. The task of cleaning the government is a
long and difficult process, considering our Oriental values and depressed
economic conditions. While there is a broad consensus that corruption has a
negative impact on economic growth and development (see below), some
researchers continue to argue that corruption may be economically justified
as it provides opportunities to bypass inefficient regulations and red tape, and
allows the private sector to correct government failures and inefficiency. As
such, it could potentially promote economic growth by removing bureaucratic
barriers to entry and lowering companies’ transaction costs when trying to
comply with excessive regulations. Méon and Sekkat provide a good
overview of the proponents and opponents of such a hypothesis (Méon and
Sekkat 2005).

This argument does not stand up to scrutiny when looking at the long-
term corrosive impact of corruption on economic growth, equality and the
quality of a country’s governance and institutional environment. Evidence
indicates that corruption is likely to adversely affect long-term economic
growth through its impact on investment, taxation, public expenditures and
human development. Corruption is also likely to undermine the regulatory
environment and the efficiency of state institutions as rent-seeking distorts
incentives and decision making processes.

Not only does corruption affect economic development in terms of

economic efficiency and growth, it also affects equitable distribution of
resources across the population, increasing income inequalities,
undermining the effectiveness of social welfare programmes and ultimately
resulting in lower levels of human development. This, in turn, may undermine
long-term sustainable development, economic growth and equality.

Bribes increase the costs of business leading to higher prices.

Officials divert funds to projects that are not in the public interest. Dishonest
exploitation of power for personal gain. Freedom of speech is lacking.
Corruption leads to an unfair allocation of resources – contracts don’t go to
the most efficient bidder. Governments are not accountable to the people.
Constant paying of small bribes reduces the economic well-being of ordinary
citizens. Legal structure is weak. Corruption leads to reduction in
effectiveness of legal system

Geography
It is where the relationship between people and their environment is
discussed. Location, it plays a part in access to the market. Some
businesses were hindered because it is located in high mountain ranges or
sometimes markets are located in a place that is less populated and out of
reach since its destination is far from the city. Through this, it is possible for
those markets to lead to economic downfall since there are less buyers. You
really need to consider a location if you are about to build a business.
Environmental resources such as minerals and fossil fuels directly facilitate
the production of goods and services. The environment provides other
services that help businesses and markets to have goods which help to
economic development.
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Rizal Avenue, Ext., Batangas City
COLLEGE OF TEACHER EDUCATION
SECONDARY EDUCATION DEPARTMENT

Polpulation
Developed countries that have insufficient numbers of people
encourage immigration of aliens. Example, in Middle East Countries hire
immigrants to help them elevate their economy. If the rate of population
growth is higher than the rate of production growth. It becomes more serious
if the resources aren't equitably distributed. They are advised to adopt family
planning programs. For an instance, the population in Black Africa is about
400 million. They have the highest birth rates and shortest life expectancy.
Its population explosion growth exceeds its growth in local production.
Reasons of population growth
• Religious reasons
• Cultural reasons
• Economic reasons
The real problem is not the population itself but in the production. The
country’s inadequate organization of their natural and human resources is
the real problem that needs to be resolved. If production is properly
organized, the population, no matter how big and dense it is, will not be a
problem. Their needs will be met because the resources are distributed
evenly.

Availability of
infrastructure It is an important driving force for economic growth. It reduces trade
and transaction costs and stimulates the productivity of the economy.
Infrastructure is crucially important to foster a country's economic
development. Investment in infrastructure contributes to higher productivity
and growth, facilitates trade and connectivity and promotes economic
inclusion. Railroads were developed to easily transfer the raw materials from
various parts of the country. Airports and seaports are essential to the
economic development of either cities or countries. They directly contribute
to economies by providing services to airlines, moving passengers and
transporting cargo to other places. Another is the electricity, without electricity
some business will be affected. Staff won't manage to finish their work on
time. Through electricity it is easy to produce goods and services.

