BASIC ECONOMIC

PROBLEMS & PHILIPPINE

SOCIOECONOMIC
DEVELOPMENT
Applied Economics
7:30 – 8:30 am
 SPECIFIC OBJECTIVES

At end of this lesson, you are expected to:

1. Identify the different economic problems in the
Philippines.
2. Explain each economic problems.
3. Explain how applied economics can be used to solve
economic problems.
What are the basic
economic problems?
Economic problems are hindrances to development. The
major obstacles to development are the following:

POVERTY INFLATION

UNEMPLOYMENT INEQUALITY

POOR QUALITY OF INFRASTRUCTURE

POVERTY -refers to the condition where the
population is only able to meet its basic
subsistence needs.

ABSOLUTE -refers to the severe deprivation of

POVERTY human basic human needs. People who
earn ₱50 or less per day are considered to
experience absolute poverty.
 COMMON CAUSES

• Increase in the population

• Increase in the cost of
living
• Unemployment
• Income inequality
 WHAT CAN BE DONE TO SOLVE THE
POVERTY PROBLEM?

1. Reduce unemployment
2. Appropriate policy on labor income
3. Provision of unemployment benefits for those who
will be unemployed due to calamities.
4. Increase social services like education, health care
and food subsidies.
5. Appropriate policy on labor income.
UNEMPLOYMENT

-refers to the portion of the labor force

who are willing to engage in productive
activities yet fails to do so.
Unemployment can hinder economic
development since the human resources
of a country are not efficiency utilized.
 COMMON CAUSES

• The number of people entering the job

market has been greater than the number
of jobs created.
• The rural-urban migration increases due to
employment opportunities.
• Many of the unemployed individuals are
college graduates.
 WHAT CAN BE DONE TO SOLVE THE
UNEMPLOYMENT PROBLEM?

1. Appropriate economic policies for labor-intensive industries.

2. Improve the educational system of the county especially in
the rural areas.
3. Minimize rural-urban migration by improving the economic
environment in rural areas.
4. Proper coordination between government and the private
sector to solve the problem of job mismatch.
5. Slowing population growth.
6. Provision of more investment opportunities.
INFRASTRUCTURE

-refers to the basic equipment and

structures that are needed for a country
to function properly. It includes quality of
roads, improvement in public transport,
traffic in urban areas, water resources,
energy infrastructure and ITC
infrastructure
 WHAT CAN BE DONE TO SOLVE THE
POOR QUALITY OF INFRASTRUCTURE PROBLEM?

1. The government shall implement fiscal reform

program.
2. Improving central oversight of the planning
and coordination of investment.
3. Focus on investment through public-private
partnerships to achieve faster delivery of
service.
 INCOME
-Is the money that an
individual earned from a
work or business received
from investments.
INCOME
INEQUALITY
-refers to the gap in income
that exist between the rich
and the poor
 WHAT CAN BE DONE TO SOLVE THE
INCOME INEQUALITY PROBLEM?

1. Policies to enforce progressive rates of

direct taxation on high wage earners
and wealthy individuals.
2. Direct government policies to keep the
price of basic commodities low
3. Raise minimum wage
 INFLATION

-refers to the sustained and continual increase in the

prices of goods and services. Economic growth as
indicated by increasing GDP, is the factor in bringing
about inflation. Hyperinflation or very high inflation
has negative effect in the economy. A period of high
inflation, slow economic growth and high
unemployment is called stagflation
 Among the challenges to
Philippine development,
which should be given top
priority by the government?