INTRODUCTION TO ECONOMIC DEVELOPMENT The New Economic View of Development

 many developing nations did reach their economic

Development economics – The study of how economies are growth targets but the levels of living of the masses of
transformed from stagnation to growth and from low-income people remained for the most part unchanged.
to high-income status, and overcome problems of absolute  economic development came to be redefined in terms
poverty. of the reduction or elimination of poverty, inequality,
and unemployment within the context of a growing
The Nature of Development Economics economy.
 being concerned with the efficient allocation of existing  multidimensional process involving major changes in
scarce social structures, popular attitudes, and national
 commodity and resource markets are typically highly institutions, as well as the acceleration of economic
imperfect, growth, the reduction of inequality, and the eradication
 Consumers and producers have limited information. of poverty.

The Important Role of Values in Development Economics Amartya Sen’s “Capability” Approach
 Concepts or goals such as economic and social equality,  Amartya Sen, the 1998 Nobel laureate in economics,
the elimination of poverty, universal education, rising argues that the “capability to function” is what really
levels of living, national independence, modernization matters for status as a poor or non-poor person. As Sen
of institutions, rule of law and due process, access to puts it,“the expansion of commodity productions...are
opportunity, political and economic participation, valued, ultimately, not for their own sake, but as means
grassroots democracy, self-reliance, and personal to human welfare and freedom.”
fulfillment all derive from subjective value judgments  Sen argues that poverty cannot be properly measured
about what is good and desirable and what is not. by income
 but what a person is, or can be, and does, or can do.
Economies as Social Systems: The Need to Go Beyond
Simple Economics Development and Happiness
Social system – The organizational and institutional structure  Happiness is part of human well-being, and greater
of a society, including its values, attitudes, power structure, happiness may in itself expand an individual’s capability
and traditions. By “social system,” we mean the to function.
interdependent relationships between economic and non-  As Amartya Sen has argued, a person may well regard
economic factors. happiness as an important functioning for her well-
Non-economic factors: being.
 attitudes toward life work and authority  In recent years, economists have explored the empirical
 public and private bureaucratic, legal, and relationship across countries and over time between
administrative structures subjectively reported satisfaction and happiness and
 patterns of kinship and religion factors such as income.
 cultural traditions  One of the findings is that the average level of
 systems of land tenure happiness or satisfaction increases with a country’s
 the authority and integrity of government agencies average income.
 the degree of popular participation in development
decisions and activities Three Core Values of Development
 flexibility or rigidity of economic and social classes. 1. Sustenance - The Ability to Meet Basic Needs
 All people have certain basic needs without which life
Traditional Economic Measures would be impossible. These life-sustaining basic human
In strictly economic terms, development has traditionally needs include food, shelter, health, and protection.
meant achieving sustained rates of growth of income per When any of these is absent or in critically short supply,
capita to enable a nation to expand its output at a rate faster a condition of “absolute underdevelopment” exists.
than the growth rate of its population.  Economic development is a necessary condition for the
Income per capita – Total gross national income of a country improvement in the quality of life that is development.
divided by its total population.
2. Self-esteem - To Be a Person
Gross National Income (GNI) – The total domestic and foreign  The feeling of worthiness that a society enjoys when its
output claimed by residents of a country. It comprises gross social, political, and economic systems and institutions
domestic product (GDP) plus factor incomes accruing to promote human values such as respect, dignity,
residents from abroad, less the income earned in the integrity, and self-determination
domestic economy accruing to persons abroad.  All peoples and societies seek some basic form of self-
esteem, although they may call it authenticity, identity,
Gross domestic product (GDP) - The total final output of dignity, respect, honor, or recognition.
goods and services produced by the country’s economy,  The nature and form of this self-esteem may vary from
within the country’s territory, by residents and nonresidents, society to society and from culture to culture. However,
regardless of its allocation between domestic and foreign with the proliferation of the “modernizing values” of
claims. developed nations, many societies in developing
 countries that have had a profound sense of their own
worth suffer from serious cultural confusion when they
come in contact with economically and technologically c. Laissez faire theory (ley alone or leave alone)
advanced societies. This is because national prosperity  developed by classical economist, Adam Smith
has become an almost universal measure of worth.  It connotes non-interference, liberty or freedoms.
 In economics, it means the government should not
3. Freedom from Servitude - To Be Able to Choose intervene in economic affairs.
 A situation in which a society has at its disposal a variety 1. Just let the market forces interact with one
of alternatives from which to satisfy its wants and another.
individuals enjoy real choices according to their 2. No grants or subsidies are given by government.
preferences.
 The concept of human freedom also encompasses   This is in accordance with natural law, and the results
various components of political freedom, including would be good for the individuals and society.
personal security, the rule of law, freedom of  Individuals must be free to pursue their own economic
expression, political participation, and equality of interests.
opportunity.  The government should not help or hinder them.