It excludes immediate consumption in order to get more consumables

Capital in the future, whereas "capital" refers to that portion of the existing product
that is employed for more production rather than being eaten right now.
Society does not apply the whole of its productive activity to the needs and
desires of immediate consumption but directs a part of it to make capital
goods, tools and instruments, machines and transport facilities plant and
equipment all the various forms of real capital that can so greatly increase
the efficiency of productive effort. Investment rises as a result of capital
formation, and this has an impact on economic growth in two ways. First off,
it boosts per capita income and purchasing power, which in turn generates
demand more effectively. Second, increased investment results in higher
productivity. This allows for the expansion of economic activity in developing
nations, which in turn aids in the eradication of poverty and the achievement
of economic growth. And on an individual, societal, and global level, people
share and exchange a variety of products, services, and skills as capital.
These resources help an organization or people expand and succeed in a
sustainable way. A diverse, healthy, and prosperous society depends on
many different types of capital, all of which have important roles to play such
as Human Capital, Financial Capital, Social Capital, Economic Capital,
Manufactured Capital, Intellectual Capital, Cultural Capital, Experiential
Capital and Natural Capital.

Social Structure
The particular, enduring configuration of institutions that govern how
people interact and coexist in a society. Social change, which examines the
processes affecting social structure and societal organization, is frequently
discussed in conjunction with social structure. This social structure can also
affect the economy of the country, due to the structure and different classes
that we had in our society such as Lower Class, Middle Class and Upper
Class. Wherein in the Lower Class are some called as slave or the poorest
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Rizal Avenue, Ext., Batangas City
COLLEGE OF TEACHER EDUCATION
SECONDARY EDUCATION DEPARTMENT

one, Middle Class includes a normal living, and Upper Class where the
superior people like King and Queen and the successful
businessman/woman are belong. Sometimes there’s an issue that in this
social structure the giving wealth is not totally fair distributed. “Some people
who are in the upper class can be the motivation of people who are in lower
class to be one of the rich, but people who are in the lower class didn’t giving
a chance to be on top because they’re discriminated by others” and it affect
the economic because there’s no helping each other.

Family Structure
Family members in Western societies like the United States are more
individualistic and self-reliant. Adult children are financially independent from
their parents. They are free to pursue their economic inclinations anywhere.
Considering the security of the parents, their family obligations are
minimized. Their family structure helps their economy a lot, for their citizens
are independent and economically self-reliant. On the other hand, the
opposite is the system of most of the Filipino families. In the Philippines, an
extended family system has dominant features which are not favorable to
economic development. Close family ties hamper labor mobility, and the
choice of better economic opportunities. The family obligations of the older
children to their parents and younger brothers and sisters have been a part
of culture.

Cultural Values
It examines the connection between cultural and economic results.
Here, "culture" refers to the shared values and tastes of the relevant
groups. Programmatic concerns include questions of whether and to what
extent culture influences economic outcomes, as well as how it relates to
institutions. The influence of culture on economic behavior is a developing
area of behavioral economics, and it is being shown more and more that
these differences have a considerable impact on how people make
decisions and manage and value their assets. The culture in the economy
develops from the formation of desires and tastes in society. This is partly
due to aspects of one's upbringing or the type of environment in which one
grows up, as it is the internalization of one's upbringing that shapes one's
future desires and preferences. You can think of acquired tastes that
indicate how they are shaped. A key idea that distinguishes the
development of cultural economics from traditional economics is the
difference in the way individuals make decisions. Everyone has traits or
behavior that are affecting the economy such as Mañana Habit, Batman
Mentality and Hiya Factor.

The Desire to Imitate

By this we can adopt and desire what other countries have because
we admire them. For example, we are imitating one product from China
because in their country this product is pretty high value and many of them
buy this product. So here in the Philippines, we tend to imitate this but we are
not aware if this product is advisable or if people in your community can buy
it. Therefore, the more that we have an idea from the other country we must
think first if it can help our economy grow or not, then think again of the other
possible products that we can use.

