SAINT JOSEPH COLLEGE, MAASIN, LEYTE

Maasin City, Southern Leyte

BACHELOR OF SCIENCE IN BUSINESS ADMINISTRATION

Module I (Pre-Midterm)
For
Econ 0 – Applied Economics
First Semester, AY 2022-2023

Prepared by

Mr. Nilo L. Bia, Jr., MBA

Instructor

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Course Description

This course deals with the basic principles of applied economics, and its application to
contemporary economic issues facing the Filipino entrepreneur such as prices of
commodities, minimum wage, rent, and taxes. It covers an analysis of industries for
identification of potential business opportunities. The main output of the course is the
preparation of a socioeconomic impact study of a business venture.

Grading System

Each student shall be assessed on the following:

Pre-Midterm/Pre-Final Examination ------------------------------------ 20%

Midterm/Final Examination ---------------------------------------- 20%
Activities/Oral Examination and Class Participation ----------------- 30%
Quizzes, Exercises, and Assignments ------------------------------------ 30%
TOTAL: 100%
Learning Outcomes

At the end of the semester, the students must be able to:

1. Apply different terms in applied economics and recommend in their own simple ways
on helping
alleviate economic problems;
2. predict the possible outcomes of different situations based on their understanding of
applied economics;
3. Show computations applying the concepts of the law of supply and demand,
quantity, and equilibrium price;
4. Construct a diagram explaining the different market structures and how they can
contribute to contemporary issues;
5. Formulate a SWOT analysis for different business opportunities;
6. Conduct a survey of macro and micro environments affecting local businesses; and
7. Predict the outcomes of a possible business venture based on the different socio-
economic factors that might affect it.

Module 1

INTRODUCTION TO APPLIED ECONOMICS

Topics:

Lesson 1: Revisiting Economics as a Social Science

Lesson 2: Economics as an Applied Science
Lesson 3: The Economic Models
Lesson 4: The Socioeconomic Problems and the Philippine Socioeconomic
Development in the 21st Century

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Introduction

In any society where we live a number of things are undertaken for ourselves, our family, our
community, and our country for various reasons including among others material survival,
stability, and development. For example, we get our food from various sources and through
different means. There are families that secure their food grains and vegetables from their
farms or gardens. But the majority of families purchase their foods in various markets. In
addition, the composition of our food intake and the way we prepare them are meant to
sustain us, strengthen our bodies, and keep us healthy. Similarly, many of us purchase our
clothes and wear them not only to cover our bodies but also to show our comfort, and express
our tastes and prosperity. Meanwhile, when a family constructs a nipa hut or rents a room
or acquires a condominium, or purchases a house its intention is not only to have a place
where they can be protected from the harsh elements of the environment but more so to
enhance their level of enjoyment as they east, entertain, interact with family members, and
sleep.

All these activities that are intended for the material survival of people and their community
as well as in strengthening and developing their material capacity are the purview of
economics. Since economics covers many aspects of human life we cannot escape the
economic implications of human actions, behavior, and decisions from the time we are born
until death. It is in this light that economics is being taught in schools to prepare our young
citizens for their roles as members of society in responding toward the goal of material
survival, stability, and growth

Lesson
Revisiting Economics as a
1 Social Science

Objectives

At the end of the lesson, you should be able to:

1. define basic terms in economics; and

2. explain the principles of economics as a social science.

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 Lesson
Revisiting Economics as a
1 Social Science

We all want to make wise choices in life and as you grow older, the more important
choices you will have to make. Many of these choices will deal with economics. Economics is
all about making choices. Economics is the study of how people, which includes countries
and companies, make choices on buying, selling, using, and distributing things.

This lesson helps you understand economics as a social science, its nature and scope.

As a student, the subject may not appeal to you and see economics as another subject
that you must take and pass to meet certain educational requirement. But you will realize
the importance of economics when you start buying things and realize that the allowance you
get from your parents is not enough to buy the things that you want.

Everybody goes through a day faced with constraints or limitations. People always
complain about not having enough – not enough food on the table, not enough money to pay
one’s debts, or not enough income to meet all the family’s needs. This, in effect, is the
existence of what we call scarcity. And scarcity is the reason why people have to practice
economics.

