Rozaine A. Reyes Dr. Aileen L.

Camba

BSMA 2 – 6 Economic Development

REVIEW QUESTIONS
1. Cite five (5) major issues of economic development in the world today.
a. Growing Income Inequality
People have an age-old tendency to compare themselves to their
neighbors, especially when it comes to wealth. We are less concerned about
our absolute level of wealth, but look more at what we have and own in
relative terms to the people around us. Global private wealth reached a
record $166.5 trillion in 2016, an increase of 5.3% over the previous year,
according to a report by the Boston Consulting Group (BCG).1 In 2015, the
increase was 4.4%. Faster economic growth and stock price performance
mainly drove the rapid increase.
But this growth is not spread equally. Private wealth in Asia-Pacific is
likely to surpass that of Western Europe by as early as the end of this year,
BCG’s analysis shows. This could be an economic shock for many citizens of
traditional western powerhouses. Such changes need to be watched and
managed carefully as they tilt economic and political power. British
geographer and politician Sir Halford Mackinder used to say: “Unequal growth
among nations tends to produce a hegemonic world war about every 100
years.” We can only hope he is wrong.
b. Technology Driving Change in Jobs
How disruptive will the effect of globalization and technological
advances be on labor markets? That is a key question today. Over the last
three decades, advanced economies have seen labor-intensive sector jobs
move to emerging markets. In other cases, new technologies have made
certain occupations obsolete. UNCTAD (United Nations Conference on Trade
 and Development) released a policy brief last year that said robots could take
away two-thirds of jobs in developing countries.
We see some of these shifts already. Today’s five largest global
companies are: Apple, Alphabet (Google), Microsoft, Amazon, and Facebook.
They employ around 720,000 people. A decade ago, the big five were
completely different: Petrochina, Exxon Mobile, General Electric, China
Mobile, and Bank of China. They employed around 1.3 million people. What a
decade can do! Today’s five biggest companies are all technology
companies. Their market capitalization is 30% higher than that of the top five
a decade ago; they achieve that with a whopping 44% less staff (figure 2).
This has a large impact on labor markets and jobs.
c. Rising Protectionism
G20 countries have become more protectionist. The total number of
discriminatory protectionist measures implemented by G20 countries has
increased over the past five years (figure 3). The main driver has been the
U.S. According to the Global Trade Alert report, had the United States been
excluded, the total number of protectionist policy instruments imposed by the
G20 would have been lower in 2017 than in 2016. The U.S. has implemented
the most protectionist and trade restrictive measures of its peer group, the
European Union the least (figure 4). This sounds counter-intuitive for the
country that prides itself as an open economy, but it seems that it is Europe
that is championing trade barrier reductions and the avoidance of protectionist
measures.
d. Increasing Migration
The recent refugee crisis in Syria and the resulting arrival of more than
one million migrants in 2015-2016 in Germany presented a formidable
challenge to political and social stability. In addition to tougher checks on the
EU’s external borders, and a controversial refugee pact with Turkey, the EU is
investing more in the migrants’ countries of origin. The refugees from Syria
have been fleeing a brutal civil war. They are escaping violence, as many
also are from Iraq and Afghanistan, and, in such cases, humanitarian reasons
 should always prevail over other considerations. Wars, climate change, and
broader economic and social inequalities are the root causes of migration
flows. While these increases in migration are all easy to understand, they
nonetheless cause issues in the countries of arrival: integration problems,
absorption limits and skills-mismatches.
e. Growing Influence of Social Media and the Post-truth World
Social media pose the final major challenge to international
organizations. According to a recent analysis by the Reuters Institute for the
Study of Journalism, 51% of people with online access use social media as a
news source. Social media is the primary source for news for 44% of
smartphone users in the U.S. and 38% in the U.K. (figure 7). Coupled with the
proliferation of so-called fake news, which became so prominent in last year’s
U.S. elections, as well as social media’s favoring of ever shorter and catchier
messages, it is no wonder that many observers are saying we are living in a
post-truth world.

