CIT COLLEGES OF PANIQUI FOUNDATION INC.

Paniqui, Tarlac

Bachelor of Secondary Education - Social Studies

TOPIC 1 - REVIEW OF IMPORTANT CONCEPTS
At the end of these weeks, the preservice teacher (PST) should be able to:
a. define Economics and explain the field as a social science;
b. explain the nature and meaning of Economics;
c. cite the importance of the study of Economics;
d. explain the different views/connotations on development;
e. cite examples explaining the real meaning of development;
f. define economic planning and explain its nature.
A. ECONOMICS: ITS MEANING, NATURE AND IMPORTANCE
Read excerpt from article “Why it's Important to Understand
Economics is a social science concerned with the production,
Economics?” by William Walstad, the Director of National Center for
distribution, and consumption of goods and services. It studies how
Research in Economic Education, University of Nebraska.
individuals, businesses, governments, and nations make choices about
how to allocate resources. Economics focuses on the actions of human The case for economic literacy is a strong one. George Stigler, a Nobel
Laureate in economics, probably stated it best almost three decades ago
beings, based on assumptions that humans act with rational behavior, when he wrote: "The public has chosen to speak and vote on economic
seeking the most optimal level of benefit or utility. The building blocks of problems, so the only open question is how intelligently it speaks and votes."
economics are the studies of labor and trade. Since there are many In Stigler's view, economic literacy is special because it contributes to two
possible applications of human labor and many different ways to acquire classes of knowledge. First, it serves as a "means of communication among
resources, it is the task of economics to determine which methods yield the people, incorporating a basic vocabulary or logic that is so frequently
best results. encountered that the knowledge should be possessed by everyone." Second,
Nature of Economics it is a "type of knowledge frequently needed and yet not susceptible to
The nature of economics deals with the question that whether economical purchase from experts."
economics falls into the category of science or arts. Various economists Economic literacy certainly contributes to the first class of knowledge.
have given their arguments in favor of science while others have their People like to think and talk about the economic issues that affect them as
reservations for arts. consumers, workers, producers, investors, citizens and in other roles they
a. Economics as a Science assume over a lifetime. Economic literacy also gives people the tools for
To consider anything as a science, first, we should know what science understanding their economic world and how to interpret events that will either
is all about? Science deals with systematic studies that signify the cause directly or indirectly affect them. Nations benefit from having an economically
literate population because it improves the public's ability to comprehend and
and effect relationship. In science, facts and figures are collected and are
evaluate critical issues. This understanding is especially important in
analyzed systematically to arrive at any certain conclusion. For these democracies that rely on the active support and involvement of its citizens.
attributes, economics can be considered as a science. However, Economic literacy contributes to a second class of knowledge. For some
economics is treated as a social science because of the following features: economic decisions, such as buying a home or investing in the stock market, it
 It involves a systematic collection of facts and figures. is possible to hire professional or technical help when making a choice, but in
 Like in science, it is based on the formulation of theories and most cases it is neither economical nor practical for an individual to hire a
laws. skilled professional every time an economic decision needs to be made. Even
 It deals with the cause and effect relationship. when such advice is given, the final choice must be made by the individual,
These points validate that the nature of economics is correlated with not the adviser. What this means is that each person must ultimately serve as
science. Just as in science, various economic theories are also based on his or her own economist in making many economic choices, whether those
logical reasoning. choices involve buying a product, getting a loan, voting on candidates and
b. Economics as an Art economic issues, or something else. Economic literacy improves the
competence of each individual for making personal and social decisions about
It is said that “knowledge is science, action is art.” Economic theories
the multitude of economic issues that will be encountered over a lifetime.
are used to solve various economic problems in society. Thus, it can be
inferred that besides being a social science, economics is also an art.
B. OTHER IMPORTANT CONCEPTS
Importance of Studying Economics Development is basically an economic concept that has positive
So, why do we study economics? Here are five reasons why studying connotations; it involves the application of certain economic and
economics is important. technical measures to utilize available resources to instigate economic
1. Informs decisions - Economists provide information and forecasting growth and improve people’s quality of life.
to inform decisions within companies and governments. This Development as Economic Growth. From an economic perspective,
knowledge of economics – or economic intelligence – is based on Schumpeter (1984, 1985, 1989) cannot be left unmentioned. He used
data and modelling. the term development as evolution, unfolding, revelation and
2. Influences everything - Economic issues influence our daily lives. innovation. For this school, it seems that there is no need for a
This includes issues such as tax and inflation, interest rates and development theory, applying modern economics to the concept, which
wealth, inequality and emerging markets, and energy and the is an antihistorical and universally valid discipline being sufficient.
environment. A broad subject, economics provides answers to a According to Veiga (2005, p. 80): “The market fundamentalists
range of health, social and political issues that impact households and implicitly consider development as something redundant. Development
wider communities. would come as a natural consequence of economic growth, thanks to
3. Impacts industries - Firms of all sizes and industries have to rely on the trickle-down effect”.
economics, whether that’s for product research and development, Development as Fiction. Development cannot be reduced to a
pricing strategies or how to advertise. This wide influence means quantitative understanding of the world is present. Rivero (2002)
studying economics can open up a variety of career options across all defends the idea that those who believe in development ignore the
sectors of the economy, from agriculture to manufacturing, to banking historical-cultural processes, society’s non-linear progress, ethical
and consultancy. approaches and even dispense with ecological impacts. Another point
4. Inspires business success - Understanding how consumers behave that characterizes the authors forming part of this current scepticism is
is vital for a business to succeed. Economists use theories and related to the fact of believing that a reduced, or almost non-existent,
models to predict behaviour and inform business strategies. For possibility exists of peripheral countries rising in the rigid world
example, how to analyse ‘big data’. capitalist hierarchy.
5. International perspective - Economics affects the world we live in. The ‘Alternative’ Route. The multidisciplinary concept of development is
Understanding domestic and international perspectives – historic and complementary to the unidisciplinary idea of economic development.
current – can provide a useful insight into how different cultures and Veiga (2005), for example, considers that Furtado has the best
societies interact. For international corporations, understanding the conception of the concept:
world economy is key to driving success.