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 The word economy comes from the Greek word Oikonomia for “one who manages the
household.” At first the origin might seem peculiar. But, in fact, households and economies
have much in common. A household faces many decisions such as: Who cooks dinner? Who
gets the extra rice at dinner? Who washes the dishes after? In short, the household must
allocate its scarce resources among its various members considering each member’s abilities,
efforts and desires. Like a household, a society must decide what jobs will be done and who
will do them. It needs some people to grow food, other people to make clothing, and still others
to design a computer software.

WHAT IS ECONOMICS?

Economics has been defined in many ways. Some of these definitions are as follows:
(1) According to Mankiw, Economics is the study of how society manages its resources.
(2) Hall and Leiberman states that economics is the study of choice under the conditions
of scarcity.
(3) Castillo viewed economics as the study of how man could best allocate and utilize the
scarce resources of society to satisfy his unlimited want.
(4) Webster defined economics as a branch of knowledge that deals with the production,
distribution and consumption of goods and services.
(5) Economics, according to Sicat, is a scientific study which deals with how individuals and
society in general makes choices.

In summary, economics covers all kinds of topics, but at the core, it is devoted to
understanding how society allocates its resources under the condition of scarcity. Scarcity is
defined as the limited nature of society’s resources. Since resources are generally scarce and
human wants and needs tend to be unlimited, we need to study how society choose from the
menu of possible goods and services, how different commodities are produced, priced and
who gets to consume the goods that society produce.

ECONOMICS AS A SOCIAL SCIENCE

Social science is defined as the study or discipline that aims to explain human behavior
and society. It is a study of society or parts of it that utilizes the scientific method of
observation, hypothesis formulation, testing and experimentation.

Economics is a social science because it tries to understand how members of a society

behave and organize themselves to meet their individual and communal material needs and
desires. It explains how the unlimited demands and desire of man or consumer is given
satisfaction by the goods and services produced using the limited economics resources
available in the country.

COMMON TERMS IN THE DEFINITION OF ECONOMICS

 Scarcity: is a situation wherein the amount of something available is insufficient to

satisfy the desire for it.

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  Resources: labor, capital, land, and entrepreneurship that are used to produce goods
and services also known as factors of production.
 Production: the process of combining inputs to make something for consumption. It
is the act of creating output.
 Output: a product of which either a goods or services which has value and contributes
to the utility of individuals.
 Distribution: the allocation of the total product among members of society.
 Consumption: the use of a good or service.

WHY STUDY ECONOMICS?

I. To learn a way of thinking: It helps you understand how people make decisions
− Economics has three fundamental concepts:
 Opportunity cost: the best alternative that people forego, or give up,
when making a choice or decision.
 Marginalism: the process of analyzing the additional costs or benefits
arising from a choice or decision.
 Efficient Markets: a market in which profit opportunities are eliminated
almost instantaneously.

II. To understand society: It helps you understand how people interact with each
other.
 Trade can make everyone better off.
 Markets are usually a good way to organize economic activity.
 Governments can sometimes improve economic outcomes.

III. To understand global affairs and be an informed citizen: It helps you

understand the forces and trends that affect how the economy as a whole.
− The standard of living depends on a country’s production.
− Prices rise when the government prints too much money.
− Society faces a short-run tradeoff between inflation and unemployment.

SCOPE OF ECONOMICS
There are two scopes of economics.

1. Macroeconomics

− It looks at the economy as a whole and examines the factors that determine
national output or product.
− It looks at the big picture such as economic growth, inflation, employment, etc.,
and choices are made by large groups (like countries).

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 2. Microeconomics

− It deals with the functioning of individual industries and the behavior of

individual economic decision-making units such as firms and household.

− It looks on how individuals make economic decisions.

METHODS OF ECONOMICS

There are two methods of economics.

1. Positive Economics: focuses on causes and effects, behavior relationships, and facts
involved in the evolution and development of economic theories. Often called “what is”
economics.
 Descriptive economics: the compilation of data that describe phenomena and
facts.
 Economic theory: a set of related statements about cause and effect.

2. Normative Economics: expresses value or judgments about economic fairness or

what the outcome of the economy ought to be. Often called “what should be”
economics.

