Every society has formed social institutions and organizations to meet all the basic needs of

the people. One of these needs is to produce and distribute goods and services to the people. The
economic institutions and organizations of society provide the distribution of goods and services to the
people.

ECONOMIC INSTITUTIONS
Nonmarket Institutions

Reciprocity exists when there is an exchange of goods or labor between individuals in a

community. This would include direct barter or simultaneous exchanges of goods or labor. An
example of reciprocity is when you exchange food or in-kind for the labor extended from your
neighbors.

Transfer entails a redistribution of income that is not matched by the actual exchange of
goods or services. An example of this is a donation or financial assistance from a wealthy relative to
the needy one. Another is from the government institutions in the case of 4P's, senior citizen social
pension, farmer subsidies, social security benefits, among others.

Redistribution can be considered as a combination of transfer and reciprocity. It involves a

centralized collection of goods from members of a group and redistributes the goods to the same
members of the group. For example, during this covid-19 pandemic, a student organization in your
school collects relief goods and distributes the same to the most affected students in the community.

Market Institutions

The market transaction involves parties who sell their goods and services in exchange for
cash from consumers or customers. Some examples of these are the sari-sari stores in our
community where we use to buy our basic needs; the food industry that we used to patronize provides
support to the economic activity in our country, in general.

Market and state. The state, through the government, plays an important role in the market.
The government regulates the prices especially for the basic commodity to protect the interest of the
consumers. That is why we have this so-called Suggested Retail Price (SRP) which means that the
price of a certain commodity follows a price ceiling or the maximum price set by the government. The
Department of Trade and Industry (DTI) is tasked with this regulation.

Labor is also considered a commodity and it is an input to the production of goods and
services. The government regulates the prices of labor by determining the minimum wages through
the regional wage board to protect the workers from being paid below the minimum in exchange for
their service rendered. The government intervenes in the activities of market institutions to primarily
protect the interest and welfare of the consumers and the workers.

The government collects taxes from the worker’s income, business profits, and consumption
of goods and services to raise revenue for government spending, may it be government purchase, for
example, purchase of fighter planes or construction of railways or transfer payments which does not
require any output in the form of social security benefits, provision of public services through free
education, universal health care, etc., subsidies and the like.

A bank is a place where people deposit or save their money with interest in a given period. It lends
money both to public and private organizations. The government borrows money from the bank to
finance its projects while private organizations and individuals borrow money to finance their business
and other personal needs. The example includes Banco de Oro, Bank of the Philippine Islands,
Metrobank, rural banks, etc.

A corporation is a company or group of people authorized to act as a single entity and

recognized as such in law. Usually, corporations operate as stock corporations where ownership is
through stockholders who own shares in the company. Examples are San Miguel Corporation and
Jollibee Foods Corporation.
 Cooperative or coop refers to an autonomous association whose membership is voluntary
toward the attainment of shared economic, social and, cultural needs or aspirations. The members
are the owner of a cooperative. Examples are credit cooperative, a consumer cooperative, electric
cooperative, housing cooperative, worker’s cooperative, an agricultural cooperative, general
cooperative.

A trade union or labor union is an organization of workers whose main objective is to protect the
welfare of its members. Its purpose is to collectively negotiate with employers for better compensation
benefits, to ensure safety standards in the workplace, and others. In the Philippines, these national
federations are the Trade Union Congress of the Philippines (TUCP) and the Kilusang Mayo Uno
(KMU).

Transnational Advocacy Groups are involved in social advocacy to promote principled

causes, ideas, and values. Their goal is to give the powerless a voice in the domestic and
international law-making body. Common social advocacies include human rights, consumer rights,
women’s rights, environmental issues, and international peace. In the Philippines, Human Rights
Watch is very active in human rights and peace issues.

Development Agencies are committed and dedicated to distributing aid. These agencies are
present in developing countries challenged by security conflict, food shortage, climate change,
financial instability, and others. Some of the prominent development agencies in the Philippines are
the following:
 United States Agency for International Development (USAID)
 Australian Agency for International Development (AusAID)
 Japan International Cooperation Agency (JICA)

The aid can be subdivided into two categories: humanitarian aid (emergency relief efforts in
response to disasters and development aid (foreign aid) aimed at helping countries to achieve
sustainable economic growth.

Global Organizations work in the development of entire countries. They are the funders and
donors. They operate by giving loans or grants to other countries to be used for improvement. In the
onslaught of COVID-19, World Bank granted a loan to the Philippines to be used for financial
assistance to many of the Filipinos who are affected by the pandemic. Below are the most well-known
organizations in the world.
 World Bank (WB)
 International Monetary Fund (IMF)
 Asian Development Bank (ADB)

The International Organizations are organizations with a worldwide membership, scope, or

presence. The two (2) main types are the following:
 International Non-governmental Organizations (INGO) are non-governmental organizations
(NGOs) that operate internationally, for example, the International Committee of the Red
Cross.
 International Governmental Organizations (IGOs) are organizations that are made up
primarily of member states, for example, the United Nations (UN).