CRUZ, DIANNE MAE S.

BSMA 2-1

ECONOMIC DEVELOPMENT (ECON 40163)

PART A

Review Questions

1. Poverty is an economic condition in which people experience shortage or lack of certain

resources that are important for human life, such as money and material objects. It is said
to occur when people lack the resources to meet their basic needs. With this, the recognition
of the poor includes, first of all, a determination of what constitutes basic needs.

Water is a basic human need. Every human on Earth needs water daily to drink, cook, and
just to keep clean and with these they will be needing at least twenty to fifty litters of clean
and healthy water a day. The presence of pollutants in water can lead to serious health
problems, such gastrointestinal disease, fertility problems and brain conditions. Kids, small
children, pregnant women, elderly people and people whose immune systems are
weakened by AIDS, chemotherapy or transplantation may be particularly vulnerable to
some pollutants. Contaminated water supply is said to cause an estimated 485,000 diarrheal
deaths per year. To prevent this, the World Health Organization shall draw up a set of
recommendations on the safety of water, including drinking water, the sustainable use of
wastewater and the safe recreation of water.

Education is also referred to as a great equalizer: it will open the gates to work,
opportunities and skills that a family needs not only to thrive, but to succeed. Access to
high-quality primary education and the promotion of child well-being is an internationally
recognized antidote to the poverty cycle. Without significant investment in human
resources, no country can achieve sustainable economic growth. It plays a very important
role in securing economic and social growth and improving income distribution. Over 72
 million children around the world remain uneducated as a result of poverty and
marginalization.

Corruption is one of the most serious economic issues in the world. It undermines trust,
destabilizes democracy, hinders economic growth and exacerbates inequalities, poverty,
social division and the environmental crisis. It can literally happen anywhere and affect
anyone; at work, at business, even at school. Corrupts are like carpenter ants, among other
ants, the most troublesome. We may create our beautiful homes from the sweat of our hard
work, but still carpenter ants cause serious property damage to homes and other buildings,
such as the corrupt. We must put an end to the injustice of corruption by fostering honesty,
accountability and dignity.

High mortality rates clearly mean that there is some kind of rough economic growth in
the health sector or, maybe, national security. Death factors differ considerably between
countries; they can be non-communicable or communicable diseases. Globally, leading
risk factors for premature death include smoking, obesity, high blood pressure, high blood
sugar and environmental stressors, including air pollution, including unhealthy water
supply. Millions of deaths have been registered this year, 2020 in related cases of COVID-
19, which has resulted in a lot of deaths of people working for their families. It really
impacts economies around the world that are simply triggered by a lack of health programs
and preparedness. With national security, threats may be social, such as interference from
a neighboring country, penetration by a terrorist organization, or global economic
developments that threaten the welfare of the nation.

2. Investment in economics is not about saving money in banks. It means spending on capital
expenditure, e.g. purchasing of buildings, larger factories, purchasing of new machines to
allow automation. They enable companies to generate revenue for several years by adding
or enhancing production facilities and boosting operating performance. Additional or
enhanced capital goods are intended to increase labor efficiency by making firms more
profitable and efficient. Newer machinery or factories result in more goods being made,
and at a faster pace. For instance, a new manufacturing plant will use less electricity
 because it uses modern equipment and is located in a more energy-efficient building.
Capital expenditure impacts the pace of economic growth as it is a portion of aggregate
demand and, more significantly, affects the potential production of the economy.

3. In the 1980 and early 1990s, both domestic and external factors led to the weak overall
economic performance of sub-Saharan Africa. Main growth barriers included weak
economic policies, inadequate creation of human resources, and low levels of private
investment. However, for the first time in a decade, there is evidence that a growing number
of countries in sub-Saharan Africa are showing signs of economic growth, indicating the
introduction of improved economic policies and institutional adjustment. These countries
have effectively minimized domestic and external financial imbalances and increased
economic efficiency. They have given greater importance to public expenditure on health
care, education as well as other social services. That being said, given some upturn in
overall economic growth, poverty is still pervasive and highly severe in many parts of the
continent. The social and economic situation in sub-Saharan Africa appears unstable and
susceptible to domestic and external shocks, and the nation has a long way to go to make
up for the lost ground in past decades. Growing development and reducing poverty, and
integrating themselves into the global economy are some of the significant problems that
are facing by Sub-Saharan African countries. Economic performance are still not high
enough to make a real dent in widespread poverty and to allow these countries to move
ahead with other developing countries.