2. What matters for growth is not so much the rate of investment but the
efficiency with which it is used and the policy environment in which it takes
place. Discuss this statement using relevant data and literature relating to
at least two developing countries.
Malaysia Investment accounted for 24.5 % of its Nominal GDP in December
2017. Malaysia investment share of Nominal GDP data is updated quarterly. On
the other hand, Qatar Investment accounted for 42.8 % of its Nominal GDP in
September 2017. Qatar investment share of Nominal GDP data is also being
updated quarterly. Despite having lower rate of investment, Malaysia reported a
5.902% growth in 2017 while Qatar reported 1.596 growth the same year. It can
be concluded here that the growth of a country doesn’t depend on its rate of
investment but on how they use and manage the investment efficiently.
3. Why did so many countries in Sub-Saharan Africa experience economic
stagnation in the 1980s and 1990s? Is there any evidence of recovery in
the last decade?
During 1980s up until 1990s, the economic and social situation in sub-
Saharan Africa remains fragile and vulnerable to domestic and external shocks,
and the region has a long way to go to make up for the ground lost over the past
two decades. Despite some upturn in economic growth rates, poverty is still
widespread and in many parts of the continent extremely acute. Investment
remains subdued, limiting efforts to diversify economic structures and boost
growth. Furthermore, a number of countries have only recently emerged from
civil wars that have severely set back their development efforts while, sadly, new
armed conflicts have erupted in other parts of the continent. These conflicts and
other adverse factors, notably poor weather conditions and a deterioration in the
terms of trade, have led to some loss in economic momentum in the region over
the past two years. Sub-Saharan African countries therefore face major
challenges: to raise growth and reduce poverty, and to integrate themselves into
the world economy. Economic growth rates are still not high enough to make a
real dent in the pervasive poverty and enable these countries to catch up with
other developing nations. What is needed is a sustained and substantial increase
in real per capita GDP growth rates in these countries, coupled with significant
improvements in social conditions.
Fortunately, Sub-Saharan recovered this economic stagnation. IMF
researchers looked at the experiences of a sample of 46 countries during 1995–
97. The available data showed that sub-Saharan Africa grew significantly during
1995–97. The average annual growth rate of per capita real GDP, which was
negative through most of the 1980s and –2.2 percent during the five-year period
1990–94, rose to 1.2 percent during 1995–97. Moreover, whereas per capita real
GDP increased in 16 countries in 1990–94, twice as many countries registered
positive growth rates during 1995–97. Those countries in the study that
experienced negative or declining growth rates did so largely as a result of a
combination of long-standing, deep-rooted economic problems and the
 debilitating effects of past or continuing political turmoil. In the 1990s, while many
countries implemented structural adjustment programs, several other countries
experienced economic disruptions because of war. The data for 1995–97 show
that the measured improvement in economic performance in sub-Saharan Africa
is much stronger when countries that experienced either unsettled political (or
conflict) situations or a stop-go pattern of program implementation are excluded
from the sample data.

4. The rapid economic growth of China and India in the last twenty years
owes much to the size of their economies, so their experience cannot be
replicated in smaller economies.
The two nations have encountered exceptionally fast development, which
has brought about prominent accomplishments, especially decrease in poverty.
They additionally share regular issues related with fast development, for
example, the widening rural-urban income gap and environmental degradation.
Rising salaries make impulse for primary change in the agribusiness and food
areas as demand and consumption patterns shift; concomitantly the impact will
extend to trade, commerce and investment.
Both China and India have encountered noteworthy development in farming,
a Green Revolution, trailed by quick industrial development and a sharp
reduction in relative poverty. Nonetheless, the preconditions and the main stimuli
behind the development in the two cases were totally different.

5. What is the relation between economic growth and economic

development?
Economic growth means an increase in real national income / national
output. It measures an increase in Real GDP (real output). GDP is a measure of
the national income / national output and national expenditure. It basically
measures the total volume of goods and services produced in an economy.
However, Economic development measures an increase in Real GDP (real
output). GDP is a measure of the national income / national output and national
 expenditure. It basically measures the total volume of goods and services
produced in an economy. Measures of economic development will base at levels
of education and healthcare, real income per head, life expectancy and etc.
There’s a possibility to have economic growth without economic
development. A country may see higher GDP, but the benefits of growth may be
syphoned into the bank accounts of politicians because of corruption. That’s why
the proceeds of growth should always be used to improve its citizens’ living
standards.

STUDENT EXERCISE / ASSESSMENT

Critique the Philippine Development Plan 2017-2022

The Duterte Administration’s crafted its medium-term development plan. It aims

to contribute to the overall goal of achieving Ambisyon Natin 2040, the Philippine
government’s long-term plan to improve the lives of many Filipinos and bring to life our
collective vision of a “Matatag, Maginhawa, at Panatag na Buhay para sa Lahat.” As a
group, read the framework of PDP and critique its contents. In particular, use the
following guide questions to write down your critical analysis essay:

• What is the main goal of PDP 2017-2022?

• How does it view development and quality living for Filipinos?
• How does the development plan address continuing problems on
poverty and inequality in the country? Assess if these policies and
programs are adequate to tackle the problem; discuss why is it
adequate, or why is it not enough?
• Based on what you’ve learned so far in class and your personal
observations, how should we frame our development plans?

The Philippine Development Plan handles the drawn-out vision of the

public authority to support each Filipino family by 2040 helping them to live with a
'Matatag, Maginhawa, at Panatag na buhay' (Secure, Comfortable, and Serene
Life). It recognizes the achievements of the past administrations, continue the
great practices and learn from these encounters.

It intends to lessen poverty incidence from 21.6 percent in 2015 to 14.0

percent by 2022. With these aspirations of the populace as the basis of the
development plan, the government lay-out plan under the 25-year long-term
vision of the regime entitled “AmBisyon Natin 2040” (Our Ambition by 2040). It
centers around the four strategies, projects, and activities that will help them
achieve their goal: building a prosperous, prevalently working-class society
where nobody is poor; advancing a long and sound life; getting more intelligent
and more inventive; and assembling a high-trust society.

In my opinion, our advancement plans ought to be outlined dependent on

what we need and what should be improved. We should also think of the ways to
implement it. Planning should not stop when you determined your goal.