REVIEWER SA ECONOMIC

DEVELOPMENT NI MICAH ☺ MEASUREMES OF ECONOMIC

DEVELOPMENT
OVERVIEW OF ECONOMIC Economic Growth vs Economic
DEVELOPMENT: Development
Development economics is a ECONOMIC ECONOMIC
branch of economics that focuses GROWTH DEVELOPMENT
on improving fiscal, economic, and
social conditions in developing Definition refers to refers to economic
countries. increases in a growth accompanied
country’s by changes in output
Development Economics - focuses production distribution and
primarily on the poorest two-thirds (GDP; GNP) economic structure.
of the world’s population. or income per
capita.
Why Study Economic
Measurement GDP and HDI, PQLI, Basic
Development?
GNP needs attainment
1. To study about development approach, Sen’s
of different countries, Capability approach,
especially developing MDGs and SDGs, and
economies. Happiness and
2. To know how Wellness measures of
underdeveloped countries socio-economic
can develop, reduce poverty, development
utilize its resources and Kind of Quantitative Qualitative and
foreign capital, and attract Changes changes quantitative changes
foreign investment. Scope Increase in Improvement in life
3. To understand government’s the indicators expectancy rate,
role in economic growth and like GDP, per infant mortality rate,
development capita income literacy rate, and
• Laws and etc. poverty rates.
• Capital Concept Narrow Broad
• Market regulation and Term Short term Long term process
policies process
• Health
• Education
• Employment
• Inequality reduction
• Promoting entrepreneurship
 7. Ensure environmental
sustainability
The two terms are not identical. 8. Global partnership for
Growth may be necessary but not development
sufficient for development.

Growth can lead to development. Economic Classification of

Gross Domestic Product (GDP): total Countries
output of goods and services produced The World Bank’s classification of the
in an economy (or country) over a world’s economies is based on estimates
period of time. of gross national income (GNI/ GNP)
GDP= C + I + G + (X-M) Gross National per capita, which can change with
Product (GNP): total output of goods economic growth, inflation, exchange
and services produced by a country’s rates, and population.
resources over a period of time. The GNI per capita is also used to
GDP= C + I + G + X + NFIA determine lending eligibility of
countries.
GDP per capita: GDP divided by
population Less
LOW
than
INCOME
$1,135
DEVELOPING
Millennium Development Goals
LOWER COUNTRIES
(MDGs) - targets for reducing $1,136 -
MIDDLE
poverty, hunger, disease, illiteracy, $4,465
INCOME
environmental degradation, and
discrimination against women UPPER
MIDDLE $4,466-
MILLENIUM DEVELOPMENT
INCOME $13,845
GOALS DEVELOPED
COUNTRIES
1. Eradicate extreme poverty and HIGH $13,84
hunger 6 and
INCOME
2. Achieve universal primary above
education
3. Promote gender equality and
empower women
Undeveloped, underdeveloped vs.
4. Reduce child mortality
Developing
5. Improve maternal health
6. Combat HIV/AIDS, malaria and • 1st world vs. 3rd world
other diseases

3rd world (low-and middle-income
economies)
2nd world (socialist, or centrally directed
countries, where the government owns
the means of production)
• Newly industrializing countries (NICs):
industrially diversified and high income
countries (eg. 4 Asian Tigers - South
Korea, Taiwan, Singapore and Hong
Kong)
• Organization of Petroleum Exporting
Countries (8 member UMICs + high
income Kuwait and the United Arab
Emirates)

1st world (the high-income capitalist

countries, where capital and land are Problems in Comparing GNPs of
owned by private entities) Developed and Developing Countries

1. GNP is understated for

Underdeveloped Developing Developed
developing countries,
Liberia India Japan
because a greater
Niger Brazil Germany
proportion of their goods
Uganda Malaysia United States
and services are produced
Malawi Argentina Denmark
within the home by family
Burundi Indonesia Switzerland
members for their own use
Sudan Cambodia Australia
rather than for sale in the
Central African Bangladesh South Korea
marketplace.
Republic
2. GNP may be understated
Myanmar Nepal Singapore
for developing countries,
Mali Bhutan Italy
where household size is
substantially larger than that in
developed countries, resulting in
• Economies in Transition: implying a household scale economies.
passage to the market; used by 26 3. GNP may be overstated for
countries in East-Central Europe and developed countries, because a
the former Soviet Union who all low and number of items included in their
middle-income countries (except national incomes are
Slovenia which is high-income) intermediate goods, reflecting the
costs of producing or guarding
• Least Developed: 25 countries with a income.
low per capita income, low share of
manufacturing in gross product, and low
adult literacy rates (UN, 1971)
 4. The exchange rate used to - Human development - “a process of
convert GNP in local currency enlarging people’s choices. The
units into U.S. dollars is based on most critical ones are to lead a long
the relative prices of and healthy life, to be educated and
internationally traded goods. enjoy a decent standard of living”
5. GNP is overstated for countries - 3 indicators
(usually developing countries) - longevity (measured by life
where the price of foreign expectancy as proxy for health and
exchange is less than a market- nutrition)
clearing price. - education (measured by adult
6. Comparison-resistant services, literacy and combined primary,
like health care, education, and secondary and tertiary enrollment
government administration, ratio)
which comprise more than 10 - living standards(measured by GDP
percent of most countries’ per capita)
expenditure, distort cross-
national, GNP comparisons.
HDI TOP 10 HDI BOTTOM 10
Switzerland South Sudan
Norway Chad
MEASURES FOR DEVELOPMENT Iceland Niger
Hong Kong Central African Republic
PHYSICAL QUALITY OF LIFE INDEX
Australia Burundi
(PQLI)
Denmark Mali
- invented by M.D. Morris in 1979 Sweden Mozambique
- 3 indicators Ireland Burkina Faso
- infant mortality rate Germany Yemen
- life expectancy (at age one, to not Netherlands Guinea
overlap with infant mortality)
- adult literacy rate, the ability to
read and write in any language (in The HDI was created to emphasize that
percentage). people and their capabilities should be
- 0 – 100 scale the ultimate criteria for assessing the
- 0 - worst performance development of a country, not economic
- 100 - best performance growth alone.