DIVISIONS OF ECONOMICS

Economics has five (5) major divisions. These divisions are as follows:

(1) Production – This refers to the process of producing or creating goods needed by the
households to satisfy their needs and wants. The factors of production are called inputs
and the goods and services that have been created are called outputs of production.
(2) Distribution – This refers to the marketing of goods and services to different economic
outlets for allocation to individual consumers. In monetary terms, this is the allocation of
income among persons or household.
(3) Exchange – This is a process of transferring goods and services to a person or persons
in return for something. At present, the medium of exchange used in the market is money.
(4) Consumption – This refers to the proper utilization of economic goods. Since goods
and services could not be consumed unless paid for, then we can also say that
consumption is spending money for goods and services for direct satisfaction
(5) Public Finance – This pertains to the activities of the government regarding taxation,
borrowings, and expenditures. It deals with the efficient use and fair distribution of
public resources in order to achieve maximum social benefits.

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THE ECONOMIC RESOURCES

Economic resources are also known as factors of production. There are four major factors
of production, which are utilized in our economy. They are as follows:
(1) Land – The physical space on which production takes place, as well as useful
materials – natural resources – found under it or in it, such as crude oil, iron, coal, or
fertile soil.
(2) Labor – This is also termed as human resources. Labor refers to the time and effort,
both physical and mental, spent in producing goods or services.
(3) Capital – Capital has two economic types as a factor of production. Physical
Capital consists of things like machinery and equipment, factory buildings,
computers, and even hand tools like hammers and screwdrivers. Another type is
Human Capital – the skills and knowledge possessed by workers,
(4) Entrepreneurship – The ability and willingness to combine the other resources –
land, labor, and capital – into a productive enterprise.

WHY ECONOMISTS DISAGREE?

In some cases, the disagreement may be positive in nature because our knowledge of
the economy is imperfect, and certain facts are in dispute.

In most cases, the disagreement is normative in nature because while the facts may
not be in dispute, differing values of economists lead them to dissimilar conclusions about
what should be done.

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 Lesson
Economics as an Applied
2 Science

Objectives

At the end of the lesson, you should be able to:

1. define basic terms in applied economics;

2. explain the principles of economics as an applied science; and
3. explain how applied economics can be used to solve economic problems.

Lesson
Economics as an Applied
2 Science

A pure science furnishes tools and applied science works with these tools. Economics
as pure science, formulates various laws and applied economics applies them in practice in
solving various problems. Before economics has been treated as a pure positive science. But
recently, applied economics assumed greater importance. As pure science and applied science
go together, so Economics is also pure as applied science.

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 Every society-whether it is a highly industrialized nation, a communist, socialists, or
any form of society-confronts four fundamental economic problems. These four economic
problems are common to all economies for resources are limited to satisfy unlimited human
wants and needs.

This lesson helps you understand economics as an applied science, the basic economic
problems and the economic system.

As a student, savings or setting aside extra money for future use from your allowance
it not your priority. But you will realize the value of savings when you run out of money or
during emergencies. Since, “There is no such thing as abundance…that’s why there is
Economics”. Thus, the value of savings is an application of economics in the field of finance.

Beyond commercial science, economic theories and principles can also find several
applications in education, international trade, labor, health, transportation, analysis of
environmental problems including pollution and overfishing as well as in understanding
crimes and other social ills.

ECONOMICS AS AN APPLIED SCIENCE

Applied science is the discipline that utilizes scientific knowledge to develop practical
solutions to society’s problems.

Economics uses theories to help come up with answers when analyzing a certain
situation. When you put these theories into action by trying things out, you are actually
applying these ideas and bringing them into practice. Simply put, when economic principles
and theories are applied to real-life situations, and outcomes are predicted because of this,
then economics has been applied.

Applied economics is thus the study or economics relative to real-life situations. This
is done by observing how theories work in practice. Applied economics usually deals with
numbers on which possible outcomes being reviewed are based and supported.

WHAT IS THE IMPORTANCE OF APPLIED ECONOMICS APPLICATION?

1. Applying economics to a company, household or a country helps seep aside all

attempts to dress up a situation so that it will appear worse or better than it actually
is.

Applied economics becomes a powerful tool to reveal the true and complete
situation in order to come up with things to do.

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Example:
Applied economics can assess the profits of a certain company. The result can help
the executives to do some strategies in order to boost its sales.

2. Applied economics acts as a mechanism to determine what steps can reasonably

be taken to improve current economic situation.

To examine each aspect, one can strengthen areas where performance is weak.

Example:
 Purchase of goods and services
 Usage of raw materials
 Division of labor within the entity (e.g. firm, company, agency)

3. Applied economics can teach valuable lessons on how to avoid the recurrence of a
negative situation, or at least minimize the impact.