The Three Objectives of Development d. The classical theories

1. To increase the availability and widen the distribution of  In 1776, his book the An Inquiry to the Nature and
basic life-sustaining goods such as food, shelter, health, and Causes of the Wealth of Nations was published.
protection  It explains how wealth of nations is created and
distributed.
2. To raise levels of living, including, in addition to higher  Free competition concept
incomes, the provision of more jobs, better education, and 1. Free market mechanism could provide more
greater attention to cultural and human values, all of which benefits to individuals to society
will serve not only to enhance material well-being but also to  than an economy run by the government like in the case
generate greater individual and national self-esteem of mercantilism which even established trade
monopolies.
3. To expand the range of economic and social choices 
available to individuals and nations by freeing them from Production is real wealth
servitude and dependence, not only in relation to other  Based on industrialization and not on agricultural
people and nation-states, but also to the forces of ignorance development since at that time, most of the farmers in
and human misery Great Britain are tenants and are exploited so the gave
up their farms and decided to work in factories.
Ideas and Theories of Economic Development  Smith believes that the only source of wealth is
production through labour and resources.
a. Economic doctrines of mercantilism  He wrote that wealth can be increased through division
Economic ideas were focused on the vital role of the state in of labour and machinery.
economic development.
 It is the duty of the state to create and accumulate Under a free market economy, production would be most
wealth. efficient.
 Wealth came from gold and silver.  Consumers can get the best quality and the lowest
 Countries without gold and silver mines could acquire price.
such precious metals through favourable international  Law of supply and demand even in wages and interests.
trade, and colonies with gold and silver mines.  If demand for labor is greater than supply of labor, the
 To achieve this objectives of mercantilism, wage increases.
manufacturing was given top priority.  Although Smith stressed free competition and non
 Agriculture was no longer appreciated because of its interference by the government in economic affairs, he
natural shortcomings. made some exceptions.
 Manufactured goods can be readily sold abroad than  He encouraged government to promote shipping.
agricultural goods.  Favoured imposition of tariffs for bargaining purposes
and for equalizing competitions.
b. Physiocracy – the rule of nature
 People started to rationalize human behaviour and the Theory on population
existence of institutions.  Thomas Malthus, a religious minister saw the growth of
 They concluded that it was not the will of God that population and human miseries.
created the conditions in the world. Rather, it was the  Stated that population explosion is the root cause of the
product of causes and effects which conformed to the problems in society.
laws of nature.  Malthus said that the rate of population growth is
 Kung ano ang tinanim mo ay siyang aanihin mo higher than the rate of food production.
 Philosophers claimed that those who are poor because  To control population growth, he proposed late
they violated the laws of nature. marriages and abstinence.
 Malthusian theory: As population grows geometrically,  Henry George He saw rapid economic growth in
food production grows arithmetically. California during the 1870s amidst widespread poverty