4. China’s trade is six times larger than India’s. Even more striking, the increase in China’s
trade level in 2007 was greater than India’s total trade. India’s share of the global economy
today is still less than half of what it was at independence in 1948. India’s economy is
expanding rapidly; but its trade is still less than 1 percent of the global total, whereas
China’s trade is the second or third largest. A similar disparity exists in foreign investment.
Author based on my research suggested that India’s growth would continue and increase
in the coming decade if economic reforms continue and are expanded and large-scale
structural changes are undertaken to support growth. Exports have doubled in three years,
and software exports doubled in the last two years. In the past two decades, China and India
 have liberalized internal economic policy, treatment of foreign investment, and trade, and
have experienced economic growth at sustained high rates. From the point of view of the
United States, however, the most important development in the Chinese and Indian
economies in the long term may be the strides they are making in developing their own
domestic innovation capacities. After a long period of underinvestment, both countries
have committed to growing their science and education systems to bolster research and
further economic expansion. Some observers of the recent growth have said that both
countries are surging in their efforts to spur innovation; others have emphasized the
potential of one country over the other; and still others have suggested that both China and
India have a long way to go before achieving innovation-driven growth. With such a range
of views, The National Academies set out to describe developments in both countries, in
relation to each other and the rest of the world, by organizing a conference in Washington,
D.C. The conference, summarized in this volume, discussed recent changes at both the
macroeconomic level and also in selected industries, and explored the causes and
implications of those changes.

5. The rise in the monetary value of all products produced in the economy over a period of
time is what Economic growth means. It can be calculated by increasing the overall market
value of additional products and services generated using economic principles such as GDP
and GDP. Economic development refers to the mechanism by which the health status, well-
being and educational level of the overall population of the country is enhanced. It also
means increased production rates due to technological advances. Economic development
is more important for an economy to become a developed country, and has been said that
it is a much broader concept than economic growth. The equivalent definition of it is the
combined economic growth and standard of living of a nation. The standard of living
involves a number of items, such as clean drinking water, improved sanitation systems,
medical services, the spread of primary education to increase literacy rates, etc., and the
economic development can be accomplished with its main measure of quality of life.
Student Exercises / Assessment

The main goal of the Philippine Development Plan is to turn the Filipinos vision into
reality. The PDP has set targets to be achieved for 6 years. Foremost the Philippines will be an
upper middle-income country with GDP growth of seven to eight percent per capita income from
$3,500 to $5,000 increase over the 6 year plan period. Moreover growth will be more inclusive as
manifested by lower poverty incidence in the rural areas will decline from 30% to 20% and will
let more Filipinos out of poverty. The Philippines will have a high level of development. The
Philippine Development Plan 2017-2022 will lay down a solid foundation for more inclusive
growth, a high-trust society and a globally competitive economy. The aim is to regain peoples trust
in public institutions and cultivate trust in fellow Filipinos. These entails making public institutions
citizen-centered, efficient and clean. Justice will be served and there will be increased awareness
and knowledge of the validity of cultural diversity and shared heritage among Filipinos. In
addition, the main priority are inequality-reducing transformation, lifting the poor and other
economic groups.

Increasing growth potential will be attained by advancing to acknowledge economy and

accelerating the full harvest, and technology advancement will be adopted and promoted as PDP
view the development and quality living for Filipinos by 2022. The Philippines will be an upper
middle-income country, Growth will be more inclusive as manifested by a lower poverty incidence
in rural areas – from 30 percent in 2015 to 20 percent, The Philippines will have a high level of
human development, The unemployment rate will decline from 5.5 percent to 3-5 percent in 2022,
There will be greater trust in government and in society, Individuals and communities will be more
resilient, and lastly, Filipinos will have greater drive for innovation.