HUMAN DEVELOPMENT INDEX “BASIC-NEEDS” ATTAINMENT

(HDI) APPROACH

- Lord Meghnad Desai and Nobel - attention from maximizing output

Laureate Amartya Sen to minimizing poverty. The stress is
not only on how much is being
 produced but also on what is being The Capability Approach is defined by
produced, in what ways, for whom, its focus on the moral significance of
and with what impact. individuals’ capability of achieving the
- 6 indicators kind of lives they have reason to value.
- Food: Calorie supply per head, or
calorie supply as a percentage of MDGs and SDGs
requirements; protein Millennium, Development Goals (2000-
- Education: Literacy rates, primary 2015) Sustainable Development Goals
enrolment (as a percentage of the (2015-2030)
population aged 5–14)
- Health: Life expectancy at birth
- Sanitation: Infant mortality (per
17 Sustainable Development Goals
thousand births), percentage of the
population with access to sanitation 1. No poverty
facilities 2. Zero hunger (No hunger)
- Water supply: Infant mortality (per
3. Good health and well-being
thousand births), percentage of the 4. Quality education
population with access to potable 5. Gender equality
water 6. Clean water and sanitation
- Housing: None (as existing 7. Affordable and clean energy
measures, such as people per room, 8. Decent work and economic
do not satisfactorily indicate the growth
quality of housing) 9. Industry, Innovation and
SEN’S CAPABILITY APPROACH Infrastructure
10. Reduced inequality
- The Nobel laureate Amartya Sen’s 11. Sustainable cities and
(1999) argues that freedom (not communities
development) is the ultimate goal of 12. Responsible consumption and
economic life as well as the most production
efficient means of realizing general 13. Climate action
welfare. 14. Life below water
- “Unfreedoms” include hunger, 15. Life on land
famine, ignorance, an 16. Peace, justice and strong
unsustainable economic life, institutions
unemployment, barriers to 17. Partnership for the goals
economic fulfilment by women or Happiness and Wellness as measures of
minority communities, premature socio-economic development (welfare
death, violation of political freedom economics)
and basic liberty, threats to the Gross National Happiness Index: Gross
environment, and little access to National Happiness is a term coined by
health, sanitation, or clean water.
His Majesty the Fourth King of Bhutan,
Jigme Singye Wangchuck in the 1972.
The concept implies that sustainable
development should take a holistic
approach towards notions of progress
and give equal importance to non-
economic aspects of wellbeing.
The Gross National Happiness Index is
a single number index developed from
33 indicators categorized under nine
domains.
The GNH Index is constructed based
upon a robust multidimensional
methodology known as the Alkire-Foster
method.
Happiness and Wellness measures of
socio-economic development
World Happiness Report: Started in
2011 following the passing by UN
General Assembly of the Bhutanese
Resolution, annual reports are published
to give evidence on the emerging science
of happiness.
Happy Planet Index: similar to WHR,
the HPI measures sustainable wellbeing
across different countries. It combines
four elements to show how efficiently
residents of different country use
environmental resources to lead long,
happy lives.
Satisfaction of Life index: was created in
2007 by Adrian G. White, an analytic
social psychologist at the University of
Leicester in UK.
CHARACTERISTICS OF
DEVELOPMENT
Extended family - including two or more
nuclear families of parent(s) and
children, is a common institution in
developing countries.
Peasant Agricultural Societies - Most
low-income countries are predominantly
peasant agricultural societies. Peasants
are rural cultivators. They do not run a
business enterprise as do farmers in the
United States but, rather, a household
whose main concern is survival.
Sustainable development - refers to
maintaining the productivity of natural,
produced, and human assets (or wealth)
over time.
A country’s capital stock - is the sum
total of previous gross capital (including
human capital) investments minus
physical capital consumption (or
depreciation), natural capital depletion,
and environmental capital damage.
Dual Economies - all low-income
countries and many middle-income
countries. These economies have a
traditional, peasant, agricultural sector,
producing primarily for family or village
subsistence.
Democratization - includes the growth
of civil society.
. Social capital - includes tools and
training that, similar to other forms of
capital, enhance individual productivity.
“refers to features of social organization
such as networks, norms, and social
trust that facilitate coordination and
cooperation for mutual benefit
Rent seeking - unproductive activity to
obtain private benefit from public action
and resources. This activity ranges from
legal activity, such as lobbying and
advertising, to illegal bribes or coercion
(ibid.).
Common Characteristics of Developing
Countries
1. Low Per Capita Income
2. High Population Growth Rate
3. High Dependence on Agriculture
4. Low Levels of Capital Formation
5. Lower Levels of Human Capital
Diversities among Developing World
Despite commonalities, no two
developing countries are 100% the same.
Developing countries display notable
diversity in a number of areas:
1. Resource Endowment - endowment
in terms of physical resources can
vary immensely between developing
countries
-Nigeria and Angola, the two
largest oil producers in the
SubSaharan region were
characterized by autocratic rule of
one form or another for most of
their post-independence
histories. [ie., in Angola, Jose
Eduardo dos Santos ruled for 38
years.]
2. Historical Background - It could be
argued that countries gained some
positive outcomes from colonization,
such as Singapore and Hong Kong;
while some countries did not, such as
Vietnam and Angola.
- Colonized or not, there is no doubt that
whatever developing countries we
consider, there will be marked historical
differences that will set the countries
apart from each other.
3. Geographic and Demographic Factors
- Geographical location also affects a
country’s access to markets. All the great
empires have been based around trade
routes, and these are almost always
maritime.
- A country’s geographical location and
subsequently its climate, plays a role in
development. It is argued that countries
are in the tropics are least developed
because where the climate is hot, the