To review what steps were taken to improve and correct similar situations and
continue good strategies to keep the economy flowing in the correct direction.

ECONOMETRICS

Econometrics is the application of statistical and mathematical theories to economics for the
purpose of testing hypotheses and forecasting future trends. Econometrics takes economic
models and test them through statistical trials. The results are then compared against real-
life examples.

Some of the common econometric models are:

 Linear regression
 Generalized linear models
 Probit, Logit, and Tobit
 Hazard
 ARIMA
 Vector Autoregression
 Cointegration

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Econometrics Example:

Real life application of econometrics would be to study

the hypothesis that as person’s income increases,
spending increases.

BASIC ECONOMIC PROBLEMS AND THE ECONOMIC SYSTEM

In today’s world, it is commonly believed that scarcity is the root cause of all economic
problems. Scarcity of means for satisfying various needs is the central problem of our
economic life and it is scarcity that creates the need to make a choice. All the problems like
poverty, unemployment, inflation, balance of payments, slow growth, etc. that a modern
economy faces originates from the scarcity of resources. It is because of scarcity, people and
economies must make decisions over how to allocate their resources.

Due to scarcity of resources, every economic system is faced with the following problems:

Four Basic Economic Problems

1) What to produce? (Microeconomics)

An economy must identify the commodities that need to be produced for the everyday
uses of the society.

(2) How to produce? (Microeconomics)

There is a need to identify the different methods and techniques in order to produce
commodities. The society must determine whether to employ labor-intensive production or
capital-intensive production.

Labor-intensive production uses more human resources or manual labor in producing

goods and service than capital resources.

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 On the other hand, capital-intensive production employs more technology and capital
goods, like machinery and equipment in producing goods and services, over labor resources.

(3) How much to produce? (Microeconomics)

This identifies the number of commodities that need to be produced in order to answer
the demands of the society.

(4)For whom shall goods and services be produced? (Microeconomics)

This question identifies the people or sectors who demand the commodities produced
in society.

Other Economic Problems

(5) Are the country’s resources being utilized, or some of them are lying idle and unemployed?
(Macroeconomics)
When resources are scarce, it is absolutely not right to keep some of the available ones
idle. If resources are not fully utilized, the production system is said to be inefficient.

(6) Is the economy’s capacity to produce goods growing or remaining the same overtime?
(Macroeconomics)

To achieve growth is productive capacity is a universal objective.

The questions or problems above are answered based on the structure of an economic
system. The way resources are allocated is influenced by the type of economy a society has.
An economic system is characterized by the type of institutions responsible for the
management and allocation of resources used in the production of goods and services.
Generally there are four know economic systems, namely market, command, traditional, and
mixed economic system.

Traditional Economy

This is basically a subsistence economy. Is one whose decisions ae made with great influence
from the past. Hence, a traditional economic system is a system whose past experience, which
were handed down from generation to generation, are used as bases for economic decisions.
Production is carried on through methods used by their forefathers and are therefore very
primitive. A product is produced this way because it has always been produced this way.

Command Economy

The factors of production and distribution are owned and managed by the state. Decisions in
answering the basic economic problems are planned, done, and dictated by the government.

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Market Economy

Here, individual consumers and businesses interact to solve the economic problem. The price
of commodities dictates what goods and services will be produced, how and for whom they
will be produced. This economic system solves the four economic questions/problems in
production of particular goods or services by conferring with the majority.

The term market describes any method by which, or place at which, buyers can communicate
with sellers.

Mixed Economy

All four questions/problems are answered by both the government and private entities
benefiting both. Today, most countries apply this type of economy but in different
proportions-maybe more of command and a little of market or more of market and a little of
command or traditional.

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 Lesson
The Economic Models
3
Objectives

At the end of the lesson, you should be able to:

1. define basic terms in economic models; and

2. explain the applications of economic models;

Lesson
The Economic Models
3

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 Every field of study has its own language and its own ways of thinking. Mathematicians
talk about axioms, integrals, and vector spaces. Psychologists talk about ego, id, and
superego. Economics is no different. Supply demand, elasticity, consumer surplus etc. – these
terms are part of an economist’s language. At first this language may seem needlessly arcane
but, as you will see, its value lies in its ability to provide you new and useful way of thinking
about the world in which you live.

This lesson helps you understand the economic models.

Mom, are imports and exports Yes of course anak!

part of international trade?

