I.
MEASUREMENT OF ECONOMIC GROWTH - This does not only indicate the growth of the
 Economic Growth is an increase in the
production of goods and services over a specific
period. It creates more profit for businesses. To
be most accurate, the measurement must
remove the effects of inflation as result, stock
prices rise.
 Using product or income as the bases of
measuring economic growth is not always
accurate. It may not reflect the social, political
or cultural growth of a country. Moreover, the
equitable distribution of income and wealth
among the members of the society is not likely
indicated.
GROWTH VS DEVELOPMENT
Economic growth maybe one aspect of economic
development but is not the same.
 Growth – measure of the value of output of
goods and services within a time period
 Development – measure of the welfare of
humans in a society
How to Measure Economic Growth
 Gross Domestic Product or GDP
- the best way to measure economic
growth
- It takes into account the country’s
entire economic output.
- It includes all goods and services that
businesses in the country produce for
sale.
- It doesn’t matter whether they are sold
domestically or overseas.
 Gross National Product or GNP
- This is the total market value of all goods and
services produced by citizens of a country in
one year.
economy but also it serves a data for both
government and business sectors
 Nominal GDP
- value of all the final goods and services that
an economy produced during a given year. It
is calculated by using the prices that are
current in the year in which the output is
produced. In economics, a nominal value is
expressed in monetary terms.
 Real GDP
- total value of all of the final goods and
services that an economy produces during a
given year, accounting for inflation. It is
calculated using the prices of a selected base
year.
 GDP Deflator
- Measure of the level of prices of all new,
domestically produced, final goods and
services in an economy in a year.
GDP measures final production. It doesn't include
the parts that are manufactured to make a
product. It includes exports because they are
produced in the country. Imports are subtracted
from economic growth.
LIMITATIONS OF GDP
 Non-productive activities
- These are goods and services that cannot be
measured using market prices. Ex,
housewives, and family members during
harvest season; and production of illegal
gambling such as jueteng, drugs and
prostitution.
 Informal sector
- The term often refers to the sidewalk vendors
and home-based businesses that may opt to
understate their income. But this also refers
illegal activities gambling and drugs.
  Environmental cost
- Environment is one of the casualties of
development. Environmental costs may come
in the form of soil erosion and dying forest
because of logging; and water pollution
because of mining, among others.
 Social cost
- The OFWs earn dollars to meet the needs of
their families but their absence has resulted
in broken homes and dysfunctional family.
GDP is neither a measure of material well-
being nor an indicator of welfare.
GDP = C + I + G + ( X – M )
- C = Private Consumption
- I = Gross Investment
- G= Government Investment + Government
Spending
- X = Exports
- M = Imports
APPROACHES IN MEASURING NATIONAL OUTPUT
1. Expenditure Approach
 C = Consumption expenditure
 I = Investment expenditure
 G = Government expenditure
 X-M = Net export
 NFIA = Income abroad
 SD = Statistical Discrepancy1
2. Income Approach
 PI = Profits and Dividends
 GI = Government Income
 CI = Corporate Income
 IT = Indirect Taxes
 Minus S = Subsidies
 D = Depreciation
3. Industrial Origin
 Agriculture, fisheries and industry + services
 GDP + NFIA = GNP
1
gross domestic product less gross domestic income.
ensures perfect equality
THE REAL PRODUCTS OF DEVELOPMENT
People
- is the real product of development
- are the true key factors in improving the
conditions of their own nations
- there are higher needs which people
naturally crave for as human beings:
a. freedom b. dignity
 The Freedom of Choice
- It is inherent among people to yearn for
freedom of choice
- They like to live as human beings and not
simply exist. Any society which limits the
freedom of its members is an unjust society.
 Freedom and Poverty
- Freedom of choice can exist in a democracy,
but in a democratic society where there is
absolute poverty, freedom of choice is
useless.
- Example: a.) They are free to choose the
goods and services which they need the
most, but since they are very poor they
cannot buy such essential goods and services.
b.) They are dreaming of putting up of a small
business to improve their miserable
economic situations but this cannot be
realized because they have no funds of their
own and they are not even qualified to
borrow money from lending institutions.
 The Existence of Human Dignity
- It is inherent in man. It is a priceless gift of
God to man.
- Without it man is a useless human being and
simply exists without much difference from
the lower animals.
- Example:
a.) The widespread exploitation of peasants
and workers during the European Feudalism,
Industrial Resolution and American Slavery
b.) Peasants in Europe during the medieval
times were treated like slaves.
C.) In Austria, the bride slept with the
landlord at the first night of the wedding
 D.) During the Industrial Revolution, the
capitalist forced their workers to work until
they were completely exhausted.
E.) The Blacks were bought from Africa and
sold in the U.S to work like animals in
plantations. Even up to present the Blacks in
America still suffer racial discriminations from
whites.
According to professor Todaro the poor ones are not