Inequality has become a defining issue of the present time that must be addressed through
social protection policies. The Philippine Development Plan addresses the problem that our
country facing regarding inequality that by 2022, there will be more economic opportunities for
all. Lagging economic sectors like farmers and fisherman will be given priority and will have
easier access to economic opportunities. Increasing the access to economic opportunities requires
facilitating the small farmers’ and fisherman’s access to production markets, new technology, and
financing services. Citizens will be given access to economic opportunities through job creation
and encouraging entrepreneurship in the country. As for poverty, by 2022, Filipinos will have
access to affordable, adequate, safe, and secure housing in well-planned communities. They will
strengthen housing as a platform to reduce poverty and improve social outcomes. It is also has
been said that the Philippine Government hereby aims to triple real per capita incomes and
eradicate hunger and poverty by 2040, if not sooner. They addresses the problem just enough in a
way that they indicated such possible solutions that can really make a change for both poverty and
inequality problem we're Filipinos experiencing. I am just looking for more details behind those
policies, nevertheless, it is all adequate.

We should just frame our development plans in a way that they are specific, realistic,
measurable, achievable, and timely. Plans that are indicated should be more detailed or specific,
possible programs for different sector will be there. Realistic and Measurable in a way that plans
are practical and depends on the capacity of our government; with that, being realistic we should
just include something that is achievable. And finally, timely, we should indicate those our
economy really needed for better economy.

PART C.1.

CHAPTER 1

Student Exercises / Assessment

1. Poverty is a state of not being able to access or provide a standard amount of food, water
and/or shelter or adequate housing. Absolute poverty is poverty to the degree that
individuals are deprived of the capacity to meet basic human needs. The word inequality
refers to income inequalities or to the rate of income growth between classes. Some groups
may experience more relative income gains than others.

2. Considered poor are those people who are unable to meet any of the basic needs, such as
food, clothing, housing, sanitation, etc. Poor people live without the basic freedom of
choice that makes their lives happier. They face exposure to ill health, economic
dislocation, and natural disasters. Popular characteristics of the poor are low wages, poor
living conditions, the majority of the poor are illiterate, agriculture in rural areas and
manual labor in urban areas are common occupations.
3. Economic growth means a rise in real GDP – an increase in the value of national
production, revenue and expenses. Essentially, improved living standards – higher real
wages and the opportunity to commit more money to fields such as health care and
education – are the main benefits of economic development. There are several measures
that indicate economic growth: good job levels, wage growth, stable inflation, rising
interest rates, high retail sales and higher industrial performance which is a positive
indicator of a strong economy, as production data provide valuable details on the economic
performance of a country. All the people inside the nation who are experiencing growth
will benefit. Even if inequality grows with prosperity, it is not inherently the case that poor
people will not gain – just that they will benefit less from growth than other households.
Because we cannot deny that there's a wide gap between the rich and poor, and by that
those who are privileged are the one who can be reached easily.

4. Rapid income growth and equitable income distribution actually conflicts with each other.
Rapid growth also contributes to a rise in disparities exacerbated by high wage rises for
people in top-paid employment, decreases in the percentage of union workers, high fertility
in poorer households, low-income families invest a higher percentage of their income –
inequalities depress consumer demand. As a consequence, fast income growth is attainable,
however low probability is achieved.

5. Economic growth is the most effective tool to alleviate poverty and boost the quality of life
in developing countries. Economic analysis has debunked the common assumption that
only the rich profit from development. In the contrary, it raises the wealth of everyone,
including those at the bottom of our society. One research, looking at 58 countries, found
that 10 per cent of annual GDP growth is correlated with a 10 percent rise in bottom-up
income of 40 percent. Economic prosperity and the resulting expanded opportunities would
benefit the overall population, as well as the poor. Encouraged such growth is the best way
to support the most marginalized in the community. If the aim is to reduce poverty, we
should concentrate not on income disparity at a particular point in time, but on wealth-
creating government policies such as reducing tax burdens, liberalizing the labor market,
 countering corruption and the free movement of products. Any policy that goes against all
these broad positions causes adverse consequences by encouraging small groups to enrich
themselves at the expense of the overwhelming majority of customers and taxpayers.