 Their higher stage of economic growth became an
effective birth control device, and their modern  He was not satisfied with the doctrines of the classical
production. economists regarding wages, profits and rent.
 It is only in less developed countries which are now  He concluded that rent is the root cause of poverty
afflicted with the Malthusian theory. High birth rates  The increase in value of land is not due to its fertility but
but very low food productivity. due to the growth of population in the community and
progress of society
Theory of Comparative Advantage  One can be rich by not purchasing the best farm but a
 David Ricardo one of the most famous classical piece of land near the center of a fast growing city. It
economists developed the law of comparative doesn’t matter if the land is the most fertile or solid
advantage granite.
 Based on this theory, nations should export only goods  Rent is unearned income.
which they enjoy the greatest advantage, and should  Businessmen pay rents. In rents increase, they have to
import the good which they have the greatest pay more. This means that cost of production or
disadvantage. business gets higher. But cost is paid ultimately by the
 Which means do not produce the product if it is cheaper consumers when they buy the goods of businessmen.
to buy.
 Classical economists like Ricardo equated the value of a h. Modern theory of Employment
product with the cost of labor that went into its  Employment is determined by the supply and demand
production. for labor.
 A product which takes more hours or days in producing  A decline in employment means that wages are high in
has a higher price or value than a product with lesser relation to prices of goods.
hours on producing it.  Producers are not willing to manufacture goods if they
know they are going to lose. So they get more workers if
Theory of Karl Marx they are willing to accept lower wages. This means they
 The economic ideas of Karl Marx were basically derived make more profits.
from classical economists. He only qualified his theory  The main point of the theory is that the cause of high
of value by emphasizing that labor must be socially unemployment is high wages. There is more
necessary. employment when wages are low – classical theory of
 He believed that workers are the real producers of employment which was accepted for a many years.
goods. He claimed that the benefits of production go to
the capitalists and not to workers. i. Keynesian theory of employment
 Based on the Keynesian theory of employment,
e. Promotion of human values employment determines the necessity of equating the
 Jean Sismondi, an Italian writer, disagreed with Adam aggregate supply with the aggregate demand for goods.
Smith.  When people buy more goods, it means there is more
 Wealth should not be measured in terms of material expenditure or consumption. This condition stimulates
things but in terms of human welfare. more investments which also increases employment
 No nation can be considered prosperous if the and production.
conditions of the poor have not been improved.  Keynes proposed to the US government to spend more
 He also rejected the laissez faire theory which provided money in order to solve the depression.
freedoms to individuals to seek their own self-interests  Many public works were constructed which created
for their own welfare. He asserted that the state should massive employment. The situation generated income
interfere to prevent the unfair distribution of wealth for the people. They started buying more goods and
spawned by unrestrained capitalism. services.
 Focused on the welfare of the poor.  Encouraged the private business sector to meet the
growing demand of the people. As a result, employment
f. Factors of Economic Development was generated by the private sector.
 Friedrich List Did not agree with classical economists  They needed more people in producing goods and
about production, free trade, and free competition. services
 According to him, the progress of a nation is great not in
proportion to the accumulation of wealth, but in j. Innovation theory
proportion to the development of the productive forces.  Joseph Schumpeter Emphasized the role of the
 He proposed that a nation should protect its industries innovator in economic development.
by means of tariffs during its early stage of  Innovator is the key factor in economic development.
industrialization. He is the planner, organizer, coordinator, and
implementor of economic activities.
g. Theory on Progress and Poverty  The innovator is the economic leader or the
entrepreneur who has the courage and imagination to
 handle old systems, and be able to transform theory  According to Schumpeter: the discovery of new
into practice. techniques is invention
 He pointed out that the practical application of an
invention to production for the market is innovation.
 Developing countries usually copy or imitate western
k. Other growth models technology.
Ricardian growth model – derived from the law of Technology in less developed countries
diminishing returns by David Ricardo.  There is nothing wrong with the importation of
 Limits of economic growth brought about by the scarcity technology.
of land, its being a fixed input, and its diminishing  Saves time and money.
productivity.  But imported technology should be suitable to local
 To reduce the constraints of economic growth, Ricardo conditions.
proposed the discovery of more land for cultivation or
more food at lower prices should be imported. c. Market
 Agricultural sector has a very vital role in economic  The growth of markets reflects an expanding economic
development. development.
Harrod-Domar model  For as long as the various sectors of the economy are
 By economists Sir Roy Harrod of England and Professor equitably benefited, economic growth is real and
Evsey Domar of America in the 1930s and 40s enduring.
 Economic growth depends on the amount of capital that  Transportation, communication and electricity greatly
is available for investment, and that the rate of capital help in the growth of markets.
accumulation is proportional to the rate of savings.  A market becomes bigger when more people buy more
 Key factor is capital like machinery, buildings, goods.
equipment, etc.  Stimulates investments and production.
 The model shows the relationship between the input  Businesses are expected to produce more if there is a
and the output. The input is capital, and its efficiency is good demand for
reflected in its output.  their products.
Kaldor model  Highly developed countries have considerable
 Nicolas Kaldor Key factor is technology. advantages in both local and foreign markets.
 Technology is embodied in physical capital.
 Technical process comes from investment d. Social Structure
 Very good example is Japan – it invested a big slice of its  A society with a more equitable distribution of wealth
national budget for research and technology. As a and income, and economic freedoms provides a more
result, it has become very progressive as a nation. fertile environment for economic development.
 A society whose wealth and income belong to very few
Determinants of Economic Development families does not encourage economic development.
Economic development is not determined by economic
factors alone. There are non- economic factors that affect e. Family System
economic development, and they have greater influence than  Family systems in the western societies like the United
the economic ones. Example, of economic factors are capital, States and Canada re more individualistic and self-
technology, and market. While non-economic factors are reliant.
government, religion, education, social structure, values,  Adult children are financially independent from their
culture, etc. clearly, solving economic problems with parents.
economic solutions only inadequate.  They pay for their own tertiary education
 Expended family system, which is common in the
a. Capital Philippines and other developing countries, is good in a
 In economics, capital refer to finished goods which are sense that there is unity, and the welfare of the older
being used to produce other goods. and the young member of the family are protected by
 These are machines, buildings, tools, equipment, etc. – the stronger adult members..
specifically called physical capital.
 During ancient times, people relied on men and animals f. Cultural Values
for their production and construction.  Some cultural values have negative effects on economic
 Unfortunately, there are still many parts of the world development.
that rely on primitive methods of production and  They retard the growth of the economy.
construction.  According to Professor Gunnar Myrdal, industrialization
 Less developed countries do not even have enough requires efficiency, mobility, discipline, and punctuality.
funds for road construction, electrification,
communication, irrigation, and other vital projects for g. Political Conditions
economic development.  Have considerable impact on economic development.
 Political stability and fair economic policies stimulate
b. Technology] economic growth.
 Generally refers to better techniques or methods of  Policies, plans and programs are tools of economic
production. development.
 Can only operate efficiently under a regime of good and
honest public administration.