respected by the rich nation and they have been
exploited and become the tools of economic interests
of the rich nations.
II. INDUSTRIALIZATION AND THE THIRD WORLD
Industrialization
- This is the period of social and economic change
that transforms a human group from an
agrarian society into an industrial society,
involving the extensive re-organization of an
economy for the purpose of manufacturing.
- Through industrialization, they believe they can
eliminate the problems of poverty, insecurity
and over population.
Occurrence of Industrial Revolution
- Industrial Revolution took effect on Europe and
America at the beginning of the 19th century
but took some time to reach third world
countries, such as the Philippines.
- It is the gradual transition of an agricultural
community into an extensive industrialized
community.
- This is the peak of innovations and inventions
e.g. steam punk engines, cameras, airplanes,
radio, etc.
Industry Taxonomy - Organizes companies into
industrial groupings based on similar production
processes, products or behavior in the market, such as:
- Primary – involves the accumulation of raw
materials e.g. mining, farming, fishing,
agriculture.
- Secondary – concerned with converting those
raw materials into finished goods e.g. smart
phones, cars, paper, etc.
- Tertiary – the extension of goods and services
to the market and consumers e.g. universities,
sari-sari stores, beauty salons, etc.
- Quaternary – composed of the research and
development sectors of the industry e.g.
government, NGOs, etc.
Reasons for Industrialization
1. increase the national income of the country
2. improve the stability of export earnings and
national income
3. provide more employment to unemployed and
underemployed
4. expand markets of local raw materials
The Role of Industrialization in Developing Countries
a) Increase in National Income
b) Higher Standard of Living
c) Economic Stability
d) Stimulated Progress in Other Sectors
e) Increased Employment Opportunities
f) Greater Specialization of Labor
g) Rise in Agricultural Production
h) Larger Scope for Technological Progress
i) Reduction in the Rate of Population Growth
j) Increased Savings and Investments
k) Provision for Defense
l) Development of Markets
m) Increased in Government Revenue
Disadvantages of Industrialization
1. Social Disadvantage – culture, family ties, etc.
2. Environmental Disadvantage – extinction,
unbalanced ecosystem, etc.
Others:
1. Unfair distribution of Income
2. Increase in slavery and child labor
3. Downfall may lead to drastic increase in
unemployment and poverty
III. AGRICULTURE
- The science or practice of farming
- the key development in the rise of sedentary
human civilization.
- Latin word “agerculture” means field cultivation
Branches
 Livestock Production
 Crop Production
 Agricultural Economics
Importance
- production food for the rural and urban
population.
- source of livelihood of the people who live in
the rural areas.
Contributions
1. Modern agriculture supplies raw materials to
the industrial sector and food to the urban
population.
 Four sub-sectors
- Farming
- Fisheries
- Livestock
- Forestry
2. With higher productivity, people in the
agricultural sector get higher incomes.
3. When agriculture applies efficiently modern
machines and technology, it is capable of
releasing a portion of labor force or
employment.
4. Agricultural economy earns more foreign
exchange.
5. Improving the economic performance of
agriculture more jobs are created.
6. A sustained agricultural development provides a
more balanced economic development once a
country has attained full industrialization.
Problems
 It is a risky business, because natural calamities
can easily destroy agricultural investment.
 Financing, production, processing and
marketing.
 Farmers are willing to improve their production
techniques if there is proper support from the
government.
 The prices of farm products are not stable.
Agricultural Development – provides assistance to the
crop producers with the help of various agricultural
resources
In poor countries:
 Poor countries are primarily agricultural
economies and the national incomes come
mostly from the agricultural sector.
 They depend on raw materials and very few
crops for exports to the industrial countries.
 Resources are not only underutilized but also
inefficiency developed due to deficiency in
capital, technology and management.
 Agricultural productivity is extremely low.
 Land use in cultivating is just a small area.
 They develop their agriculture through land
reform and cooperatives.
In rich countries:
 In achieving agricultural development money,
machines and technology are not enough.
Proper political, social and cultural institutions
are also needed.
 They have been successful in their agricultural
development programs
 United states, Australia and Canada
 Countries who are rich produced surplus food
and raw materials.
Key Characteristics of Agriculture in a Developing
Country
1. Low Labor Productivity
- “Worker Productivity” is the economic output
per hour of labor. Computing for the labor
productivity is done through division of total
output by total number of labor hours.
2. High Cost of Agricultural Products & Large
Percentage of Income Spent on Food
- The issue is not within the availability of the
products but on its fluctuating prices.
3. Food’s share of household expenditures
declines with Economic Growth
- As per capita income increases, the amount of
income spent on food expenditure decreases.
4. Small Family Farms
- The amount of land that can be farmed by a
family without relying much on hired labor.
