BASIC ECONOMIC PROBLEMS

CONFRONTING THE
DEVELOPMENT OF THE
PHILIPPINES IN THE 21ST
CENTUTY

LESSON 5
PHILIPPINES
• The Philippines is confronted
with several issues and
problems which prevent its
citizens from realizing a
meaningful life, on the hand,
and in pushing its
socioeconomic developement,
on the other
 • POVERTY AND UNEQUAL DISTRIBUTION OF INCOME

Poverty is a restricting condition experienced by millions of families that prevents them in

attaining the minimum level of consumption for subsistence living

• Families with limited or without resources

• Limited Schooling
• Have no funds and cannot have access to credit
• Not properly trained and monitored the resources
 Two Categories of Poverty

• Absolute Poverty - is the lack of income to buy the basic food

and necessities for subsistence living.
• Relative Poverty - refers to the structure on how the national
income is being distributed among households in an economy.
 ABSOLUTE POVERTY
A. Poverty threshold - is the income needed to purchase these
minimum nutritional requirements and other basics necessities for
daily survival.

B. Poverty Incidence - is the proportion households in the

country with family income lower than the poverty threshold or
poverty line.
 RELATIVE POVERTY

lORENZ CURVE - shows the share of the various households groups

(ranked from the poorest to the richest) on the total national
income.

GINI COEFFICIENT -is a measure of income inequality derived from

the Lorenz curve
VARIOUS INTERVENTIONS IMPLEMENTED IN THE PHILIPPINE ECONOMY

• PROVIDE FREE MEALS, HOUSING, AND ADEQUATE CLOTHING.

• PROVIDE RESOURCES INCLUDING CREDIT, SKILLS, AND ENTREPRENURIAL
TRAINING, AND CASH TRANSFERS. EX. POOR HOUSEHOLDS GIVEN A
RESOURCE LIKE A LIVESTOCK OR SARI-SARI STORE.
• MEASURES LIKE PROGRESSIVE TAXATION, INCOME TRANSFERS, AND OTHER
PROGRAMS MEANT TO IMPROVE THE INCOME DISTRIBUTION CAN BE
IMPLEMENTED. EX. DISCOUNTS GIVEN TO A SENIOR CITIZENS.
• SUBSIDIES AND GRANTS GIVEN TO STUDENTS FROM POOR HOUSEHOLDS SO
THEY CAN ENROLL IN STATE UNIVERSITIES AND COLLEGES.
2. DEMOGRAPHIC CHANGES AND ITS ECONOMIC IMPLICATIONS

POPULATION IN THE
PHILIPPINES
• In 1960, has enumerated 27 million.
• In 2015, population estimate for the
country has reached 102 million.
• Philippines considered the twelfth
(12th) largest country in the world.
• Population Growth has falles 1.9%
between 2000-2010
MEASURES IN MANAGING THE POPULATION GROWTH

• population excerts on limited resources.

• reduce the available land person and can put a toll on
productivity of the agricultural sector.
• provide the social services including education, health, and
housing to an expanding population.
• rapid population growth can strain environment as the expansion o
people demands more land for housing and other economic
activities.
 Several Explanations on the Growth of the
Population

• The cost and benefit analysis can explain why fertility

rate among women in poor households is higher compared
with better-off households.
• They attach a higher value on the future contributions of
these children on household welfare.
• Well-to-do families do not consider as investments that
can enhance family income in the future.
• They derive intrinsic joy in having children not because
they can help them in the future but they give meaning to
family life.
5. More women employed in affluent households the opportunity
cost of having a child is high which is further augumented by
the high cost of rearing and educating child.
 IMPLICATIONS OF AN
EXPANDED POPULATION

• Increase in Labor
• Labor forced is not well trained
• Internal Migration can reduce the labor force
• Overseas migration may also have impact on the school
participation of children
 3. low investment in human
resource development

