Lecture 5-Basic Economic Problems Confronting The Development of The

The document outlines 7 basic economic problems confronting the Philippines in the 21st century: 1) high poverty and income inequality, 2) rapid population growth, 3) underinvestment in human capital, 4) weak infrastructure, 5) the need for food security, 6) slow adoption of technology, and 7) environmental sustainability challenges. It provides statistics on poverty incidence, the Gini coefficient for income inequality, population growth, and school attendance to support these problems. Addressing these issues is important for achieving sustainable and inclusive economic development in the Philippines.

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Lecture 5-Basic Economic Problems Confronting The Development of The

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Cristy Nunes Villanueva

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Basic Economic Problems

Confronting the Development of

the Philippines in the 21st

Century
Crisanta N. Villanueva, LPT
Teacher II
Applied Economics
2nd Sem. SY 2017-2018
Paliparan III Senior High school
1. 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.
Two Categories of Poverty

1. Absolute Poverty the lack

of income to buy the basic food
and necessities for subsistence
living.
2. Relative Poverty it does not
necessarily mean they do not have
sufficient income to purchase the
minimum requirements for daily
survival.
Poverty threshold the income needed to
purchase theses minimum nutritional
requirements and other basic necessities for
daily survival. Those below threshold are
considered poor since they cannot even
have the income to purchase the minimum
nutritional requirement for daily
subsistence.
1st Sem. Of 2014

P10,534 per year per capita food

threshold
P29/individual/day to meet the
minimum food intake for daily survival
Below threshold are considered poor
Poverty incidence is the
proportion of households in the
country with family income
lower than threshold or poverty
line.
1st Sem. Of 2014

20% of all the families

25.8% of all the population
These proportions show a slight
decline from the poverty incidence
recorded in the previous year.
Poverty Incidence in the Philippines, Selected Years
Poverty Incidence
Among Among
Population Families
2006 28.8% 23.4%
2009 28.6% 22.9%
2012 27.9% 2.3%
Source:2013 Philippine Statistical Yearbook, National Statistical Coordination Board
Poverty incidence is the
proportion of households in the
country with family income
lower than threshold or poverty
line.
Gini coefficient is a measure of
income inequality derived from the
Lorenz curve. Perfect equality is
indicated by the value 0 and perfect
inequality has a value of 1.
2. Demographic Changes and its
Economic Implications
Because of the increase in
population from 27 million in 1960
to 102 million in 2015, the country
th
is now considered the 12 largest
country in the world.
3. Low investment in Human
Resource Development
A highly trained workforce is more
productive than a pool of unskilled
workers. Filipino youth are still out of
school youth and have limited education
and training. This may be due to the
huge opportunity costs of school
attendance.
World Bank estimated:

0.43% in 2012 Gini coefficient of the

Philippines
0.4484 in 2009
The coefficient has declined slightly
implying a minimal improvement in the
income distribution in the country
4. Weak Infrastructure
Physical infrastructure facilitates and expands that likewise fuel
economic growth. The inadequate infrastructure of a country has
debilitating effects on the individuals, households, business firms, and
economy.
Percentage Distribution of Total
Family Income by Income Deciles
Income Decile 1991 1994 1997 2000 2003 2009
First 1.8 1.9 1.7 1.7 1.8 2.0
Second 2.9 3.0 2.7 2.7 2.9 3.1
Third 3.8 3.9 3.5 3.5 3.8 3.9
Fourth 4.7 4.9 4.3 4.4 4.7 4.8
Fifth 5.7 6.0 5.4 5.5 5.8 5.9
Sixth 7.0 7.4 6.8 6.9 7.2 7.3
Seventh 8.7 9.1 8.7 8.8 9.1 9.2
Eighth 11.4 11.8 11.5 11.7 11.9 11.9
Ninth 16.1 16.4 16.2 16.4 16.6 16.6
Tenth 37.9 35.5 39.3 38.4 36.3 35.3
Source: 2013 Philippine Statistical Yearbook, National Statistical Coordination Board
5. Pursuing Food Security
With more than 100 million people to feed,
the concern of the government is to ensure
food security for all. This goal has been
interpreted as food self-sufficiency in the
light of the huge amount of arable land
devoted to the production of food grains-
rice and corn.
6. Slow Adoption of Modern
Technology
Technology is the manner of
processing raw materials or
intermediate inputs into
transformed outputs through the
use of factor outputs.

Labor-intensive technology a
technology that is biased in the use
of labor
Capital-intensive technology refers
to use of more capital relative to
labor in the production process
7. Environmental Sustainability and
the Countrys Development Thrust
The environment is part of natural
resources where we derive income from
the utilization of its wealth. Excessive
use of our natural resources may
compromise its ability to provide income
and other benefits in the future.
Group Activity:
Give example or examples of the given
basic economic problems confronting
the development of the Philippines in
st
the 21 Century. Explain.