h. Corruption in Public Administration

 Government corruption is the number one obstacle in POVERTY AND INQUALITY
economic development. 1. Poverty:
 Very precious scarce resources, like money, are not Poverty refers to a state where individuals or communities
properly utilized for development due to graft and lack the resources necessary for a minimum standard of
corruption. living. This deprivation can manifest in various forms,
 Govt corruption is present in any society. including a lack of access to food, clean water, shelter,
 But are more rampant in less developed countries education, health-care, and basic infrastructure. Poverty is a
multidimensional problem and can be categorized into
i. Religion absolute poverty (lack of basic needs for survival) and relative
 During biblical times, materialism and the pursuit of poverty (living below the average income of a society).
wealth were despised and discouraged.
 The bible contains many chapters and verses against Key insights about poverty include:
wealth or materialism.
 “Blessed are the poor for they shall inherit the kingdom a. Causes: Poverty is often caused by a combination of
of God.” factors, including lack of education, limited employment
 “it is harder for a rich man to enter the gates of heaven opportunities, inadequate social safety nets, unequal
than for a camel to pass through the eye of a needle.” distribution of resources, economic policies, armed conflicts,
 Such religious concepts and teachings against and environmental challenges.
materialism are not favorable to economic
development. b. Poverty cycle: Poverty can perpetuate itself through
generations due to the lack of access to education and
j. Population opportunities for upward mobility. This creates a poverty
 Is both an advantage and disadvantage in economic trap, making it challenging for individuals and families to
development. break free from the cycle of poverty.
 It is an advantage if people are educated, productive
and creative. c. Global impact: Poverty is not limited to any specific region
 Some development economists are not in favor of birth or country. It affects billions of people worldwide, with a
control. significant concentration in developing nations.
 Developed countries that have insufficient number of
people encourage immigration. d. Solutions: Effective poverty alleviation strategies include
 Poor countries with high birth rates are advised to investing in education, health care, infrastructure, and social
adopt family planning programs. safety nets, promoting inclusive economic growth,
empowering marginalized communities, and addressing
k. Geography systemic issues that perpetuate poverty.
 Refers to climate, soil, natural resources, topography,
and structure of the land. 2. Inequality:
 These have considerable influence on economic Inequality refers to the unequal distribution of wealth,
development. resources, and opportunities within a society. It is often
 Countries which are endowed with abundant natural measured using various indicators such as income inequality,
resources have greater potentials for economic wealth inequality, and social mobility. High levels of
development. inequality can have far-reaching consequences, including
 However, there are some countries with barren land but social unrest, decreased economic growth, and reduced
are rich in oil resources such as the Middle East overall well-being.
countries.
 Such resources are good sources of income for various Key insights about inequality include:
programs of the government.
 Transportation and communication are likewise affected a. Types of inequality: Inequality can manifest in different
by geographical structure. forms, such as income inequality (unequal distribution of
 Geographical disadvantages can be eliminated or income among individuals or households), wealth inequality
reduced through the proper use of technology and (unequal distribution of assets and property), and social
capital. inequality (unequal access to education, health care, and
opportunities).

