APPLIED ECONOMICS

Basic Economic Problems

and the
Philippine
z Socio - Economic
Development in the 21st Century
APPLIED ECONOMICS
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Basic Economic Problems

Objectives

At the end of the lesson, the learner is expected

to:

 identify the basic economic problems of the country

 explain how applied economics can be used to solve economic
problems

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Basic Economic Problems

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Basic Economic Problems

Poverty and unequal distribution

of income
Poverty is a restricting condition experience by millions of
families that prevents them in attaining the minimum level of
consumption for subsistence living.

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Basic Economic Problems

Two categories of Poverty

Absolute Poverty is the lack of income to buy the basic foods and
necessities for subsistence living.

Relative Poverty refers to the structure on how the national

income is being distributed among households in an economy.

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Poverty Incidence in the Philippines

Selected Years
Among Among Families
Population

2006 28.8% 23.4%

2009 28.6% 22.9%

2012 27.9% 22.3%

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 Unemployment
z

• Refers to the portion of the lavpr

force who is willing to engage in
production activities yet fails to do
so.
Typesz of Unemployment

1. Frictional Unemployment

2. Cyclical Unemployment

3. Seasonal Unemployment

4. Structural Unemployment
 z
Underemployment

 State of individual being employed but

his or her talents, expertise are
underutilized or are not matched to the
job.
INFLATION
z

 Economic Phenomenon

 Sustained and continual increase in the prices of goods and

services
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Demographic changes and its

economic applications
The population of the Philippines has been increasing over several
decades. In 1960, the country has enumerated 27 million people .
In 2015 the population estimate for the country has reached 102
million people

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Economic Implications
Negative

 Population growth exerts on limited resources

 It is a burden to the government to provide the social services

including education, health and housing to an expanding population.

 Limited funds to suffice the needs of the huge population.

 Strain to the environment.

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Positive

 Additional consumer and savers that can expand the economy

 Additional laborers can be a source of productivity, creativity and

entrepreneurship.

 Labor force

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Internal migration can reduce labor force in sending regions

which can exacerbate their already sluggish economic
performance.

Overseas migration may engender the a culture or of

dependency as recipients of remittances may be content with the
external income transfer rather than work.

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Migrants- a person who goes from one place to another especially to

find work.

Migration- to move from one country or place to live or work in

another.

Immigration- to come to country to live there

Immigrant- a person who comes to a country to live.

Emigrant- a person who emigrates

Emigration- to leave a country or region, to live elsewhere

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Low Investment in Human

Resource Development
A highly trained workforce is more productive than a pool of
unskilled workers.

Skills training and investment in education can shape human

capital of a nation.

Importance of education.

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Weak Infrastracture
Physical Infrastructure facilitates the expands transaction that
likewise fuel economic growth.

Philippines have weak infrastructure, mean while the limited

capacity of our energy infrastructure has resulted in daily
interruptions of electricity in many regions in the country

The major reason for this inadequate expansion is insufficient

funds.

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Pursuing Food Security

With more than 100 million people to feed, the concern of the
government is to ensure food security for all.

The food sufficiency is linked with the development of

agriculture as a major economic sector of the country contributing
over 11% of GNP.

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 A sluggish agriculture may result to the unstable society with the

spread of poverty while insufficiency of food may invite
inflationary pressure or dependence on imports.

 But to equate food security with food sufficiency is problematic.

 Enhancing the productivity of the agricultural sector can

contribute to the achievement of food security.

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Slow Adaption of Modern

Technology
Technology is the manner of processing the raw materials or
intermediate inputs into transformed outputs through the use of factor
inputs.

A technology that is biased in the use of labor is called labor

intensive technology, while the capital intensive technology refers to
use of more capital relative to labor in the productive process.

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 Thailand and China that have economically transformed

characterized by substantial increases in the share of
manufacturing in the GDP of their economics over time.

 The development of the services sector is also hinged on

massive investments in modern technology.

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 One of the most vibrant industries in the services sector is the

Business Process Outsourcing (BPO) which the one of the
leading contributor of foreign exchange to the Philippines.

 The country needs efficient and productive services industries

are strongly linked with the agricultural and industrial sector.

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Environmental sustainability and the

country’s development thrust.
The capacity of our economy to maintain its productive capacity and
pursue its development goals will be constrained by the prudent use of
natural resources for sustainable development.

For Example, the capacity of land resources to be productive rest

on the proper use of fertilizer and pesticides.

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Similarly, a total ban on mining is too extreme since it does not

consider the positive contributions of mining to our economy. It can
deny the country of the needed foreign exchange derived from the
export of our leading minerals such as gold, copper and nickel.

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Students Activities:

1. Write a short essay arguing on why the government should

pursue a policy on food security instead of food self-sufficiency

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Have a debate about the 4P’s or The Pantawid Pamilyang

Pilipino Program- a conditional cash transfer program that aims to
alleviate poverty. Discuss weather it is positive or negative policy.

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• Tullao Jr., Tereso S. Applied Economics For A

Progressive Philippines. Phoenix Publishing House;
927 Quezon Ave., Quezon City. 2016
Reference:
• Pagoso, Cristobal M. Philippine Economics (Macro
Approach). NELSON PUBLICATION; Marimar
Village Paranaque City. 2003
• Carnaje, Gideon P. Applied Economics. Vibal Group
Inc, Araneta Avenue, Quezon City. 2016

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