The government makes two types of purchases in the economy. It hires labor from the
household sector, rents their land for their offices and factories, and borrows capital by selling
securities. For these it makes money payments to the households. The government also buys
goods from business firms, and makes money payments for these purchases.

An open economy like the Philippines maintains trade relations with other countries.
First, it sells goods to these countries, in the form of exports. Second, the Philippines also
buys from other countries goods and services called imports.

As a student, you need to put in mind that the country cannot produces all the
commodities we demand, so the country engaged in trade with other countries through
imports and exports.

THE ECONOMIC MODELS

Economists use models to learn about the world, but instead of actual physical models, they
most often composed of diagrams and equations. These models omit many details to allow us
to see what is truly important. However, due to certain limitations, an economist’s model does
not include every feature of the economy. There are several economic models in existence but
to simplify things for now, we will first discuss the Circular Flow Diagram and Production
Possibility Frontier.

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CIRCULAR FLOW DIAGRAM

This diagram is a schematic representation of the organization of the economy. Households

and firms interact in two types of markets. In the markets for goods and services, households
are buyers and firms are sellers. Households buy the output of goods and services that firms
produce. In the markets for the factors of production, households are sellers and firms are
buyers. In these markets, households provide firms the inputs that the firms use to produce
goods and services. The circular-flow diagram offers a simple way of organizing all the
economic transactions that occur between households and firms in the economy.

The inner loop of the circular-flow diagram represents the flows of goods and services between
households and firms. The households sell the use of their labor, land, and capital to the
firms in the markets for the factors of production. The firms then use these factors to produce
goods and services, which in turn are sold to households in the markets for goods and
services. Hence, the factors of production flow from households to firms, and goods and
services flow from firms to households.

The outer loop of the circular-flow diagram represents the corresponding flow of peso. The
households spend money to buy goods and services from the firms. The firms use some of
the revenue from these sales to pay for the factors of production, such as the wages of their
workers. What’s left is the profit of the firm owners, who themselves are members of
households. Hence, spending on goods and services flows from households to firms, and
income in the form of wages, rent, and profit flows from firms to households.

The flow of goods

and services

The flow of money

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This circular-flow diagram is one simple model of the economy. It dispenses with details that,
for some purposes, are significant. A more complex and realistic circular-flow model would
include, for instance, the roles of government and international trade. Yet these details are
not crucial for a basic understanding of how the economy is organized. Because of its
simplicity, this circular-flow diagram is useful to keep in mind when thinking about how the
pieces of the economy fit together.

PRODUCTION POSSIBILITY FRONTEIR

The Production Possibilities Frontier is a graph that shows the various combinations of
output—in this case, cars and computers—that the economy can possibly produce given the
available factors of production and the available production technology that firms can use to
turn these factors into output. Below is an example of a production possibilities frontier. In
this economy, if all resources were used in the car industry, the economy would produce
1,000 cars and no computers. If all resources were used in the computer industry, the
economy would produce 3,000 computers and no cars. The two end points of the production
possibilities frontier represent these extreme possibilities. If the economy were to divide its
resources between the two industries, it could produce 700 cars and 2,000 computers, shown
in the figure by point A. By contrast, the outcome at point D is not possible because resources
are scarce: The economy does not have enough of the factors of production to support that
level of output. In other words, the economy can produce at any point on or inside the
production possibilities frontier, but it cannot produce at points outside the frontier.

An outcome is said to be efficient if the economy is getting all it can from the scarce resources
it has available. Points on (rather than inside) the production possibilities frontier represent
efficient levels of production. When the economy is producing at such a point, say point A,
there is no way to produce more of one good without producing less of the other. Point B
represents an inefficient outcome. For some reason, perhaps widespread unemployment, the
economy is producing less than it could from the resources it has available: It is producing
only 300 cars and 1,000 computers. If the source of the inefficiency were eliminated, the
economy could move from point B to point A, increasing production of both cars (to 700) and
computers (to 2,000). Notice as we move from point to point, trade off between production
quantities differ. This is due to the law of increasing opportunity cost.

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OPPORTUNITY COST

The opportunity cost of any choice is what we must forego when we make a choice. When
making any decision, such as whether to attend college, decision makers should be aware of
the opportunity costs that accompany each possible action. In fact, they usually are. College-
age athletes who can earn millions if they drop out of school and play professional sports
understand their opportunity cost of college is very high. It is not surprising that they often
decide that the benefit is not worth the cost.

