Phases of

Economic
Development
 Most Essential Learning Competency

▪ Differentiate the phases of economic

development and its
impact to business environment
 Learning Objectives:
At the end of this lesson, you are expected to:

1. identify the different phases of economic

development; and
2. analyze the stages and its implication in the
economy.
 Economic Development

- Is an increase in living
conditions, improvement of the
citizens’ self-esteem needs and
presence of a free and just
society.
 Structural Formation

- Refers to a change in the

composition of the Gross
Domestic Product
 Migration of People

- Are administrative decisions that

are directly related to all issues
and activity within a nations’
borders.
 Morbidity

- Is the incidence of decease, rate

of illness.
Group Activity
Think of the factors that can
contribute in the economic
development of our country.
 What is ECONOMIC
DEVELOPMENT?
-refers to the sustained, concerted actions of
communities and policymakers that improves
the standard of living and economic health of a
specific locality.
 What is ECONOMIC
DEVELOPMENT?
-defined by Michael Todaro as an increase in
living conditions, improvement of the citizens’
self-esteem needs and presence of a free and
just society.
Michael Todaro (born May 14, 1942) is an American
economist and a pioneer in the field of development
economics.
 What is ECONOMIC
DEVELOPMENT?

Todaro suggested that the most accurate method

of measuring economic development is
Human Development Index
 Human Development Index
Includes literacy rates and life
expectancy which in turn has
impact on productivity and
economic development growth
  Economic development is also
associated with quantitative and
qualitative changes in the
economy.
• Progress in human capital
Indicator of development
• Increase in literacy rate
economically that aims in
• Establishment of important increasing the general
infrastructures welfare of the citizens
• Improvement in health and safety
and other areas
What is the most
important ingredient
in nation’s economic
development?
• Participation
from the citizens
The term economic development
is sometimes intertwine with
economic growth.
 Economic Growth
Is the general increase in the
country’s products and
services output
 Economic
Development
Is a government policy to
increase the economy, social
welfare and stability of political
environment.
 Also, there is always an association
between economic growth and human
development.
 Economic development leads to improvements in many
sectors of a nation. There are variety of indicators that
economists use to measure the level of economic
development in the country.

Indicators of Economic Development

Declining Increasing Declining Increasing

Poverty Literacy Infant Life
Rates Rate Morbidity Expectancy
According to Gunter, Economic growth
typically refers to an increase in gross
domestic product (GDP), while
economic development typically refers
to a structural transformation.
 Stages of Economic
Development according to
Gunter

1. The structural Transformation

2. The Demographic Transition
3. Migration of people
1. The structural
Transformation

Refers to a change in the

composition of GDP.
1. The structural
Transformation
Initially, economic activities and jobs are
based in the agricultural sector. With
development, the share of agriculture in
GDP decreases due to the increase and
grown of the service sectors which slowly
overtake the share of industry, while the
share of agriculture continues to
decrease.
1. The structural
Transformation
In other words, at the final stage of
development, we typically have an
economy in which people earn their
livelihood predominantly from the service
sector and still important but diminished
industry sector.
2. The Demographic
Transition
Is determined by changes in the fertility
rates (example the number of children per
women) and changes in the life expectancy.
Initially, fertility rates are high, but due to
relatively high death rates (especially high
infant mortality rates), population growth is
limited.
2. The Demographic
Transition
In the next stage, both fertility rates and life
expectancy are increasing, causing a sharp
increase in the size of population. With
continuous development, life expectancy
continues to increase, but sharply declining
fertility rates will limit population growth.
3. Migration of People

The main factors leading to the process of

urbanization is the migration of people
from rural areas seeking jobs in the
emerging urban centers, the
transformation of originally semi-urban
suburbs into fully urban centers, and
differences in population dynamics
between rural and urban areas.
 PART I QUIZ
Direction: Pair the statement in Column A with the word/s found in
Column B. Write only the letter of your choice.
Column A Column B
1. It is a general increase in the country’s
a. Economic Development
products and service output.
2. The main factors leading to urbanization. b. Structural Transformation
3. This is determined by changes in the fertility
rates and changes in life expectancy.
c. Economic Growth
4. It is a government policy to increase the
economy, social welfare and stability of political
environment. d. Demographic Transition
5. It refers to the change in the composition of the
gross domestic product. e. Migration of People
PART II QUIZ

6-10. What do you think is the

importance of understanding the
phases or stages of economic
development?