• Skills training and investment in education can shape human

capital of a nation.
• Development of knowlege capital is formed through heavy
investments in hiher education, science and technology, and
research and development.
• Filipino youth are still out of school and have limited
education and training may result unskilled workers.
• With low school participation end up with limited eployment
rate.
4. Human resource development initiatives are left with the private
sector, there will be limited investments particularly in research and
development.
5. The government does not recognize the importance of human resource
development in economic growth, the Philippines will lag behind.
 4. WEAK INFRASTRUCTURE

Similar to the role of human capital on economic growth, physical

infrastructure facilities and expands transactions that likewise
fuel economic growth. We need roads, bridges, and other networks in
transportation and communication because these grids link economic
sectors tightly.
Take case of the transportation system in Metro Manila

• no efficient mass transit system in the megacity, the huge

traffic problem is very wasteful.
• Reduce national income measured in terms of delayed
deliveries, missed business opportunities, and huge energy
consumption.
• Limited capacity of energy has resulted daily interruptions
of electricity in many regions in the country.
• With no reliable supply of electricity services industries
including business process outsourcing (BPO) can put their
operations at risk.
• Insufficient funds to finance the huge costs of contructing
networks.
 infrasctructure
projects
• A large proportion of the budget is intended for the
operation of the government agencies and in the
provision of social services.
• The government provide the financing counterpart is
grounded on the avility of government to raise
revenues through taxation.
• Allow to private sector to engage in the
construction and management of infrastructure
projects through a public-private partnership.
• There is a need to entice more private sector
participation in improving our air and marine port
facilties.
5. PURSUING FOOD
SECURITY
 AIM OF UPLIFTING THE PRODUCTIVITY OF THE
SECTOR AND THE INCOME OF THE FARMERS

• A sluggish agriculture may result an unstable society

with the spread of poverty while insuffieciency in food
may invite inflationary pressures or dependence on
imports.

• Pursuing food self sufficiency by

securing food grains domestically may
result in high prices for food grains
in the light of the lower prices in
other countries in the region
including Vietnam and Thailand.
 • Food security implies that the
country and its people should have
enough income to purchase food
grains at the cheapest price
anywhere in the world.

• Therese is a need to invest in irrigation facilities,

provide cheap fertilizers and inputs, and organize farmers
with small farm lands so they can reap the benefits of
economies of scale thorugh the mechanism of cooperatives.
• Construction of farm-to-market roads, expansion of
agricultural extension programs, and development of post-
harvest facilities can contribute to agricultural
productivity.
6. Slow Adoption of Modern Technologies

• Technology - is the manner of processing raw materials or

intermediate inputs into transformed outputs thorugh the use of
factor inputs.
 AGRICULTURE
• Many of our farmers are still using traditional farming
techniques instead of advanced ones because of cheap labor
brought about by the surplus of manpower in the sector.
Conventional seeds are still utilized that are low
yielding instead of the high yielding improved seeds.
 INDUSTRIAL
• The share of value added of the industrial sector has
remained a third of the gross domestic product of the country
for the past four decades. Similarly, the share of
manufacturing, the biggest component of the industrial
sector, has stagnated at around 23 to 25% of GDP during the
same period.
7. ENVIRONMENTAL SUSTAINABILITY AND THE
CONTRY'S DEVELOPMENT THRUST
• The environment is part of natural resources where
we derive income from the utilization of its wealth,
however, excessive use of our natural resources may
compromise its ability to provide income and other
benefits in the future.
 A NATURAL RESOURCES DIFFICULT TO EXPAND
• Proper use of land, sea and forest should be undertaken in
order to achieve a long term life for agriculture.
• Overutilization of natural resources is threatened by waste
discharges by productive and distributive activities.
• Destroy the productivity of water and marine resource
nearby as it disposes its wastes.
• Adverse effects on families dependent of logging like
furniture and construction industries a total log ban may
affect.
• Secure mineral resources intact for the future and protect
our environment.
• Measures like pollution tax, pollution limits, and mangement
plan for environmental impact of these economic activities