LAW OF INCREASING OPPORUNITY COST

Why does opportunity cost increase as we move along the PPF? It is because most resources
– by their very nature – are better suited to some purposes than others. If the economy were
using all its resources on the production of computers, even those that are much better suited
at making cars will be producing computers. As we move along the curve, we will shift our
resources out of computer production and into car production. But we would first shift those
resources best suited to car production – and least suited for computer production.

The principle of increasing opportunity cost applies to most of society’s production choices,
not just between computers and cars. If we look at society’s choice between food and oil, we
would find that some land is better suited at growing food and other land best suited for
drilling oil. As we continue to drill for more oil, we would find ourselves drilling on land that
is less and less suited to producing oil, but better and better for producing food. The
opportunity cost of producing additional oil will therefore increase.

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Lesson
The Socioeconomic Problems
and the Philippine
4 Socioeconomic Development in
the 21st Century

Objectives

At the end of the lesson, you should be able to:

1. Identify the socioeconomic problems of the country; and

2. explain the socioeconomic development of the Philippines in the 21st century;

The Socioeconomic Problems

Lesson
and the Philippine
4 Socioeconomic Development in
the 21st Century

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 A development vision and framework for the 21st Century has been formulated under
the Long-Term Philippine Development Plan (LTPDP), 2000-2025 or Plan 21. The LTPDP
framework recognizes that the new millennium will increasingly call for economic
development to become less ecologically destructive. Plan 21 sets broad developmental
directions of the country and will serve as the basis for the detailed plans of sector agencies.

This lesson helps you understand the socioeconomic problems and the Philippine
socioeconomic development in the 21st century.

For you to be equipped with

Mom, why I need to go schooling? knowledge and skills!

The number one socioeconomic problem of the country is poverty. Families with limited
or without resources cannot earn sufficient income that can provide the minimum nutritional
requirements for daily living and the basic necessities of clothing and shelter.

Because they have limited schooling, they are often unskilled and cannot find decent
and sustained employment. Since they have no funds and cannot have access to credit they
cannot even start a small livelihood project. Thera are various interventions being
implemented by the various economies including the Philippines in addressing the problem
of poverty.

As a student, you need to put in mind that only by means of education an individual
can get away from poverty. And that education can give you better future.

What is Socio-Economics?

The relationship between social and economic factors within a society.

THE SOCIOECONOMIC PROBLEMS

Typical of a growing economy the Philippines is confronted with several issues and problems
which prevent its citizens in realizing a meaningful life, on the one hand, and in pushing its
socioeconomics development, on the other hand. A sizable proportion of its people have
insufficient resources to afford the basic goods and services, limited freedom in their choices
of employment and consumption and a low self-esteem that weakens its people. Meanwhile,
the quality of human resources as well as its inadequate infrastructure is constraining the
economy to grow faster.

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Poverty and unequal distribution of income

Poverty is a restricting condition experience by millions of families that prevents them

in attaining the minimum level of consumption for subsistence living.

Limited schooling is one of the main cause of poverty.

Two categories of Poverty

1. Absolute Poverty is the lack of income to buy the basic foods and necessities for
subsistence living.
2. Relative Poverty refers to the structure on how the national income is being
distributed among households in an economy.

Poverty Incidence in the Philippines Selected Years

Years Among Population Among Families

2006 28.8% 23.4%

2009 28.6% 22.9%

2012 27.9% 22.3%

Demographic changes and its economic implications

The population of the Philippines has been

increasing over several decades. In 1960, the
country has enumerated 27 million people. In 2015
the population estimate for the country has reached
102 million people.

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Economic Implications

Negative

 Population growth exerts on limited resources

 It is a burden to the government to provide the social services including education,
health and housing to an expanding population.
 Limited funds to suffice the needs of the huge population.
 Strain to the environment.

Positive

 Additional consumer and savers that can expand the economy

 Additional laborers can be a source of productivity, creativity and entrepreneurship.
 Labor force

Internal migration can reduce labor force in sending regions which can exacerbate their already
sluggish economic performance.

Overseas migration may engender the culture or of dependency as recipients of remittances may
be content with the external income transfer rather than work.

Migrants- a person who goes from one place to another especially to find work.
Migration- to move from one country or place to live or work in another.
Immigration- to come to country to live there

Immigrant- a person who comes to a country to live.