Major 13: Comparative Economic Planning

 Economic growth such as we know it has been basing itself on 6. Planning for Consumption. In a centrally planned economy, it
preserving the elites’ privileges that satisfy their enthusiasm for should not be confined to production alone but at the same time, it
modernization; now development is characterized by its underlying must cover the distribution and consumption also. In other words, the
social project. Having resources to invest is far from being a planning authority should not decide what and how to produce but it
sufficient condition for preparing a better future for the mass must keep in mind and decide accordingly among whom it is to be
population. However, when the social project prioritises effective distributed.
improvement of this population’s living conditions, growth 7. Rational Allocation of Resources. Generally, in under-developed
metamorphasizes into development. countries, available resources are scarce and these resources are
Sustainable Development. The term sustainable development appeared allocated in such a manner as to get maximum social welfare. It
in the late 1970s and was definitely consolidated in 1987 by the needs to fix up priorities relating to economic development, thus,
aforementioned Brundtland Commission. This commission prepared allocation of resources in accordance to these fixed priorities.
the most broadly accepted definition of sustainable development: 8. Feasible Policies and Targets. A good planning is based on the
Sustainable development is a transformation process in which initial resources of the country to achieve the feasible goals and
the exploitation of resources, direction of investments, orientation policies. In this way, domestic resources are planned for attaining
of technological development and institutional change are economic stability.
reconciled and reinforces present and future potential, in order to
attend to needs and future aspirations (...) it is that which attends References:
to present needs without compromising the possibility of future  William Walstad. (1998) Why it's Important to Understand Economics |
generations attending their own needs. Federal Reserve Bank of Minneapolis. Retrieved , from
Well-being as a Variable Objective of Development. Sustainable https://www.minneapolisfed.org/article/1998/why-its-important-to-
development is something that takes place through a combination of understand-economics
 What Is Economics, and Why Is It Important? – Principles of
human and the ecosystem’s wellbeing. People live in and form part of Economics. (n.d.) Retrieved , from
the ecosystem and, consequently, analysis of the well-being of both https://opentextbc.ca/principlesofeconomics/chapter/1-1-what-is-
cannot be carried out separately, i.e. the well-being of the natural economics-and-why-is-it-important/
environment does not make sense without human dimensions  Why is it important to study economics?. (2020) Retrieved , from
(political, economic and social) and humanity’s well-being cannot be https://www.durhamisc.com/blog/why-is-it-important-to-study-
disassociated from the environment. economics
 Amaka Metu. (2018) THE NATURE AND SCOPE OF ECONOMICS.
THREE OBJECTIVES OF DEVELOPMENT Retrieved , from
1. Raising people’s living levels, i.e. incomes and consumption, levels of https://www.researchgate.net/publication/325677755_THE_NATURE_
food, medical services, education through relevant growth processes. AND_SCOPE_OF_ECONOMICS
2. Creating conditions conducive to the growth of peoples’ self- esteem  Nature And Scope of Economics – StudiousGuy. (n.d.) Retrieved , from
through the establishment of social, political and economic systems https://studiousguy.com/nature-and-scope-of-economics/