land is less fertile, water is more scarce,
and diseases tend to flourish.
4. Religion & Ethnic Breakdown - A
2019 research showed that people in the
emerging economies tend to be more
religious, more likely to consider
religion to be important in their lives,
more likely to say that belief in God is
necessary to be moral than people who
live in advanced economies
5. Industrial Structure - As countries
develop, they go through a process of
‘structural transformation: first they
went through a period of
industrialization as the economic center
of gravity shifted from agriculture to
manufacturing, and then went through a
period of deindustrialization, shifting
the weight from manufacturing to
services.
- Generally, as countries develop, the
share of the total output in their
economy generated by agriculture
declines while the share generated by
industry and related activities increases.
This is called structural transformation.
6. Social Structure - Typically, in the
early stages of development, countries
have most of their population living in
rural settings. As countries develop,
more of their people move to urban
areas. Often, a few large cities or even
one city will comprise a very substantial
share of their total population. Major
social dislocations can result, as the
cities may not be capable of handling the
inflow of so many urban migrants.
• A country's level of development is also
indicated by social conditions. Countries
in the earlier stages of development
typically have lower levels of education.
lower access to health services and
sanitation, shorter life expectancy, and
higher levels of disease.
• Levels of female participation in the
workplace are also an indicator of social
conditions. Cultural factors are probably
the major determinant of female
employment levels where higher levels
of female participation in the workforce
may be an indicator of social flexibility
or a lessening of the traditional roles.
7. Political Structure
Developing countries have different
political structures from each other
Democracies – US, Philippines, Brazil,
Mexico Monarchies – Brunei & Tobago
Military Rule - Myanmar & Pakistan
Single Party Rule – China, Cuba & Syria
Transitional Political Systems – country
in transition because of war & conflicts
(Somalia)
• Democracy is a process and
development is the outcome: Through
political stability, establishment and
enforcement of rules that protect
property rights, promotion of education,
ability to promote private capital and
reduction of inequality, positive
economic and social development are
achieved.
• From different studies it is found that
democracies experience more stable and
steady growth patterns than autocracies
over time. It is argued that democracy is
the most important vehicle for economic
development, and economic
development in turn is necessary pre-
condition for survival of democracy.
THEORIES OF ECONOMIC
DEVELOPMENT
Theory - is a systematic explanation of
interrelationships among economic
variables, and its purpose is to explain
causal relationships among these
variables.
- provide a basis for policy
Karl Marx - 19th century
- early capitalist development
- -Western Europe and
the United States
Walter Rostow’s mode - alternative to
Marx’s theory of modern history
Lewis–Fei–Ranis model - views the
accumulation of capital by profits from
the industrial capitalist sector hiring an
unlimited supply of surplus labor from
agriculture as the impetus to economic
growth in LDCs.
Paul Baran’s coalitions model – draws
on Marx’s historical dynamics and
Lenin’s theory of imperialism to analyze
economic backwardness in Asia, Africa,
and Latin America.
Neoclassicism - an economic theory and
policy that stressed freedom from the
state’s economic restraint
World Bank and International Monetary
Fund - Neoclassical economists
dominate the two most powerful
international financial agencies in
developing countries.
Formal growth theory - emphasizes the
importance of capital formation for
economic growth
The Classical Theory of Economic
Stagnation
- pessimistic about the possibility of
sustained economic growth
Adam Smith, Thomas R. Malthus,
Ricardo, and John Stuart Mill -
classical economists, influenced by
Newtonian physics
Adam Smith - argued that in a
competitive economy, with no
collusion or monopoly, each
 individual, by acting in his or her
own interest, promoted the public
interest.
Invisible hand - behind the self-
interest of capitalists, merchants,
landlords, and workers, directing
their actions toward maximum
economic growth
Laissez-faire – advocated by Smith
The classical model also took into
account
1. the use of paper money
2. the development of institutions to
supply it in appropriate
quantities
3. capital accumulation based on
output in excess of wages
4. division of labor (limited
primarily by the size of the
market)
Law of diminishing returns - major tenet
of David Ricardo, referring to
successively lower extra outputs from
adding an equal extra input to fixed land
Iron law of wages - total wages increase
in proportion to the labor force.
CRITIQUE:
David Ricardo - he underestimated the
impact of technological advance in
offsetting diminishing returns.
Marx’s Historical Materialism
Western Europe - Karl Marx’s views
were shaped by radical changes
Karl Marx - opposed the prevailing
philosophy and political economy,
especially the views of utopian socialists
and classical economists, in favor of a
worldview called historical materialism.
- wanted to replace the unhistorical
approach of the classicists with a
historical dialectic
Feudalism is undercut by.
1. the migration of serfs to the town
2. factory competition with handicraft
and manorial production
3. expanded transport, trade,
discovery, and new international
markets on behalf of the new
business class
4. the accompanying rise of nation-
states
Friedrich Engels – Collaborator of Karl
Marx. he finished Marx’s uncompleted
manuscripts, interpreted Marxism, and
provided its intellectual and
organizational leadership
CRITIQUE:
Capitalism - Marx’s main analysis
Even his analysis of capitalism, and the
transition to socialism, had a number of
flaws
Rostow’s Stages of Economic
Growth
Walter W. Rostow – proposed stages of
economic growth
Five stages:
1. the traditional society
 2. the preconditions for takeoff SUPPLY SIDE
3. the takeoff
4. the drive to maturity As countries grow richer, they save
5. the age of high mass consumption more, creating a virtuous circle in
which high savings rates lead to faster
PRECONDITIONS STAGE growth

