ECONOMIC

INSTITUTIONS

BELLECA. OPENA. ROVELO.

BSED 2 SOCIAL STUDIES
Objectives:
a. To define Economic Institutions

b. Give the types of Economic Institutions

c. Identify the economic issues in the Philippine and Global setting

 ECONOMIC INSTITUTION
can refer to two things:

1. Specific agencies or foundations. Both government and

private, devoted to collecting or studying economic data, or
commissioned with the job of supplying a good or service that is
important to the economy of a country. 
Examples:
• The Internal Revenue Service
• The government producer of money
• National Bureau of Economic Research
2. Well-established arrangements and structures that are
part of the culture or society

 Examples:
• competitive markets
• banking system
• system of property rights
 3 MAJOR INTERNATIONAL ECONOMIC
INSTITUTIONS

1. World Trade Organization

The main objective of WTO is to help the global organizations to
conduct their businesses. WTO. Headquartered at Geneva,
Switzerland, consists of 153 members and represents more than 97%
of world’s trade.
MAIN
F U Na.CSetting
TIO theN S
framework for trade policies
b. Reviewing the trade policies of different countries
c. Providing technical cooperation to less developed and developing countries
d. Setting a forum for addressing trade-related disputes among different countries
e. Reducing the barriers to international trade
f. Facilitating the implementation, administration, and operation of agreements
g. Setting a negotiation forum for multilateral trade agreements
h. Cooperating with the international institutions, such as IMF and World Bank for
making global economic policies
i. Ensuring the transparency of trade policies
j. Conducting economic research and analysis
2. International Monetary Fund
established in 1945, consists of 187 member countries. It works to secure
financial stability, develop global monetary cooperation, facilitate
international trade, and reduce poverty and maintain sustainable economic
growth around the world. Its headquarters are in Washington, D.C., United
States.
3. United Nations Conference on Trade
and Development

UNCTAD, established in 1964, is the principal organ of United Nations

General Assembly. It provides a forum where the developing countries can
discuss the problems related to economic development. UNCTAD is
headquartered in Geneva, Switzerland and has 193 member countries.
UNCTAD was created because the existing institutions, such as
GATT, IMF, and World Bank were not concerned with the problem of
developing countries. UNCTAD’s main objective is to formulate the
policies related to areas of development, such as trade, finance,
transport, and technology.
FUNCTIONS OF ECONOMIC
INSTITUTIONS

RECIPROCITY
TRANSFER AND REDISTRIBUTION
MARKET TRANSACTIONS
MARKET AND STATE
RECIPROCITY
Is the chain of giving, receiving and repaying goods and
services.

In Sociology, it is defined as a system of voluntary exchange

between individuals based on the understanding that the giving
of favor by one will be reciprocated either to the giver or t
someone else.
RECIPROCITY
- a social rule that says people should repay, in kind, what another person has provided for
them; that is, people give back (reciprocate) the kind of treatment they have received from
another.
- by virtue of the rule of reciprocity, people are obligated to repay favors, gifts, invitations,
etc. in the future.
- This sense of future obligation associated with reciprocity makes it possible to build
continuing relationships and exchanges.
- Reciprocal actions of this nature are important to social psychology as they can help
explain the maintenance of social norms.
- Reciprocity is a form of gift exchange between two parties wherein return is expected
after product or gift giving (Parry, 1986).
TYPES OF RECIPROCITY (Marshall Sahlims, 1965)

1. GENERALIZED RECIPROCITY – gift giving without the expectation of an

immediate return

2. BALANCED RECIPROCITY – there is an explicit expectation of immediate

return

3. NEGATIVE RECIPROCITY – attempt to get someone to exchange something

he/she may not want to give up or an attempt to get more valued thing than the

thing you give in return.