and institutions which promote human dignity and respect.  Adam Hayes. (2020) Economics Definition: Overview, Types, &
3. Increasing peoples’ freedom to choose by enlarging the range of their Indicators. Retrieved , from
choice variables, e.g. varieties of goods and services. https://www.investopedia.com/terms/e/economics.asp
 Rabie M. (2016) Meaning of Development. In: A Theory of Sustainable
ECONOMIC PLANNING Sociocultural and Economic Development. Palgrave Macmillan, New
Economic planning is a resource allocation mechanism based on a York. https://doi.org/10.1007/978-1-137-57952-2_2
computational procedure for solving a constrained maximization problem  What is Development? - Sid Israel - Society for international
with an iterative process for obtaining its solution. Planning is a mechanism development. (2021) Retrieved , from https://sid-israel.org/en/what-is-
for the allocation of resources between and within organizations contrasted development/
 Jair Soares Jr. and Rogerio Quitella. (2008) Development:
with the market mechanism. As an allocation mechanism for socialism, Development: An Analysis of Concepts, Measurement and Indicators.
economic planning replaces factor markets with a procedure for direct Retrieved , from
allocations of resources within an interconnected group of socially owned https://www.scielo.br/j/bar/a/5SHFxh5cBhrQtBM6GXWy3tp/?
organizations which together comprise the productive apparatus of the format=pdf&lang=en
economy.  Shelly Shah. (n.d.) Development: Development as Multiple
Top 8 Features of Economic Planning Connotations. Retrieved , from
https://www.sociologydiscussion.com/society/development-
1. Definite Objective. The most significant characteristic of economic development-as-multiple-connotations/1039
planning is that it should possess definite objectives. Planning means  Top 8 Features of Economic Planning. (n.d.) Retrieved , from
conscious and deliberate undertaking for a definite objective. For https://www.economicsdiscussion.net/economic-planning/top-8-
instance, economic planning has the objective to accelerate the rate features-of-economic-planning/4658
of growth, elimination of trade cycles, bringing the stability and a
attain full employment in the economy.
2. Central Planning Authority. The existence of a central planning
authority is another feature of economic planning. This central
planning authority is responsible to prepare different schemes of
development and coordinating the various activities. The central
planning authority takes all decisions relating to production and
consumption in an economy.
3. Democratic Character. Another pioneer feature is its democratic
nature. No doubt, various plans are prepared by experts but at the
same time, adequate opportunities are provided to the people to
actively participate at various levels. Being federal structure of Indian
Constitution, the Union Government only uses its fiscal, monetary and
physical controls to guide and give direction in consequence with the
five-year plans.
4. Only an Advisory Role of Planning Commission. In the
decentralized set up of planning. Planning Commission is the apex
body. It provides the necessary perspective, guidance and
coordination. Furthermore, it serves as a close link between different
agencies so that functioning may be smooth. In this regard, Planning
Commission is an advisory character.
5. Comprehensiveness. Another important characteristic of planning is
its comprehensiveness in scope. As central planning authority takes
all decisions regarding production, consumption and distribution, thus,
it must cover the entire economy which must be comprehensive in
scope. In other words, planning must be effective so that the planning
of one sector may not be nullified by the absence of planning in other
sectors.

Major 13: Comparative Economic Planning