1. increased transport investment to DEMAND SIDE

enlarge the market and
production specialization. Lack of investment means low
2. a revolution in agriculture, so that productivity and continued low
a growing urban population can income. A country is poor because it
be fed was previously too poor to provide the
3. an expansion of imports, market to spur investment.
including capital, financed Insufficient Saving: A Critique
perhaps by exporting some
natural resources. The vicious circle theory seems
plausible to those Westerners who
TAKEOFF - central historical stage imagine that the entire population of
- a decisive expansion occurring over the third world is poor and hungry.
20 to 30 years, which radically SMALL MARKETS: A CRITIQUE
transforms a country’s economy
and society He argues that even a fairly small
improvement in productivity for any of
DRIVE TO MATURITY these commodities would capture a
- a period of growth that is regular, sizable market.
expected, and self-sustained, Balanced Versus Unbalanced
follows takeoff. Growth
AGE OF HIGH MASS CONSUMPTION - A major development debate from
the 1940s through the 1960s
- other societies may choose a
welfare state or international BALANCED GROWTH
military and political power. - The synchronized application of
capital to a wide range of different
Vicious Circle Theory industries
- indicates that poverty perpetuates BIG PUSH THESIS
itself in mutually reinforcing - Support by those advocating this
vicious circles on both the supply synchronized application of capital
and demand sides. to all major sectors
 Indivisibilities - the factors that
contribute to economic growth,
such as demand and investment in
infrastructure, do not increase
smoothly but are subject to sizable
jumps
Indivisibility in infrastructure -
major indivisibility
Indivisibility in demand - This
indivisibility arises from the
interdependence of investment
decisions; that is, a prospective
investor is uncertain whether the
output from his or her investment
project will find a market.
Coordination Failure: The O-
Ring Theory of Economic
Development
- Michael Kremer (1993) uses the
1986 space shuttle Challenger as a
metaphor for coordinating
production in “The O-Ring Theory
of Economic Development.”
Kremer - proposes a production
function in which “production
consists of many tasks, [either
simultaneous or sequential], all of
which must be successfully
completed for the product to have
full value.
O ring theory - can explain why rich
countries specialize in more complicated
products, have larger firms, and have
astonishingly higher worker productivity
and average incomes than poor
countries
The Lewis–Fei–Ranis Model
- explain how economic growth gets
started in a less-developed country
with a traditional agricultural sector
and an industrial capitalist sector.
- economic growth occurs because of
the increase in the size of the
industrial sector, which
accumulates capital, relative to the
subsistence agricultural sectors,
which amasses no capital at all.
Baran’s Neo-Marxist Thesis
as capitalism took hold, the bourgeoisie
(business and middle classes) in LDCs,
lacking the strength to spearhead
thorough institutional change for major
capital accumulation, would have to
seek allies among other classes.
CRITIQUE: the theory fails to examine a
number of economic and political
conflicts of interest.
Dependency Theory
Celso Furtado - (1970, 1968), a Brazilian
economist with the U.N. Economic
Committee for Latin America, was an
early contributor to the Spanish and
Portugues literature
Peripheral capitalism - a capitalism
unable to generate innovations and
dependent for transformation upon
decisions from the outside.