6. Inequality is an issue affecting all nations, and the divide between rich and poor has
increased in most countries. It is an extreme issue, since economic inequality can offer
power to wealthy people, because if wealth is very unevenly distributed in society, rich
people also end up influencing certain aspects of the lives of poorer citizens. For example,
low-income families are willing to spend less in college, decreasing their chances of
finding a well-paid occupation someday. Economic disparity can compromise the fairness
of government systems. Extreme income inequality continues to be a fairly unstable
situation, which has already resulted in some disastrous outcomes. It's time to take a stand
before it gets worse.

7. Poverty is an issue everywhere in the world, and governments play a vital role in the battle
against poverty. At least different strategies should be used in any situation to minimize
poverty. These public policies increase the real income levels of the poor above what would
otherwise be their personal income levels, they can do so sustainably by building the ability
and assets of people living in poverty. Minimum wage reform also benefits disadvantaged
people in our country by forcing all employers to pay their workers a minimum wage that
is set by the government. The concept behind minimum wage reform is to support the
working poor without directly raising government spending. Social protection also
provides a variety of various government programs, such as income support, tax credits,
social care benefits or unemployment benefits. In-kind benefits, the idea behind this is to
provide low-income families and individuals directly with access to certain products they
need most to increase their standard of living.
 CHAPTER 2

Student Exercises / Assessment

1.

COUNTRIES GDP PER CAPITA FERTILITY RATE MORTALITY RATE LIFE EXPECTANCY
New Zealand $42,084 1.889 births per 7.033 82.21 years
woman
Philippines $3,485 2.555 births per 5.900 71.16 years
woman
China $10,262 1.693 births per 7.261 76.79 years
woman
United States $65,281 1.778 births per 8.782 78.87 years
woman
Singapore $65,233 1.216 births per 4.600 83.6 years
woman
Thailand $7,808 1.520 births per 7.746 77.01 years
woman
Vietnam $2,715 2.049 births per 6.354 75.37 years
woman

2. The expected population in 2050 of China is 1,402,405,000 while India is 1,639,176,000. From
these facts we can infer that the currently most populated countries are still the one most populated
in 2050, by that we can say that these countries doesn’t have any plan to control their population
growth.

3. Yes

4. I will encourage developing countries to have fewer children by saying the benefits of having a
healthy small family. Children in small families appear to have higher levels of school and personal
achievement than children in larger families. It will be easier for both parents to manage their
career at the same time family. With that, the stress level is lower also financial cost will be lower.
5. Yes, Countries must provide family planning programs to achieve the goal of rapid economic
growth and actively urge their residents to limit the size of their households. Disincentives for
families to have more than 2 children would be legislated by the government. Women were made
unavailable for maternity benefits for 2 or more infants. Instead of banning them, the regulation
should just discourage new pregnancies, guiding rather than pressuring family planning decisions.

PART C.2.

CHAPTER 3

Review Questions

 Employment is any service performed for payment or compensation. It applies to any

hiring contract, whether written, oral or implied. It brings together the employee and
employer in which they are having a contract for an agreed salary or hourly wage for
employee by providing certain services.

 Unemployment happens when a person who is a member of the labor force and is actively
looking for jobs is unable to find a job, or maybe have taken specific steps to find work.

 Businesses need access to qualified people, business networks, capital, and space to start
up and grow in order for new jobs to be created. A number of policies are managed by
central governments, the effect of which will enhance each other and lead to the fulfillment
of economic capacity, market expansion and local social stability. Proper job matching is
also important, we must pay attention to the skills and experience that a potential employee
will bring to the company. Employers should strictly assess whether the potential employee
will be fit on the position he/she is looking up to.
Student Exercises / Assessment

Exercise 1.

