ALCANTARA, MARYANN

PAZ, JESMARIE JOY LM2-1

ECONOMICS AS AN APPLIED SCIENCE

It is a social science, one of the most rigorous social sciences that follow all the
steps of scientific method. What makes economics an applied science is the formulation
of general theories through testing, mainly using data from the past.
Economics as pure science, formulates various laws and applied economics
applies them in practice in solving various problems. Robbins and all others before him
treated economics as a pure positive science. But recently,applied economics assumed
greater importance. As pure science and applied science go hand-in-hand, so
Economics is also pure as well as applied science.The scope of economics means the
limits or boundaries of Economics. According to Adam Smith and A.C. Pigou Economics
studies the causes of material wealth.They gave a very narrow scope to the study of
economics by limiting it only to those activities relating to wealth.
According to Prof. Marshall, ―Economics is a study of economic activities of a
man. It is only concerned with the wealth getting and wealth-using activities of a man,‖
Prof. A.C. Pigou also restricted the scope of economics to the study of economic
welfare. Robbins finds the welfare definition of economics rather restrictive as it
excludes non-material things from its scope. Services of doctors, teachers, lawyers,
domestic servants etc. are scarce and satisfy wants in our daily life but they are non
material. Similarly, all economic activities are not conductive to economic welfare.

APPLIED ECONOMICS IN RELATION TO PHILIPPINE ECONOMIC PROBLEM

The Philippines’ economic freedom score is 63.8, making its economy the 70th
freest in the 2019 Index. Its overall score has decreased by 1.2 points, with drops in
scores for monetary freedom, government integrity, and the tax burden outweighing a
higher score for property rights. The Philippines is ranked 15th among 43 countries in
the Asia–Pacific region, and its overall score is above the regional and world averages.
Continued strong economic growth, driven in part by ambitious state-funded
infrastructure projects, has allowed the government to prioritize domestic law-and-order
issues over economic policy concerns. Investors remain concerned about President
Duterte’s heavy-handed rule, although Duterte has consolidated support from
Congress. The absence of entrepreneurial dynamism thwarts development. Despite the
adoption of some fiscal reforms, deeper institutional reforms are needed in interrelated
areas: business freedom, investment freedom, and the rule of law. The judicial system
remains weak and vulnerable to political influence.
 PHILIPPINE ECONOMIC PROBLEMS

1. POVERTY
2. UNEMPLOYMENT RATE
3. INCOME INEQUALITY
4. POOR QUALITY OF INFUSTRUCTURE

THE PHILIPPINES BASIC ECONOMIC PROBLEM

Economic problems are hindrances to the development.

The major obstacles to development are the following:

POVERTY

Poverty and inequality in the Philippines remains a challenge. In the past 4 decades, the
proportion of households living below the official poverty line has declined slowly and
unevenly.

Causes of Poverty

The main causes of poverty in the country include the following:

 Low to moderate economic growth for the past 40 years;

 Weakness in employment generation and the quality of jobs generated;
 Failure to fully develop the agriculture sector;
 High inflation during crisis periods;
 High levels of population growth;
 High and persistent levels of inequality (incomes and assets), which dampen the
positive impacts of economic expansion; and
 Recurrent shocks and exposure to risks such as economic crisis, conflicts,
natural disasters,and ―environmental poverty.‖

UNEMPLOYMENT

Unemployment has remained high in the Philippines, at almost twice the level of
neighboring countries, despite relatively fast employment growth in the past decade.
Employment growth was not sufficient to reduce unemployment because of rapid
population growth and increased labor force participation.
In 2018, the unemployment rate in the Philippines was at approximately 2.52 percent
and on a steady downward trend from 3.6 percent in 2014. The Philippines’ economy
relies heavily on remittances from overseas, i.e. money sent home by Filipino emigrants
and workers in other countries.

INFLATION

Inflation is defined as an increase in the general level of prices for goods and services.
It is measured as an annual percentage increase. As inflation rises, the value of the
money you own, buys a smaller percentage of a good or service.

There are two main causes of inflation: Demand-pull and Cost-push. Both are
responsible for a general rise in prices in an economy. But they work differently.
Demand-pull inflation results when prices rise because aggregate demand in an
economy is greater than aggregate supply. While Cost-push inflation is a result of
increased production costs, such as wages and raw materials and decreased aggregate
supply.

In the Philippines, the volatility of inflation has been caused by factors such as
disturbances in agricultural food supply or movements in international oil prices. As a
result, the headline inflation rate may reach double-digit levels.

ASEAN ICON

Amartya Sen was born on November 3, 1933, Santiniketan, India. An Indian economist
who was awarded the 1998 Nobel Prize in Economic Sciences for his contributions to
welfare economics and social choice theory and for his interest in the problems of
society’s poorest members. Sen was best known for his work on the causes of famine,
which led to the development of practical solutions for preventing or limiting the effects
of real or perceived shortages of food.

Welfare economics seeks to evaluate economic policies in terms of their effects on the
well-being of the community. Sen, who devoted his career to such issues, was called
the ―conscience of his profession.‖ His influential monograph Collective Choice and
Social Welfare (1970)—which addressed problems such as individual rights, majority
rule, and the availability of information about individual conditions—inspired researchers
to turn their attention to issues of basic welfare. Sen devised methods of measuring
poverty that yielded useful information for improving economic conditions for the poor.
For instance, his theoretical work on inequality provided an explanation for why there
are fewer women than men in some poor countries in spite of the fact that more women
than men are born and infant mortality is higher among males. Sen claimed that this
skewed ratio results from the better health treatment and childhood opportunities
afforded to boys in those countries.
As for our country the Philippines there is one economist who truly became a big part of
our success. He was Cielito Flores Habito, born April 20, 1953 in Cabuyao City,
Lagunaor simply ―Ciel‖ Habito is a Filipino economist, professor, and columnist. He
served concurrently as the Director-General of the National Economic and Development
Authority and Socio-Economic Planning Secretary during the Ramos administration.

Smith T.W (2018), Economics as an applied Science. Economic Lecture

Dinio R. Philippine Economic Problem.Applied Ecocomics. Rex Book Store First Edition