The Neoclassical
Counterrevolution
“Liberal” here, and among Europeans,
refers to economic liberalism (the
ideology of Adam Smith, Milton
Friedman, and Ludwig von Hayek)
Neoclassicism’s policies are reflected in
the Washington consensus, a term
coined by Washington’s Institute of
International Economics’ economist
John Williamson.
The following are the components of the
neoclassical Washington consensus:
1. Price decontrol.
2. Fiscal discipline.
3. Public expenditure priorities
4. Tax reform
5. Financial liberalization
6. Exchange rates
7. Trade liberalization
8. Domestic savings
9. Foreign direct investment
10. Privatization
11. Deregulation
12. Property rights
The Neoclassical Growth Theory
The MIT economist Robert Solow won a
Nobel Prize for his formulation of this
theory.
CRITIQUE: But although Mankiw et al.
salvaged the neoclassical growth model,
it still has several weaknesses, including
the assumptions that markets are
perfectly competitive (essential for
computing the marginal products that
are components of α, β, and the human
capital exponent), that technological
change is exogenous (explained outside
the model), and that the level of
technology is the same throughout the
world.
The New (Endogenous) Growth
Theory
The University of Chicago’s Robert
Lucas finds that international wage
differences and migration are difficult to
reconcile with neoclassical theory.
For new growth theorists such as
Romer, innovation or technical change,
the embodiment in production of some
new idea or invention that enhances
capital and labor productivity, is the
engine of growth.
CONLUSION:
David Ricardo - feared eventual
stagnation from slow capital
accumulation, and diminishing returns
from population growth on fixed natural
resources.
Marx saw history dialectically – as
progressing from feudalism to
capitalism to socialism on the basis of
class conflict.
Rostow’s economic model has five
stages; its central historical stage is the
takeoff, a decisive period of increased
investment, rapid growth in leading
sectors, and institutional change during
which the major blocks to steady growth
are finally overcome.
The vicious circle theory contends that a
country is poor because its income is too
low to encourage potential investors and
generate adequate saving.
Balanced growth advocates argue that a
big push is needed to begin economic
development because of indivisibilities
in demand and infrastructure.
Hirschman supports a deliberate
unbalancing of the economy to facilitate
economic decision making and
investment.
Kremer’s O-ring theory of development
emphasizes that production consists of
many tasks, all of which must be
successfully completed for the product
to have full value and to prevent
coordination failure.
For Lewis, economic growth takes place
as a result of growth in the size of the
industrial sector, which saves, relative to
the subsistence agricultural sector,
which saves nothing.
Fei and Ranis, too, believe that the
capitalist wage will increase before
surplus labor is absorbed, unless
agriculture and industry can achieve
balanced growth.
For Baran, the coalition of the
bourgeoisie and landed classes, helped
by foreign capitalist governments, is
incapable of undertaking the capital
formation and political reform required
for rapid economic growth and
alleviation of mass poverty.
Furtado’s dependency theory contends
that increased productivity and new
consumption patterns resulting from
capitalism in the peripheral countries of
Asia, Africa, and Latin America benefit a
small ruling class and its allies.
The neoclassical counterrevolution to
Marxian and dependency theory
emphasized reliance on the market,
private initiative, and deregulation in
LDCs.
The new growth theory, however, does
no better than an enhanced neoclassical
model in measuring the sources of
economic growth.
GROUP REPORTS
Natural Resources and Economic
development
RELATIONSHIP:
Natural resources are simply the
fundamental raw material that supplies
basic substances to be manufactured.
There will be technically nothing to
depend on if there is no presence of
natural resources.
Positive Impact of Natural Resources -
Natural resources, is the fundamental
raw materials that fuel our economic
activity. Abundant natural resources,
divided into non-renewable, such as
fossil fuels, and renewable, like
ecosystems, natural resources have been
a driving force behind human
prosperity. This abundance of resources
has historically led to economic
expansion and development.
Negative Impact of Natural Resources -
The mismanagement of resource wealth
can result in a decline in GDP, as seen in
the case of Iran, where a 1% increase in
natural resources led to a 0.47% decline
in GDP. (Ahmed et al. 2016) Countries
with abundant natural resources may
find themselves caught in a cycle of
resource dependence, hindering the
development of other sectors of the
economy.
CONTEMPORARY ISSUES:
4 Biggest Environmental Issues in the
Philippines in 2023
1. Air Pollution - Air pollution in the
Philippines is also caused by
vehicular emissions, particularly
in areas like Metro Manila. In
2022, other recorded surges in air
pollution outside Metro Manila
include the San Fernando City
Station in Pampanga, Antipolo
City Station, Biñan City Station,
Puerto Princesa City Station, and
the Davao City Station.
2. Plastic Pollution - The Philippines
faces unsustainable plastic
consumption due to an inefficient
recycling system.
3. Marine Pollution - As the third-
largest contributor to marine
plastics, marine pollution
accounts for one of the most
pressing environmental issues in
the Philippines.
4. Sea Level Rise - Flood mitigation
may be crucial to the Philippines’
strategy on sea level rise,
however, there are concerns that
the government’s approach fails
to consider its long-term threat.
For the most part, this is due to
solutions such as the decision to
wall off the coast only partially.
ARGUMENTS:
Natural resources are critical for
production processes, living and social
development (Bansal et al., 2021,
Chopra et al., 2022). They represent an
essential part of the wealth of a country
and should be managed sustainably to
determine long-term economic
development (World Bank, 2011).
Natural resources are essential factors in
food patterns in the economy, and food
patterns can influence the economy. In
this way, too, natural resources can
impact economic growth (Gerbens-
Leenes et al., 2010).
Based on Maslow's theory, once we've
met our more basic human needs, we
can reach the highest level of self-
awareness, self-realization, personal
growth, and ultimately transcend into
self-actualized people. Meg Lyons, PCC,
2021
"The World Bank considers that
"countries rich in natural resources have
an advantage over others in financing
economic development. Natural
resource rents can be effectively
deployed for this purpose, but it is
important to reinvest such rents in other
types of capital, notably human capital Philippine sugar and abaca (hemp) grew
and institutions" (Portugal, 2016) apace, and the volume of exports to
Europe expanded even further after the
History and Economic completion of the Suez Canal in 1869.
Development
The growth of commercial agriculture
Modernization - Transformation of the resulted in the appearance of a new
social, political, and economic class. Alongside the landholdings of the
organizations in a society with a church and the rice estates of the pre-
rationalist and positive spirit. Spanish nobility there arose haciendas
Westernization – sub-process of of coffee, hemp, and sugar, often the
modernization property of enterprising Chinese-
Filipino mestizos. Some of the families
Industrialization - is the process by that gained prominence in the 19th
which a country's economy shifts from century have continued to play an
being primarily dependent on important role in Philippine economics
manufacturing to agriculture. and politics.

