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

Theories of Economic Development

1. Level of Production
Measured by the increase in
country’s GDP, which is often
juxtaposed with the population.

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Theories of Economic Development

2. Quality of Life
 the variable considers aspect such as
health, nutrition, education,
environment, and income distribution in
analyzing development.

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Theories of Economic Development

3. Sustainable Development
This factor considers the impact of
human activities on the environment
and believes that environment
degradation has significant impact.

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Underdevelopment
- an economic condition
characterized by low production
and standard of living.

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ECONOMIC
PROBLEMS AS
OBSTACLES
TO DEVELOPMENT
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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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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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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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UNEMPLOYMENT

refers to the portion of the labor

force who is willing to engage in
productive activities yet fails to
do so.
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Types of Unemployment
1. Frictional Unemployment
- Occurs when a worker is
“between jobs,” which means that
he/she has left job and is looking for
another.
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Types of Unemployment
2. Cyclical Unemployment
- This is seen during a downturn in
the economy when there is a less demand
for workers.
- downsizing and lay-off

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Types of Unemployment
3. Seasonal Unemployment
- it happens when people find
themselves unemployed at certain times of
the year.
- Mainly seen in tourism, retail,
construction and agriculture.
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Types of Unemployment
4. Structural Unemployment
- arises when workers experience
longer periods of frictional and
unemployment

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UNDEREMPLOYMENT

- Refers to the state of individual

being employed, but his/her talents
and expertise are underutilized or are
not match to the job.

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Types of Underemployment
1. Visible Underemployment
- Includes workers who work less
than the normal work hours and who
look for additional work.

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Types of Underemployment
2. Invisible Underemployment
- Includes workers who work the
normal hours or even more in their
jobs, but their talents are underutilized
or they receive inadequate
compensation for their work.
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INFLATION

- This refers to the sustained and

continual increase in the price of
goods and services.

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HYPERINFLATION

A condition of a very high inflation

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STAGFLATION

- A period of high inflation, slow

economic growth, and high
unemployment

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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 Infrastructure
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 based 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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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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 DYAD ACTIVITY

Direction:
• Flashed on the screen later is the list of
economic problems arising in the Philippines. All
you need to do is to select one and enumerate
the things needed to be done to solve these
economic problems in our country. You are
going to do this through writing a poem, a
song composition, an interactive drawing, or
by writing an essay.

After 5 minutes, the teacher will select 3 pairs of

 ECONOMIC PROBLEMS IN
THE PHILIPPINES
-Unemployment -Inflation

-Water Shortage -Calamity

-Underpaying Jobs -Job Mismatch

-Scarcity of Resources -Poverty

Source: https://opinionfront.com/economic-problems-of-philippines
APPLIED ECONOMICS
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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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Quiz:
Give atleast (3) basic economic problems
faced by our country.
What are the two categories of Poverty.

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