Religion
Religious beliefs are important to economic performance. Strengthens
character traits such as diligence, honesty, thrift, and the value of time.
Otherworldly compensators, such as the belief in heaven, hell, and the
afterlife, can increase productivity by motivating people to work harder in
this life. The view says that you work hard all your life (a life of good work)
because there is no way to know if you are saved. Rewards also motivate
people to work hard and cultivate virtuous behavior. Sometimes, religion
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Rizal Avenue, Ext., Batangas City
COLLEGE OF TEACHER EDUCATION
SECONDARY EDUCATION DEPARTMENT

affects the economy, it is found that religion has a negative impact on the
economic development of a country because the religious practices act as a
hindrance in promoting economic activity.
Marketable Surplus of
Agriculture It is the type that makes for the progress of the economy. It is from
the real surpluses, that the real savings, real capital formulation and real
income are obtained. They in turn make it possible to make real investment.
The larger the production of a commodity, the greater will be the surplus of
that commodity and vice versa. The commodity, the marketed and
marketable surplus helps the policy-makers as well as the traders in the
following areas. There are three aspects of agricultural marketing. First
relates to the determination of market price and this is largely a function of
demand and supply plus government intervention. The second aspect relates
to reorganization of agricultural marketing. While the first one belongs to the
pure theory of agricultural economics, the second aspect relates to
agricultural administration.
Government intervention in price setting and regulating marketing
supply and demand come under policy intervention. Third important
theoretical issue is to examine the economics of ‘marketable surplus’ and in
particular the relationship between marketable surplus and market stimuli or
price stimuli. The last important aspect is the study about mobilization of
resources from the agricultural and rural sector, both in the real terms and in
monetary (financial) terms.

Activity: Mechanics
“Pinoy Henyo”
1. The players will pick the word to be guessed.
2. One player will be the guesser and the other will help him/her guess.
3. The guesser won’t face the screen, for the clues about the word to be
guessed will be flashed.
4. Only 3 clues will be given when the guesser signals that they need it.
5. Each pair will be given 5 minutes to guess the word.

1. Word: Buwaya
Clues: Mabangis ito.
Naninirahan sa tubig
Maihahalintulad sa mga kurap na opisyal.

2. Word: Cellphone
Clues: Lagi mo itong hawak at gamit.
Di ka makakapag-facebook pag wala ito.
Pati lola mo meron nito.

3. Word: SM
Clues: Puntahan nyo ng friends mo.
Palamigan kapag binabanas.
Window Shopping pa more.

4. Word: United States

Clues: Binubuo ng maraming province.
Nasa West.
Tirahan ng mga AFAM.

5. Word: Palawan
Clues: Maraming puno dito
Parte ng MIMAROPA
Dito matatagpuan ang Puerto Prinsesa

Resources Needed:

1. Books
2. Mobile phone/ Laptop
3. Internet
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Rizal Avenue, Ext., Batangas City
COLLEGE OF TEACHER EDUCATION
SECONDARY EDUCATION DEPARTMENT

4. Smart Tv/Projector
References:

Krueger, A. O. and Myint, . Hla (2022, August 4). economic development. Encyclopedia Britannica.

https://www.britannica.com/topic/economic-development

Boldeanu, F.T. & Constantinescu, L. (2015). The Main Determinants Affecting Economic Growth

https://ashraffeps.yolasite.com/resources/EuroMed/Fall2018/The%20main%20determinants%20affecting%
20economic%20growth.pdf

Mahendra Kumar Ghadoliya (2017). Determinants of economic development.

https://www.slideshare.net/ProfMKGhadoliya/determinants-of-economic-development

Transparency International (2014). The Impact of Corruption in Growth and Inequality

https://www.transparency.org/files/content/corruptionqas/Impact_of_corruption_on_growth_and_inequality_
2014.pdf