Urbanization - refers to the process of Geography and Economic

transitioning from agriculture to other Development
urban pursuits such as trade,
manufacture, industry, and Geography - the study of the diverse
management, as well as related changes environments, places, and spaces of
in behavior patterns. Earth’s surface and their interactions.

CONTEMPORARY ISSUES: The Philippines is located in Southeast

WWII - Economic development was
initiated from the United States after
World War II during the time of
President Harry Truman Inaugural
speech.
It focuses on addressing the basic needs
of human as well as concentration of
mostly spending in healthcare and
education.
Spanish Colonization –
The last galleon arrived in Manila in
1815, and by the mid-1830s Manila was
open to foreign merchants almost
without restriction. The demand for
Asia, in the western Pacific Ocean. It is
an archipelago of over 7,600 islands,
making it the tenth largest island
country in the world.
The Philippines is rich in mineral
resources, including gold, copper, nickel,
chromite, iron ore, lead, zinc, and silver.
Marine resources
Forest resources
Water resources
Climate change and natural disasters are
having a devastating impact on the
Philippine economy
Climate change and natural disasters 5. Political Stability and Governance
can also damage infrastructure, which is 6. Location: A Crucial Factor in
essential for economic growth. For International Trade
example, in 2011, Typhoon Haiyan
destroyed or damaged over 600 bridges Understanding the relationship
in the Philippines. between geography and the economy
can help policymakers make
Agriculture: The Philippines is a major informed decisions to stimulate
agricultural producer, with crops such as economic growth.
rice, corn, coconut, and sugarcane.
CONTEMPORARY ISSUES:
Mining: The Philippines is also rich in
mineral resources, such as gold, copper, - 2011, Typhoon Haiyan destroyed or
nickel, and chromite. damaged over 600 bridges in the
Philippines.
Tourism: The Philippines is a popular - 2019, a drought caused over $1
tourist destination due to its beautiful billion in damage to the Philippine
beaches, lush forests, and diverse agricultural sector
culture. - 2018, Typhoon Mangkhut caused
over $1 billion in damage to
Renewable energy: The Philippines has tourism infrastructure in the
a significant potential for developing Philippines
renewable energy sources, such as solar, - The issue between China and
wind, and geothermal power.
Philippines about South China Sea
RELATIONSHIP: that affects their relationship.
- Suspension of classes due to smog
It affects the availability of resources, of Taal Volcano
transportation networks, and access to
markets. It also influences the type of
industries that can be developed in a
region and how those industries interact
Religion and Economic
with each other.
Development
How Geography Affects Economy of The
RELATIONSHIP:
Region?
Religious liberty contributes to better
1. The Impact of Natural Resources:
business and economic outcomes.
Backbone of Economic
According to Brian Grim of Georgetown
Development
University and Greg Clark and Robert
2. Climate: A Determinant of
Edward Snyder of Bringham Young
Economic Activity
University, countries with lower levels of
3. The Role of Infrastructure
religious hostilities and government
4. The Impact of Demographics
restrictions on religion ranked stronger based activities to manufacturing and
in global competitiveness. mechanized production.

