Contemporary

Economic Issues
Confronting the
Filipino Entrepreneur
 ENTREPRENEURSHIP

The capacity and willingness to

develop, organize, and manage a
business venture along with any of its
risks in order to make a profit.
 ENTREPRENEURS

They try to identify the needs of

marketplace and to meet those needs
by supplying a service or product.
 ENTREPRENEURS AND EMPLOYEES

• An entrepreneur assumes risks.

• Employees are people who work for someone
else.
• Both may make decision, but only the
entrepreneur is directly affected by the
consequences of those decisions.
 TYPES OF
ENTREPRENEURIAL
BUSINESS
 MANUFACTURING WHOLESALING RETAILING SERVICE
 Apparel and other  Apparel  Grocery stores  Appliance repair,
textile products  Groceries and  Hardware stores automotive repair
 Chemicals and related products  Shoe stores  Babysitting
related products  Machinery,  Gift, novelty, and  Bookkeeping
 Food products equipment, souvenir stores  Dance instruction
 Printing and supplies  Furniture stores  Tutoring
Publishing  Lumber,
 Stone, clay, and construction
glass products materials
 Hardware,
plumbing,
heating
equipment
 ENTREPRENEURIAL PROCESS

• the process of pursuing a new venture

Hirsh et.al (2008)
 ENTREPRENEURIAL PROCESS

1. Identification and evaluation of the

opportunity
2. Development of the business plan
3. Determination of the required resources
4. Management of the resulting enterprise
 CONTEMPORARY
ECONOMIC ISSUES
INVESTMENT
 INVESTMENT
• Investment is the use of savings to become future
income.
• A product that people buy with the hope that they
will be beneficial or will generate income in the
future.
• More specifically refers to the use of funds to
acquire capital goods (items that are necessary to
produce other goods and services)
 INVESTMENT

• Long-term investment – ex: buying a

property or engaging in real estate.
• Short-term investment – ex: savings and
time deposits.
Different Kinds of Investments

• Direct Investments
• Indirect Investments
 Direct Investments

Business Investments.
Buying a small business may be the most
demanding kind of investment. Investors
may be required to work hard to earn an
acceptable return.
 Direct Investments

Real Estate.
People invest in real estate when they buy
homes, land, or rental properties.
 Indirect Investments
Savings Account.
Savings account is a common kind of
investment. Funds deposited in a savings
account at a bank, credit union, or savings
institutions earn interest at a specified
annual rate.
 Indirect Investments
Bonds.
A form of long-term investment issued by a corporation or
government where the purchaser becomes a creditor of the
company.
When you invest in bonds, you're lending money to a company
or government. In return, you get regular interest payments,
called coupon payments. If you hold the bond until maturity. The
date on which a debt or investment and all outstanding interest
payments must be paid in full. , you get back the face value.
What Are Stocks?
• Stocks represent ownership in a publicly-traded
company. When you buy a company's stock, you
become part-owner of that company. For example, if a
company has 100,000 shares and you buy 1,000 of
them, you own 1% of it. Owning stocks allows you to
earn more from the company's growth and gives you
shareholder voting rights.
 Indirect Investments
Stocks.
Common stocks – represents shares of
ownership in a company.
Preferred stocks – a type of corporate
security that has features of both bonds
and common stock.
 Other Kinds of Indirect Investments
• Mutual funds. These are companies that
invest in a variety of securities and sell
shares in those securities to all types of
investors
• Life insurance. Life insurance
companies sell insurance policies that
also act as a savings account
RENT
 RENT

• A term used for that payment which is

made regularly for a fixed period for the
used of services of the goods.
 TYPES OF RENTS

Davis (1997)
Inframarginal rent. “Infra” means below or
under. “Marginal” means at the margin or
the end or last. It is quasi rent earned by a
perfectly competitive firm in the short run
• The quasi rent earned by a perfectly competitive firm in
the short run. If price equals marginal cost, then it
earns nothing on the marginal unit, but if marginal cost
increases with output due to a fixed factor, then price
exceeds marginal cost for inframarginal units.
 TYPES OF RENTS

Pure economic rent.

Any payment made to a factor of
production or anything that is fixed in
supply
• Pure economic rent is a surplus amount earned by
various sources (e.g. land, capital and labor) by
behavior as per standards of its present use. in the
market is exactly inelastic in long run. It is the price
used to pay for land and other natural resources which
are totally fixed in supply.
 TYPES OF RENTS

Quasi rent.
In a perfect competition, firms sell their
product for just what it costs to produce it,
so they earn no profit.
 TYPES OF RENTS

Monopoly rent.
They are payments made to a monopolist
that are more than the minimum that the
firm would accept.
• Monopoly rent refers to the situation wherein
a monopoly producer lacks competition and thus can
sell its goods and services at a price far above what the
otherwise competitive market price would be; at the
expense of consumers.
UNEMPLOYMEN
T AND MINIMUM
WAGE
 UNEMPLOYMENT

when a person, who is actively searching

for employment, is unable to find work.
Often used as a measure of the health of
the economy.
 MINIMUM WAGE

The lowest salary that employers can

legally pay their workers. Governed by the
Labor Code of the Philippines and is
implemented by the Department of Labor
and Employment.
 TYPES OF UNEMPLOYMENT
• Frictional Unemployment. It arises when a
person is in-between jobs.
• Cyclical Unemployment. Rises during recessions
and declines during periods of economic growth.
• Structural Unemployment. It comes about
through technological advancements, when people
lose their jobs because their skills are already
outdated.
 TAXES

• Taxes are considered inflows for the

government and outflows for firms.
• Businesses apply either a percentage tax on
gross receipts (3%) or value added (12%).