Industrial Relations &

Economic Development

Prof. Jorge V. Sibal

UP SOLAIR
Traditional View of Economics and
Economic Development
Economic development is-
◼ viewed as the annual increase in the total
production of goods and services in a country
(or GNP growth rate)
◼ Measured by trickle down effect of the
economic growth to the masses in form of
wages.
Political Economy

◼ Started as the study of production and trade

and their relations with law, custom and
government.
◼ At present, it refers to interdisciplinary studies
in economics, law and political science in
explaining how political institutions, the
political environment, and the economic
system whether capitalist, socialist or mixed
influence each other.
Development Economics

◼ concerned with the economic, cultural and

political requirements for affecting rapid
structural and institutional transformations of
entire societies in a manner that will most
efficiently bring the fruits of economic
progress to the broadest segments of the
population” (Michael Todaro, 1977).
Economic Development

◼ not merely focused on the changes in the

economic structures but on the whole society
itself including its socio-cultural and legal-
political institutions.
Goals of Economic Development

◼ It should result into a long term, stable and

sustained economic growth; and
◼ It should be “redistributive type of growth”
and able to eliminate or reduce poverty,
income inequality and unemployment and
contribute to a stable IR system (Todaro,
1977 and Villegas & Abola, 1973).
Economic Development
and IR Development
SCIENCE TECHNOLOGY

ENTREPRENEURSHIP AND
TECHNICAL INNOVATION

ECONOMIC IR DEVELOPMENT
DEVELOPMENT
Approaches to Economic Development

1. Linear stage of growth model;

2. Structural change model;
3. International dependence revolution; and
4. Neo-classical, free market counter-
revolution.
Linear Stages of Growth Model

◼ Massive dose of domestic and foreign-

sourced capital in order to generate sufficient
investments to accelerate economic growth
◼ Marshall Plan type after WW II- W.W. Rostow
◼ Harrod-Domar Growth Model- increase in
domestic savings and capital formation via
increased taxation, forced savings and
decreased consumption and foreign aid
Structural Change Model

◼ Focus in investments in the modern sector

(industry and services) rather that agriculture
(traditional sector).
◼ The development of modern sector will attract
the surplus labor from agriculture and created
demand for agricultural products (raw
materials and food.
◼ There will a shift to mechanization and
industrialization.
International Dependence Model

◼ Underdevelopment is caused by MNCs tied

up with local elites (landlords, military rulers,
traders, public officials, trade union leaders,
etc.) to prevent industrialization.
◼ LDCs must institutionalize reforms via state
and private entrepreneurship to compete, tie-
up or take-over the businesses of the MNCs
to spur economic development.
Neo-classical Counter-Revolution

◼ Underdevelopment caused by is too much

state intervention, graft and corruption,
inefficiency and lack of private sector
initiative.
◼ Promotes free trade, privatization of state
enterprises, foreign investments, export
promotion and less state intervention in
prices and in the financial and capital
markets.
Thankyou.