Possibilities for Agricultural Development
1. Irrigation
2. Pests
3. Fertilizer
4. Intercropping and Multicropping
5. Weeding
6. Multiuse
7. Harvesting and storage
8. Distribution and marketing
IV. RURAL AND URBAN DEVELOPMENT
RURAL DEVELOPMENT - Generally refers to the process
and improving the quality of life and economic well–
being of people living in relatively isolated and sparsely
populated areas.
RURAL PROBLEMS
 Low/ little/ lesser incomes
 Productivity is very low
 Absence of Economic and Social Infrastructure
 No capital
 Lack of Cultural and Educational Activities
RURAL AREAS: ROOTS OF POVERTY
The world’s poorest are found in the rural areas.
Economic opportunities are extremely rare and hope,
without enough food, clothing and shelter.
RURAL POORS
 Small Farmers
 Tenants
 Sharecroppers
 Farm Workers
 Hacienderos and Rancheros
RURAL DEVELOPMENT IN THE PHILIPPINES
The Philippine rural development program is an
integrated approach in improving the social and
economic conditions of the rural poor. Its top priority is
the development of people’s attitude, values,
knowledge, and skills.
RURAL DEVELOPMENT PROGRAM/ PROJECTS IN THE
PHILIPPINES
 Agrarian reform program
 Cooperatives development program
 Human settlement program
 Community development program
 Nutrition program
 Integrated area development program
 Rural electrification project
 Fishing resources management
 Medium and small scale industries
 Family planning
STAGES OF RURAL DEVELOPMENT
(The transition of China from a peasant economy into a
collective agriculture from 1952 – 1958)
1. Mutual Aid Team - the first step towards
collectivization. Composed of 6 to 10 families.
By the end of 1952, 40% of families belonged to
8 million teams
 2. Elementary Co-operatives - the main feature is
their recognition of individual property rights in
the system of income distribution
3. Advanced Co-operatives - composed of 10-20
elementary cooperatives. This covered one
village with 1000-3000 persons and a farm area
from 300-800 hectares
4. Peoples’ Commune - Agricultural cooperatives
and the administrative units called “Hsiang” ,
were merge into the people’s commune and
they were constituted into 26,000 communes.
URBAN DEVELOPMENT - Is a technical and political
process concerned with the use of land and design of
the urban environment, including transportation
networks, to guide and ensure the orderly development
of settlement and communities.
URBANIZATION IN LESS DEVELOPED WORLD
 The rapid urbanization of the less developed
countries has spawned illegal squatter settlements.
 It is noted that the rapid urbanization in the less
countries is a reflection of inadequate and equitable
economic development.
SPANISH DEVELOPMENT OF PHILIPPINE CITIES
During the late Spanish time, most people lived in
villages located in lake shores, river banks, and other
coastal communities. They depended on rice
agriculture, hunting and fishing for their livelihood.
Their socio-political unit was the barangay which
considered of about 30 to 100 families headed by a
datu.
Manila and Cebu were probably large agriculture and
fishing villages. Civil officials headed by an alcalde
mayor were assigned to govern and provide justice.
In the beginning of the Spanish rule, economic activity
was focused on the galleon trade.
URBANIZATION OF METRO MANILA
In 1960, almost 50 percent of the residents of Manila
were born elsewhere. Manila together with four cities
and twelve towns had been converted to one urban
center called Metro Manila.
In 2000, the total population of the country will be
classified urban. The Philippines rank among the most
rapidly urbanizing countries in the world. Currently,
more than 60% of its population lives in cities and this
figure is expected to rise to 70% by 2020.
SINGAPORE: MODEL URBAN PLANNING
Encountered problems like unemployment, housing,
traffic, sanitation, population pressure and water and
electricity supply but all these were reduced by urban
planning.
V. Third World Countries
- less developed/developing countries
- nations that have emerged from their colonial
periods, at least politically
- There are still third world countries that are
under economic control or influence of their
former colonial administrators.
CHARACTERISTICS
- Subsistence agricultural economy
- Low per capita income
- High birth rate
- High illiteracy
- Poor health
- Negative values, attitudes and institutions
- High rate of unemployment
THE VICIOUS CYCLE OF POVERTY
Low employment -> Low production -> low income ->
low savings -> low investments
BARRIERS TO DEVELOPMENT

1. Improving values and institutions

2. Redistributing wealth and income
3. Adopting western technology
4. Preparing for industrial development
5. Reducing birth rate
6. Eliminating economic exploitations

ECONOMIC MEASURES “THE BIG PUSH”

1. The very few rich individuals have to invest their

money in productive labor intensive industries.
These create production labor and income.
2. Those who are not extremely poor have to save
more. Expensive consumptions have to be
avoided.
3. Scarce resources have to be properly used and
equitably allocated
4. The nature of taxation should encourage
employment and production.
5. Foreign investment should be simulated
selectively.
6. Foreign loans and aids should be applied to self-
liquidating projects.

IMPLEMENTING THE BIG PUSH

1. The government should vigorously initiate,

encourage and assist development
2. HR development should be given highest
priority.
3. Family planning programs should be improved.
4. Develop agricultural sector first
5. Appropriate technology should be used to fit
the local conditions.