REDISTRIBUTION
 Policy or practice of lessening or reducing inequalities in income for example
through such measures like progressive taxation and anti-poverty programs.
 It is the act of the government to distribute income from the wealthy businesses
and citizens to the less wealthy (Mares, 2014).
 The process of transferring income and wealth- be it in the form of money,
physical property and the like- to other individuals.
 According to the Stanford Encyclopedia of Philosophy (2004) Redistribution is
done by taxation, monetary policies, welfare, land reforms, charity, etc.
MARKET TRANSACTIONS

 The exchange of goods and services through a market. The set of market transactions
taking place in the economy is most important in terms of measuring gross domestic
product (GDP).

 Market transactions provide the basic data used at the Bureau of Economic Analysis
to begin the estimation of GDP.
 However, these data don't just want to measure market transactions, their goal is to
measure economic production.
 As such, they eliminate some market transactions that do not involve economic
production, then add economic production that do not involve market transactions.
 ECONOMIC
SYSTEMS
M I X E D E C O N O M Y. M A R K E T E C O N O M Y.
PLANNED ECONOMY
 An ECONOMIC SYSTEM is a system or production, resource allocation and
distribution of goods and services within a society. It includes various institutions,
agencies, entities and decision-making process.
It possesses the following institutions:
I. Means of Production
II. Decision-making System
III. Coordination Mechanism
IV. Incentive System
V. Organizational Form
VI. Distribution System
MARKET ECONOMY

an economic system in which the decisions regarding investments,

production and distribution are guided by the price signals created by the
forces of supply and demand.

Prices are determined by levels of supply and demand, instead of central and/or
local government. Market forces determine what is produced, how much is
produced, how it is distributed, plus the prices of goods and services.
CHARACTERISTICS OF MARKET ECONOMY

1. Private Property
2. Freedom of Choice
3. Motive of Self-Interest
4. Competition
5. System of Market and Prices
6. Limited Government
PLANNED ECONOMY

All decisions regarding production, distribution, salaries, investment

and prices are made by central authority.

 Planned Economy is also called as centralized economy, controlled

economy or command economy
 Central government has planners who make all decisions.
 The fundamental difference between a market and planned economy is the
existence of private property.
FIVE CHARACTERISTICS OF COMMAND ECONOMY

1. The government creates a central economic plan

2. The government allocates all resources according to the central
plan
3. The central plan sets the priorities for the production of all
goods and services
4. The government owns monopoly business
5. The government create laws, regulations and directives to
enforce the central plan
MIXED ECONOMY

A mixed economy consists of both private companies and

government/state-owned entities. Both have control of owning, making,
selling, and exchanging goods in the country. We learned what planned
and market economies are; let's just think of a mixed economy as
containing features of both planned and market economies.
THREE CHARACTERISTICS
1. It protects private property
2. Allows the free market and law of supply and demand to determine
the prices
3. Driven by the motivation of self-interest of individuals
ECONOMIC ISSUES
ECONOMIC ISSUES

MICRO ECONOMIC
a) Externalities
b) Monopoly
c) Inequality/Poverty
d) Volatile Prices

MACRO ECONOMIC
e) Unemployment
f) Recession
g) Inflation
 GLOBAL SETTING:

The biggest problem for the global economy will be massive business
failures that could also lead to bank failures in emerging markets relying on foreign
capital to maintain elevated living standards.

The rise of interest rates and the end of easy money created by central bankers in
recent years. Easy money acted as a tsunami, lifting up both the demand and the
supply side of the global economy to higher levels. On the demand side, it encouraged
consumers to resume taking on more debt. China’s debt to GDP ratio, for instance, has
soared, from around 18% in 2008 to over 50% in 2018.
REFERENCES

https://study.com/academy/lesson/what-is-a-mixed-economy-definition-characteristics-examples.html
https://www.thebalance.com/socialism-types-pros-cons-examples-3305592

http://www.economicsdiscussion.net/international-economics/4-major-international-economic-institu
tions/4249

https://www.thebalance.com/capitalism-characteristics-examples-pros-cons-3305588

https://www.forbes.com/sites/panosmourdoukoutas/2018/12/29/the-biggest-problem-for-the-global-econ
omy-in-2019-wont-be-the-us-china-trade-war/#b32e2476e089