Emigrant- a person who emigrates.
Emigration- to leave a country or region, to live elsewhere.

Low Investment in Human Resource Development

A highly trained workforce is more productive than

a pool of unskilled workers.

Skills training and investment in education can

shape human capital of a nation.

Importance of education.

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Weak Infrastructure

Physical Infrastructure facilitates the expands

transaction that likewise fuel economic growth.

Philippines have weak infrastructure, meanwhile the

limited capacity of our energy infrastructure has
resulted in daily interruptions of electricity in many
regions in the country

The major reason for this inadequate expansion is

insufficient funds.

Pursuing Food Security

With more than 100 million people to feed, the

concern of the government is to ensure food security
for all.

The food sufficiency is linked with the development

of agriculture as a major economic sector of the
country contributing over 11% of GNP.

A sluggish agriculture may result to the unstable society with the spread of poverty while
insufficiency of food may invite inflationary pressure or dependence on imports.

But to equate food security with food sufficiency is problematic.

Enhancing the productivity of the agricultural sector can contribute to the achievement of food
security.

Slow Adaption of Modern Technology

Technology is the manner of processing the raw

materials or intermediate inputs into transformed
outputs through the use of factor inputs.

A technology that is biased in the use of labor is

called labor intensive technology, while the capital
intensive technology refers to use of more capital
relative to labor in the productive process.

Thailand and China that have economically transformed characterized by substantial increases
in the share of manufacturing in the GDP of their economics over time.

The development of the services sector is also hinged on massive investments in modern
technology.

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One of the most vibrant industries in the services sector is the Business Process Outsourcing
(BPO) which the one of the leading contributor of foreign exchange to the Philippines.

The country needs efficient and productive services industries are strongly linked with the
agricultural and industrial sector.

Environmental sustainability and the country’s development thrust.

The capacity of our economy to maintain its

productive capacity and pursue its development
goals will be constrained by the prudent use of
natural resources for sustainable development.

For Example, the capacity of land resources to be

productive rest on the proper use of fertilizer and
pesticides.

Similarly, a total ban on mining is too extreme since it does not consider the positive
contributions of mining to our economy. It can deny the country of the needed foreign exchange
derived from the export of our leading minerals such as gold, copper and nickel.

AGENDA 21

Agenda 21 is an action plan of the United Nations (UN) related to sustainable development
and was an outcome of the United Nations Conference on Environment and Development
(UNCED) held in Rio de Janeiro, Brazil, in 1992. It is a comprehensive blueprint of action to
be taken globally, nationally and locally by organizations of the UN, governments, and major
groups in every area which humans directly affect the environment. The Philippines also
established an agenda called the Philippine Agenda 21.

The Philippine Agenda 21 is the nation’s blueprint for sustainable development. In concreting
the vision, it describes a path for individuals, families, households, and communities; an
action plan for each ecosystem in consideration of the various landscapes and life forms found
therein.

The Philippine Agenda 21 advocates fundamental shift in development, thinking, and

approach. It departs from traditional conceptual frameworks that emphasizes sector-based
and macro concerns. Philippine Agenda 21 promotes harmony and achieves sustainability by
emphasizing the following:

(1) A scale of intervention that is primarily area-based. The national and global policy
environment builds upon and supports area-based initiatives.
(2) Integrated island development approaches where applicable. This recognizes the
archipelagic character of the Philippines which includes many small island provinces.

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 (3) People and integrity of nature at the center of the development. This implies the
strengthening of roles, relationships, and interactions between and among stakeholders
in government, civil, society, labor, and business. Basic sectors have an important role to
play in achieving equity and managing the ecosystems that sustain life.

The Philippine Agenda 21 envisions the following for a better quality of life among
Filipinos:

(1) Poverty Reduction – This includes measures to create an enabling economic

environment for sustained and broad-based growth.
(2) Social Equity – It should mean allocation of resources based on efficiency and equity
to achieve balanced development.
(3) Empowerment and Good Governance – Each is a necessary precondition to each
other. These two are a defining element of each other.
(4) Peace and Solidarity – The cycle of poverty and conflict goes on as cost of war escalate
in terms of various kinds of destruction while withholding funds for basic services,
resulting in more poverty and underdevelopment.
(5) Ecological Integrity – The involvement of heightened and sustained implementation
of environmental laws, as well as the continued pursuit of resource conservation.

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