Religious freedom also contributed to Industrialization is usually associated

peace and stability) and helped lower with a greater average income and
corruption)—two important ingredients improved living standards.
for economic development.
RELATIONSHIP:
CONTEMPORARY ISSUES:
 Economic Stability
- Socorro Cult  Increased Employment
- Religious war (Islam vs  Opportunities
Christianity)  Rise in Agricultural
ARGUMENTS:  Production

Religion affects economic decision- CONTEMPORAR ISSUES:

making by establishing social standards
 Pollution and Other
and shaping individual personalities.
Environmental Problems
Firms located in communities with
 Rapid Urbanization
higher religiosity tend to adhere to
 Increased Income Inequality
ethical norms that are conducive to a
stable economy.  Job Dissatisfaction

Barro and McCleary suggest that higher ARGUMENTS

rates of religious beliefs stimulate
 Diversification of the Economy
growth because they help to sustain
 Quality of Life Improvements
aspects of individual behavior that
 Job Creation
enhance productivity. They believe that
higher church attendance depresses  Increased Exports
growth because it signifies a greater use
of resources by the religion sector.
However, that suppression of growth is Social Structures and Economic
tempered by the extent to which church Development
attendance leads to greater religious
Social structure - refers to the
beliefs, which in turn encourages
fundamental organization of individuals
economic growth.
within a society, encompassing a wide
Industrialization and Economic array of elements that shape how people
Development interact and function within their
community.
Industrialization is a process in which
the economy and society move primarily RELATIONSHIP:
from agriculture and manual labor-
The Elements of Social Structure that
Influence Economic Development
1. Income Inequality
2. Gender Roles
3. Social Mobility
CONTEMPORARY ISSUES:
 The presence of gender gaps in the
Philippines can be linked to the
preservation of stereotypes
stemming from societal norms,
traditions, and cultural beliefs that
advise women's roles as primarily
domestic and focused on household
management. However, as time
passes, this stereotype is gradually
losing its validity due to the
inequality of putting barriers to equal
treatment for women compared to
men, who engage in paid work and
receive benefits and opportunities.
 Female labor force involvement can
help decrease the country's rising
poverty rate as the country's
population expands. According to the
World Bank Philippines, female
labor force participation ages 15 and
above has remained relatively steady
between 1990 to 2022, with a lower
rate than males. Female workers
improved in cases of vulnerable
employment from 1991 to 2021 as a
result of better chances provided by
women without constraints or
barriers, but they remain below
males.
ARGUMENTS:
1. Social networks affect the flow
and the quality of information.
2. Social networks are an important
source of reward and
punishment, since these are often
magnified in their impact when
coming from others personally
known.
3. Trust, by which I mean the
confidence that others will do the
“right” thing despite a clear
balance of incentives to the
contrary, emerges, if it does, in
the context of a social network.
Political Institutions and
Economic Development
Different types of Political Structures
1. Monarchy- a political structure in
which power resides in a single
family that rules from one generation
to the next generation enjoying a
power of traditional authority
2. Oligarchy- The term oligarch is
derived from “oligarchy,” which
means government by the few.
“Oligarch” refers to an individual
who are in extreme wealth or
significant business interest which
drives their political power.
3. Authoritarianism- a form of
government embodying strong
central power and limited political
freedoms.
4. Democracy- means "rule by the
people," empowers individuals to
exercise political control over the
form and functions of their
government.
Political Structure and Economic
Development
Monarchy
Constitutional Monarchy - a form in
which they exercise their authority in
accordance with a constitution and is
not alone in deciding.
Absolute Monarchy - in absolute
monarchy, the king or queen has
absolute power. It is a form in which the
monarch rules in their own right.
Currently, 43 nations in the world have a
monarchy. 15 commonwealth nations
share Queen Elizabeth II as their head of
state.
How can a constitutional monarchy
contribute to economic growth and
development?
- It’s one of the most stable forms of
government
- Reduce the levels of political divide in a
country.
- Possible to reduce or eliminate
corruption within the boundaries of a
monarchy.
- Governments can move faster when
implementing decisions within a
monarchy.
- It works to support a nation’s cultural
identity.
- It can apply more money toward the
economy and their people.
Authoritarianism
Due to its nature of governance, China is
reported to be an authoritarian country.
Authoritarianism is a form of
government embodying strong central
power and limited political freedoms.
Democracy
The Philippines, also known for being
one of the countries with a democratic
government. Democracy, which means
"rule by the people," empowers
individuals to exercise political control
over the form and functions of their
government.
Throughout history, more types of
democracy have been identified.
a. Direct democracy- wherein all laws
and public policy decisions are made
directly by a majority vote of the people,
rather than by the votes of their elected
representatives.
b. Indirect democracy- a system of
government in which all eligible citizens
elect officials to pass laws and formulate
public policy on their behalf.
c. Participatory democracy- the people
vote directly on policy while their elected
representatives are responsible for
implementing those policies.
d. Liberal democracy- emphasizes the
principles of classical liberalism—an
ideology advocating the protection of
individual civil liberties and economic
freedom by limiting the power of the It has been already demonstrated that
government. economic institutions (such as property
rights, regulatory institutions,
e. Parliamentary democracy- people institutions for macroeconomic
directly elect representatives to a stabilization, institutions for social
legislative parliament then the insurance, institutions for conflict
parliament directly represents the management, etc.) are the major source
people in making necessary laws and of economic growth across countries
policy decisions for the country. (Rodrik 2007).
f. Pluralist democracy- individuals work Economic institutions are also
through groups formed around common important for resource distribution.
causes hoping to win the support of
elected leaders. CONTEMPORARY ISSUES:

g. Constitutional democracy- based on - Corruption

popular sovereignty and a rule of law in - Allocation of goods and services
which the structures, powers, and limits - The level of investments for human
of government are established by a capital, physical capital, and
constitution. technology formation.

