THE PHILIPPINE

ECONOMY: HOW
DOES AN
ECONOMY GROW
CHAPTER 2
 OBJECTIVES
01 Orient people on the status of
Philippine Economy 03 Explain how a specific economy
grows

Identify factors that greatly

02 affects the business
establishments in our country
04 Discuss how entrepreneurship
could help improve the quality
of life
INTRODUCTION
- This chapter provides an overview of the
Philippine economy.
- It explains the history of economic development
in the country.
- It discusses the factors that influence the growth
of the economy.
- The chapter promotes entrepreneurship as a
prestigious and financially rewarding career
option.
- It highlights the potential of entrepreneurship
compared to traditional professions like law,
medicine, engineering, and education.
 THE PHILIPPINE ECONOMY: HOW
DOES AN ECONOMY GROW
The Philippine Economy
1. The national economy consists of businesses,
households, and the government.
2. Economic freedoms include free competition,
choice of investments, and prices determined by
supply and demand.
3. Knowledge, skills, values, and the quality of
people are key determinants of economic growth.
 THE PHILIPPINE ECONOMY: HOW
DOES AN ECONOMY GROW
4. The Philippines had inhabitants 250,000 to
300,000 years ago who had a primitive
economic existence and were later joined by
more civilized migrants.
5. The Philippines was ruled by the United States,
Japan, and Spain, with the Chinese dominating
retail trade even before the Spanish period. Each
colonial power influenced the economy
differently.
 THE PHILIPPINE ECONOMY: HOW
DOES AN ECONOMY GROW
6. The Philippines gained political independence in
1946 but not economic independence from the US.
President Carlos Garcia's import control program
aided Filipino entrepreneurs temporarily, but US
domination persisted.
7. During Martial rule, the dictator's associates
controlled Philippine business, but democracy was
restored under President Corazon Aquino. Economic
development was entrusted to the private business
sector, and subsequent administrations continued
some of Aquino's programs.
 THE PHILIPPINE ECONOMY: HOW
DOES AN ECONOMY GROW

8. The national government promotes

entrepreneurship to alleviate poverty, offering
financial and technical assistance programs for the
poor interested in starting micro-businesses. Non-
governmental organizations (NGOs) are also
involved in entrepreneurial initiatives for poverty
reduction.
 THE ROLE OF ENTREPRENEURSHIP
IN ECONOMIC DEVELOPMENT
1. Entrepreneurship offers an economical and faster method
of distributing goods and services that accelerates economic
development.
2. Entrepreneurship is capable of generating more jobs,
income, goods, and services.
3. Entrepreneurship improves the quality of life.
4. Entrepreneurship contributes to more equitable
distribution of Income, and therefore, eases social unrest.
 THE ROLE OF ENTREPRENEURSHIP
IN ECONOMIC DEVELOPMENT
5. Entrepreneurship utilizes and mobilizes resources to make
the country productive.
6. Entrepreneurship brings social benefits through the
government.
7. Entrepreneurship has several definitions.
8. Economic development is a process, while economic
growth is a product of economic development.
 THE ROLE OF ENTREPRENEURSHIP
IN ECONOMIC DEVELOPMENT
9. Development and Growth Theories
a. Laissez-Faire Theory explains that the government should
not interfere in economic activities.
b.Keynesian Theory explains that the government should play
the key role in economic development.
c.Ricardian Theory. This is the theory of David Ricardo focusing
on agriculture playing the major role in economic development.
d.Harrod-Domar Theory, conceptualized by Sir Harrod of
England and Prof. Domar of the U.S., claims that more products
can be produced through the use of machines.
 THE ROLE OF ENTREPRENEURSHIP
IN ECONOMIC DEVELOPMENT
e.Kaldor Theory, by Nichols Kaldor, maintains that the key
factor is technology. This theory explains that the
application of modern technology in the production of goods
and services has been responsible for the economic success
of the highly developed countries.
f.Innovation Theory, developed by Joseph Schumpeter,
stresses the role of innovators or entrepreneurs in economic
development.
 THE ROLE OF ENTREPRENEURSHIP
IN ECONOMIC DEVELOPMENT
10. The contributions of entrepreneurship are:
1) development of new markets,
2) discovery of new sources of materials,
3) mobilization of capital resources,
4) introduction of new technologies, and
5) creation of employment.
11. There is a need for a Filipino entrepreneurial economy.
 THE ROLE OF ENTREPRENEURSHIP
IN ECONOMIC DEVELOPMENT
12. The government can support entrepreneurs from their
various assistance programs on the following: Peace and
Order, Political Stability, Price Stability, Taxes,
Infrastructures, Education and Training, Public
Administration, Production Technology, Marketing
Assistance, and Financial Assistance.
13. We have seen that entrepreneurship directly affects the
social and economic development of people.
HOW DOES AN ECONOMY GROW?

GENERAL THEORY
ECONOMICS THEORY
SOCIO-PSYCHOLOGICAL THEORY
HOW DOES AN ECONOMY GROW?
В. General explanations of economic development
1. Economic development proceeds according to a master
plan or "Law of Nature."
2. Economic development is brought about by an
"Invisible hand”.
3. Economic Development is brought about by "Cultural
Diffusion."
HOW DOES AN ECONOMY GROW?
В. General explanations of economic development
4. Racial heritage determines the economic development
of people.
5. Climatic conditions determine the energy levels of
people and in turn its rate of development.
6. The challenge of the natural environment is responsible
for the rise of civilization.
HOW DOES AN ECONOMY GROW?
C. Economic explanations of economic development
1. Technology improvements and division of labor lead to
development.
2. Population changes affect development.
3. Entrepreneurship is an important factor in
development.
HOW DOES AN ECONOMY GROW?
D. Socio-Psychological explanations of economic
development
1. According to the work of Talcott Parsons, individuals in
modern societies are:
a. unemotional;
b. interested in themselves;
C. able to relate to others in terms of their social roles or their
ability to do a job;
d. known for their accomplishments; and
e. able to relate to others in specific economic terms.
HOW DOES AN ECONOMY GROW?
2. In contrast, members of traditional societies tend to:
a. be emotional;
b. be more interested in the general welfare of the community;
c. relate to others in terms of their unique qualities;
d. be known for who they are; and
e. tie up economic relationships with all sorts of other
relationships involving kinship and political, religious, and other
social structures.
THANK YOU