APPLIED ECONOMICS

Basic Economic Problems

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

• What to produce?
• How much to produce?
• How to produce?
• For whom to produce?

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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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Basic Economic Problems

Poverty Incidence in the Philippines

Selected Years

Among Population Among Families

2006 28.8% 23.4%

2009 28.6% 22.9%

2012 27.9% 22.3%

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Basic Economic Problems

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Basic Economic Problems

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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Basic Economic Problems

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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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Basic Economic Problems

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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Basic Economic Problems

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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Basic Economic Problems

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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Basic Economic Problems

• 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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Quiz:
Give atleast (3) basic economic problems faced
by our country.
What are the two categories of Poverty.

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Reference:

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

Progressive Philippines. Phoenix Publishing House;
927 Quezon Ave., Quezon City. 2016
• 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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