How can a constitutional democracy

contribute to economic growth and
development?

- It gives people a chance to become

personally involved with their
government.

- It works to reduce issues with

exploitation.

- It encourages equality in a positive

way.=

- More consistency is available thus it

grows faster economically.

- It protects the fundamental human

rights of people.

- It allows for peaceful change of

government.

RELATIONSHIP:
1. It is FALSE that Economic growth is
equal to Economic Development
2. It is FALSE that Economic growth
is necessary and sufficient to eradicate
most of absolute
poverty.
3. It is TRUE Income level or GDP is
used as an indicator of economic
growth , but is not a sufficient
indicator of economic development.
4. According to the UN, absolute or
extreme poverty refers to when a
person or household income is
less than $ 2.15 /day.
5. A certain amount of goods and
services is necessary for a minimum
standard of living. This is called Basic
Needs.
6. The physical quality of life index
(PQLI) is an aggregation of widely
available indicators of basic human
needs. Per capita income is not a
component of the PQL
7. There are seventeen Sustainable
Development Goals.
17 goals ensure that the world is
becoming suitable for future
generations.
12. 193 states, all members of the UN,
have signed the Agenda 2030. But
there are more states in
the world, their status is
controversial, e.g. Kosovo is not
recognized by the UN as an
independent state.
13. The UN wants to move towards a
peaceful world. But what important
aspect of the SDGs remains untouched
is Arms exports.
14. Which actors the Agenda 2030 has
in mind? - all together such as
States, municipalities,
universities, institutions, civil
society organizations, private
sector
15. The Agenda 2030 emphasizes the
goal of sustainable economic growth.
What goal does not conflict with this? -
All such as Gender equality,
Nature and resource
conservation, eliminate
inequality

8. There are eight Millennium 16. Which of these impacts are NOT
Development Goals associated with sustainable
development? -wastage of
9. HDI stands for Human
resources
Development Index.
17. At many schools, pupils can be
10. The economic growth in the first
trained as conflict mediators. Their
quarter of 2023 is reported as 5.8%.
commitment contributes to
11. Agenda 2030 is regarded as the
global treaty of the future because the
the implementation of which Agenda
2030 goal? -SDG 16
18. Why do the SDGs need sub-targets?
-There the main goals are
concretized.
19. How many sub-targets are there for
the 17 goals? -169
20. Who monitors the achievement of
the goals? - an UN commission
evaluates implementation on the
basis of an annual SDG progress
report by the UN Secretary-
General
21. As economic development
proceeds, income inequality frequently
follows an inverted U-shaped
curve.
22. It is FALSE that in the past 200
years, especially in the first half of the
20th century, most of Africa and Asia
were Western-dominated colonies.
Even countries which were never
Western colonies experienced Western
penetration and hegemony. And
although most of Latin America
became independent in the 19th
century, it has been subject to British
and U.S. economic and political
suzerainty since then. As a result,
during the century or two of rapid
economic growth in the Western
countries, most LDCs have the political
independence essential for economic
modernization.
23. As GNP per capita increases, the
output and labor force share in
agriculture decreases, while that in
industry and services increases.
24. Generally in LDCs, most
manufacturing employment, although
not output, is in the informal sector
and production is labor-intensive.
25. A country’s Capital Stock is the
sum total of previous gross capital
investments minus physical capital
consumption (or depreciation), natural
capital depletion, and environmental
capital damage.
26. Dual economies have a traditional,
peasant, agricultural sector, producing
primarily for family or village
subsistence.
27. It is TRUE that the problem in
LDCs is not population density but low
productivity combined with rapid
population growth.
28. Although literacy rates in LDCs are
low compared to those of Developed
Countries, LDC rates have increased
steadily since 1950 when a majority of
LDC adults were illiterate, and
substantially
since 1900.
29. As economic development occurs,
the structure of the workforce changes.
Capital and skilled labor are
substituted for unskilled labor.
30. As economic development takes
place and the social structure becomes
more fluid, the size of the middle
class increases.
31. It is TRUE that the protection of
property rights and the limits on the
power of the executive are

both highly correlated with income per

capita.

32. Social Capital includes tools and

training that, similar to other forms of
capital, enhance individual
productivity.

33. Rent-seeking is an unproductive

activity to obtain private benefit from
public action and resources. This
activity ranges from legal activity, such
as lobbying and advertising, to illegal
bribes or coercion.

34. Human Rights Watch reports that

toward the end of a 27-year war, US$
4 bil of oil revenue (or roughly 10% of
Angola’s GDP) disappeared from
Angolan government accounts due to
corruption and mismanagement.

35. Le’once Ndikimana (1998:30)

indicates that the civil war and
genocide in Burundi in the mid-1990s
contributed to production disruptions
that have reduced GDP per capita
below its 1978 level. This political and
economic collapse was the result of a
massive institutional failure tha
prevented “economizing, reducing risk
and uncertainty, and distributing
wealth”.

If any of you lacks wisdom, you should ask

God, who gives generously to all without
finding fault, and it will be given to you.

James 1:5