Presentation on theme: Economic Development by F.

Fajardo

The Real concept of Development?

 A better quality of life has been the goal of societies and nations.
 Minos
 Plato

The Basic Economic Problem:

1.
2.
3.

Meaning of Economic Development?

 The Progressive process of improving human conditions.
 It involves economic and non-economic factors

Classification of Countries
1.
2.
3.

Development and Growth

Development is a progressive and dynamic process. Growth is the result of the
development. Therefore, growth is the product of development

For example
Modern methods in planting tobacco involve a process, and this is development itself.
Better harvests

Economic growth is visible and measurable

Economic growth is visible and measurable. Examples: Roads, vehicles, buildings,
hospitals, banks, schools, etc. product of development

Economic growth does not stop

Economic growths do not stop. It has to create more and better goods and services.
Economic development embraces series of economic growths. Thus, earlier economic
growths help subsequent economic development.

Growth without development?

Whenever there is real development, there will be growth because growth is a natural
consequence of development. Development without growth is inconceivable.

The Objectives of Development

In the past, the traditional national objective of the LDCs was to increase the GNP.
Emphasis was given to material or economic progress.

1982-550 billion
1983- 700 billion

However, the above example is not conclusive

 However, the above example is not conclusive. And in many developing
countries, despite the perceptible economic growth, social and economic
conditions are deteriorating.
 The reason for this has been obvious to the common people. The fruits of
development have not reached to them.
 Only the few top government officials, big landlords, and business tycoons have
benefited. Government programs are in the wrong directions.
 The leaders of the developing countries have realized the root causes of such
depressed situations. Thus, the main focus now of development is towards the
social factors.
Philippine Development Objectives/ Philippine Development Plan (PDP) 2023-
2028
The PDP 2023-2028 is a plan for deep economic and social transformation to
reinvigorate job creation and accelerate poverty reduction by steering the economy
back on a high-growth path. (See Separate Document)

Obstacles to Development
1. Poor nations are deficient in capital
2. Another obstacle is the population explosion.
3. The greatest obstacle to economic development is man himself.

Stages of Growth
 The development of nations encompasses an evolutionary process from the
primitive to modern societies. However, there are societies that have until now
remained primitive in their economic, social, and political institutions.
 The industrial revolution which began in the late 1700’s in England paved the
rapid economic growth of Western Europe and in the United States.
 Since that time, the economic historians have searched a theory that would
appropriately describe the natural economic revolution that all nations will
undergo through.
 One approach is the stages of economic growth based on exchange systems.
That is in the form of barter economy to the money economy, and finally to a
credit economy.
 Another way of categorizing the stages of growth is through dominant productive
sectors in the economy. According to this theory as stated by the British
economist Colin Clark, these are three stages involved:
Stage 1
Agriculture is the principal source of employment and income in the agricultural
economies.
Stage 2
Manufacturing industry becomes the major economic activity as a country develops.
Stage 3
Service industries grow to be dominant feature of the economy as a country further
develops.

The doctrine of Rostow

 Many other studies have been conducted on the stages of economic growth,
However, the work of Professor Rostow, an American Economic historian
appears to be the most popular.

 Base on the doctrine of Rostow, the transition of the economy of one country
from underdevelopment to development passes through several stages such as:
 Traditional Society
 Preconditions for take-off
 Take-Off
 Drive to Maturity
 Age of High Mass Consumption

How can a poor country take-off?

 They need a big push to take off.
 But: It requires huge amount of money,
 Domestic saving is not enough for significant investments.
 Public administration is not only efficient but also corrupt.
 Population explosion
 Rich countries still continue to exploit them- their laborers, raw materials, and
markets.

What is poverty?
 Poverty is a state of deprivation in which people or communities lack access to
resources and basic necessities needed to live a healthy and dignified life.
 Living in poverty means not being able to afford medical care or access to basics
such as electricity, shelter, and food. Improper nutrition can cause stunting and
 wasting, permanently impacting children’s development. Poverty in countries
lacking access to clean water and sanitation leads to the spread of preventable
diseases and unnecessary deaths, particularly of children.
 Historically, poverty has been calculated based on a person’s income and how
much they can buy. Still, new multidimensional measures consider holistic factors
impacting people’s quality of life.
 And children living in poverty often face obstacles to accessing quality education,
which can perpetuate the cycle of poverty from one generation to the next.

Fast facts: Global poverty

 719 million people — 9.2% of the world’s population — are living on less than
$2.15 a day.
 Children and youth account for two-thirds of the world’s poor, and women
represent a majority in most regions.
 Extreme poverty is largely concentrated in sub-Saharan Africa.
 24% of the world’s population, which equates to 1.9 billion people, live in fragile
contexts, characterized by impoverished conditions and dire circumstances.
 By 2030, more than half of the world’s poor will live in fragile contexts.
 About 63% of people older than 15 who live in extreme poverty have no
schooling or only some basic education.
 1.2 billion people in 111 developing countries live in multidimensional poverty,
accounting for 19% of the world’s population.
 593 million children are experiencing multidimensional poverty.
 Over 37 million people were living in poverty in the U.S. in 2021. Children
account for 11.1 million of those.

 It has been said that God did not create poverty, Poverty is a product of defective
man-made institutions.
 Social, economic and political institutions do not hamper development but are
also inhuman.

A Good Economic System

An economic system is responsible for improving economic conditions of the people.

 However economic condition does not only mean material sufficiency like money,
food or houses. It also includes economic freedoms and justice.
 A person who has plenty of food to eat and clothes to wear, but could not choose
his job or he has no freedom to choose how and where to spend his income, is
certainly not happy.

The effectiveness of an economic system is measured by the following criteria:

 Abundance
 Stability
 Security
 Growth
 Efficiency
 Justice and equity

The needs of the poor masses are simple

 The needs of the poor masses are simple. They have no love for expensive
jewelries, palaces, sleek cars, and other noticeable display of wealth. All they
really dream are their basic needs, the college education of their children, and
some modest properties like a decent house.

The real test of a good economic system is the welfare of the poorest of the poor.
 If the goods and services of the system have touched their lives, and they are
contented, then it is a good economic system.

Determinants/ Factors of Economic Development

Economic
1. Capital
2. Technology
 3. Market

Non-economic
1. Social Structure
2. The Family System
3. Cultural Values
4. Political Conditions
5. Corruption in Public Administration
6. Religion
7. Population
8. Geography The Objectives of Development?
Development

Reduction of Poverty
Eradication of inequality
Minimizing unemployment

Ideas and theories of economic development

 Ancient- Plato (the republic)
 Aristotle (Management of Agriculture)
 Xenophon (Capitalism, the government should promote trade)
 Medieval Feudalism, Power of the Church, Thomas Aquinas
 The Economic Doctrine of Mercantilism- Capitalism, International Trade,
Colonies
 Physiocracy- Rule of nature- the expansion of science, people are poor because
they violated the rule of nature (ex. Lazy and drunkard)
 Laizzes Faire Theory- Limited Government interference
 Classical Theory- Adam Smith (Production is the real wealth)
 Thomas Malthus (Theory on Population)
 David Ricardo (Comparative Advantage)
 Karl Marx (Theory of scientific social evolution and Theory of value: Labor is
necessary; communism)
 Promotion of Human Values- Jean Sismonde, Welfare of the poor, the state
should interfere to promote the welfare of the poor
 Theory on progress and poverty- Henry George (Rent is the cause of poverty;
the value of land is not on fertility but population growth)
 Modern theory of employment- John Meynard Keyness (Great Depression
1930’s)
 Innovation Theory- Joseph Schumpeter (The role of innovator)