I am the youngest among us 4. My 3 older siblings are already working, our eldest is
currently working abroad and I have no idea how much is his salary working in Germany. My
other 2 siblings are working on government here in Philippines. The salary grade of my brother
before is 1 but then Mayor Vico announces it will be salary grade 3 which is around 13,091 pesos.
He is working on Pasig City Hall. While the salary grade of my sister is 15, she is a nurse I working
at Pasig City General Hospital (PCGH), her salary is around 32,053. The difference between my
brother's and sister's salary is a lot like from 3 to 15 salary grade. A salary grade (SG) is a number
that determines the amount of monthly payment/income earned by a government employee. Salary
grade in the Philippine government range from 1 to 33, with 33 earning the highest salary. SG is
allocated to each government position on the basis of its level of complexity and set of
responsibilities. The higher the number, the more complicated and the broader the scope of the
responsibilities. With salary grade 3, it is the job with less responsibility like my brother working
on Pasig city hall compare with my sister who is a nurse and I'm a lot sure that there are a lot of
benefits for a nurse like her. Productivity and wages differ in overtime and across geographical
areas or nations. There are 3 determinants of productivity and wage differences: physical capital,
human capital, and technological knowledge. When we say physical capital these are machinery
and structures are helping workers on increasing their productivity. Human capital is for
investments on education and job training for students' experiences. And technological knowledge
for workers who have access on advanced technology especially that can affect the productivity of
workers.

Exercise 2.

The official employment and unemployment rate doesn't actually capture the real labor
condition of a country. According to Philippine Statistics Authority (PSA) Philippine government
defines employment made up of people in the labor force who are reported either at work or with
a job or being an entrepreneur, even if not an employee. People at work are those that have done
some work, even for an hour during the reference time. On the other hand, they define
unemployment as consists of employees who are registered as unemployed; and currently eligible
for jobs; and actively looking for work or not looking for work because of the assumption that
there is no work available, or awaiting the outcome of a previous job application, or because of
temporary illness or injury, bad weather or waiting for re-hire or job recall. A lot of people do
businesses or anything they could do just to have money for their family not considering having
permits or anything that can report to PSA as official part of labor. The labor force participation
rate is an important measure to use when evaluating jobs and unemployment data, since it
calculates the number of people who are actively looking for work as well as those who are
currently working. In July 2020, the Labor Force Participation Rate (LFPR) was 61.9 percent,
lower than the registered 62.1 percent in July 2019. The lowest LFPR in the history of the
Philippine labor market was 55.6 percent in April 2020. The employment rate in the Philippines
rose by 90.0 percent in July 2020 compared to a record low of 82.3 percent in April 2020. However,
the job rate remained lower than that of 94.6 percent in the same month a year earlier. In July 2020,
approximately 41.3 million Filipinos were employed, 42.5 million in July 2019, and 33.8 million
in April 2020. The Philippines has one of the highest unemployment rate of 2.16 percent in South
East Asia, with around eight million Filipinos. Alongside other countries in Southeast Asia,
Thailand with 0.75 percent, Cambodia with 0.68 percent, Vietnam with 2.01 percent, Laos with
0.63 percent and Malaysia which has the highest unemployment rate with 3.38 percent. A lot of
jobs are likely to be lost, such as the Coronavirus Disease 2019 or the COVID-19 pandemic that
threatens to disrupt every country's economy.

Exercise 3.

There are a lot of policies and projects implemented for our Overseas Filipino Workers or
OFW, one of these is (1) providing timely and effective response to global emergencies or crisis
situations impacting OFWs and their families. With this policy, there will be welfare assistance
program (cash assistance) when there is Strong Typhoons, Heavy Flooding, Earthquake and other
Natural Disasters/Crises, man-made disasters and other similar causes are included, and also
bereavement assistance for death of an OFW. (2) providing social and health programs and
services to members of the OFW, including social support, education and training, cultural
services, financial management, reintegration and entrepreneurial growth services. They will
conduct a financial literacy evaluation of the needs of migrant workers; developed a financial
education course and trained migrant leaders, civil society organizations and embassy staff to
conduct financial education workshops; all for the betterment or enhancement of OFWs skills. (3)
Protecting interest and fostering the wellbeing of member-OFWs in all phases of overseas jobs in
appreciation of their significant contribution to the overall national continued development. With
this policy we ensure that the DFA is better able to respond to the needs and problems of Filipino
migrant workers overseas.

In March 2016, the Ambisyon Natin 2040 initiative, launched, embodies the Filipinos'
collective goals for a nation where all people are free from hunger and poverty, having equal
opportunities, promote fair and just community ruled by order and unity. They pointed out that the
2040 Ambisyon Natin also envisions a state where families live with simple and comfortable life
together. Simply means that we envisions growth and development of our country to the point that
our families don't need to be away from us anymore to provide for us financially. After 20 years
we will be witnessing lesser and lesser OFWs there will be as our country will have healthy and
secured people.

As a student and future accountancy practitioner, we will have a major role to play in this
country. Accounting, among other things, is about balance, and this is what our country will need
in the years to come. We need to ensure that our economies' energy flows freely and deliberately
rather than stagnantly. Despite the pandemic, there are things that give us hope, such as
understanding that students like us are leading the path to a better level that we envisage. We're
never too young to make a difference, our age doesn't stop us from serving our country and its
people, including the Filipino Overseas Employees, in any case I'm pleased to shout for justice and
defend the rights of our modern heroes.
Part C.3.

CHAPTER 4

 Some researches conclude that there is no relationship between urbanization and

development at all. But some says that it has an effect, there are postive while others are
negative. The degree of urbanization and economic growth are positively associated.
Growing population concentration at one location produces several positive externalities
that improve productivity and efficiency. The gathering of economic and human capital in
one location promotes creativity and growth in the fields of business, research, technology
and industry. Education, health care, social services and cultural events is more readily
accessible to people in cities than in villages. On the negative effects of urbanization, cities
will be overcrowded with poor housing built from lightweight materials that is very close
to one another, in a result there will be inadequate health care services, also uncertain
electricity and clean water supply, combined with unhealthy living conditions, raise
sickness and death rates.

 The term "urbanization economies" refers to benefits gained by businesses in a variety of

different sectors from population and infrastructure clusters. A good example of this is a
shopping mall. While stores in the mall may be unrelated, location close together allows
them the ability to use the same infrastructure: buildings, parking lots, and other popular
areas. With that different industry which again are unrelated to each other benefited from
the customers going to the mall. Localization economies, on the other hand, are those in
which companies in the same sector benefit from being close together. The key benefits of
localization include the opportunity to draw from the same skilled group of employees,
known as labor pooling, and the faster spread of ideas among firms within the same sector,
a phenomenon known as knowledge spillovers.

 There are various causes on why people are migrating from rural to urban places or what
we call urbanization. Poverty in rural areas, due to large corporations establishing industrial
farms and small farmers finding it increasingly difficult to make a living, causes people to
 migrate to urban areas in search of better job opportunities. The growth of manufacturing
in developed countries has created more job opportunities in urban areas and, as a result,
cities have increased dramatically in size. Educational opportunities at universities and
technical colleges attract young people to urban centers where they expect to provide better
chances for the future for themselves and their families. Urban centers in developing
countries have become centers of education and training, as well as in developed countries.
There has been a natural increase in population in many developing countries due to better
medical care, immunization initiatives, improved sanitation. In a result, death rates have
declined and child deaths have decreased.

 Everett Lee’s Theory of Migration

People are migrating for different reasons. These variations have an effect on the
overall migration process. A Theory of Migration of Everett Lee separates the factors that
decide the migration decision and the migration process into four categories; the factors
associated with the Area of Origin, the factors associated with the Area of Destination, the
interference of obstacles and the personal factors.

Duncan’s Theory
The Theory and Consequences of Mobility of Farm Population of O.D. Duncan, he
presented a theory on the mobility of people engaged in agriculture in his book. His
hypothesis is the mixture of microscopic and macroscopic active forces in the migration
process. Generally, the following factors are responsible for migration: Economic and
Technical Causes, Social Causes, Personal Causes, Natural Causes, and Other Causes.

Standing’s Theory of Materialism

According to this theory, the size and degree of migration are determined by the
relationship between the development of society, the existence of resources, the land tenure
system and factors regulating the growth of the productive forces in society. There were 2
economic system mentioned as an example in this theory. There was no significant
migration in the feudal system because the cultivators were under the influence of the
feudal lords. There was no special creation of cities during this time, and there was no rural
push migration. Whatever industrial growth has taken place in the capitalist system, this
has been possible due to migration. Migration causes an end to old class relations and gives
rise to a new form of class system, the capitalist working class.