b. Global disparities: Inequality exists not only within

countries but also between countries. There is a significant
divide between developed and developing nations in terms of
economic opportunities, access to resources, and quality of
life.
 opportunities. Governments and international organizations
c. Impact on society: High levels of inequality can lead to use poverty data to design and implement targeted policies
social tensions, reduced social cohesion, and limited social and programs aimed at reducing and eventually eradicating
mobility. It can also hinder economic growth and absolute poverty.
development by concentrating resources in the hands of a Poverty, inequality, and social welfare are closely interlinked
few, rather than distributing them more broadly. concepts that play significant roles in shaping the well-being
and development of societies. Let's explore their
d. Policy interventions: Addressing inequality often requires relationships and how they interact:
a combination of progressive taxation, social welfare
programs, education and skill development initiatives, and 1. Poverty and Inequality:
policies that promote equal opportunities for all. Poverty and inequality are distinct but interconnected issues.
Poverty refers to the lack of essential resources necessary for
MEASURING POVERTY a minimum standard of living, while inequality refers to the
Both poverty and inequality are complex and interconnected unequal distribution of wealth, income, or opportunities
issues that require comprehensive and sustainable solutions. within a population. High levels of inequality can exacerbate
Governments, international organizations, civil society, and poverty by concentrating resources in the hands of a few,
individuals play crucial roles in addressing these challenges leaving others with limited access to opportunities and
and creating a more equitable and just world. resources.
Measuring absolute poverty involves assessing whether
individuals or households have enough resources to meet Key points of their relationship include:
their basic needs for survival. Unlike relative poverty, which  Inequality can create and perpetuate poverty by limiting
compares people's income or living standards to the average access to education, healthcare, and economic
in their society, absolute poverty sets a fixed standard based opportunities for disadvantaged groups.
on a minimum threshold necessary for a decent life. The  Poverty can also contribute to increased inequality, as
most commonly used measure of absolute poverty is the those living in poverty have fewer chances to break free
"poverty line" or "poverty threshold." from the cycle of deprivation and move up the
economic ladder.
The process of measuring absolute poverty typically involves  Reducing inequality can be an effective way to address
the following steps: poverty, as a more equitable distribution of resources
and opportunities can improve the living conditions of
1. Define the Poverty Line: The poverty line is the minimum marginalized communities.
income or consumption level required to meet basic needs,
such as food, clothing, shelter, and other essential goods and 2. Social Welfare and Poverty:
services. The definition of the poverty line may vary from Social welfare refers to the policies, programs, and services
country to country and can be determined through various designed to promote the well-being and improve the quality
approaches, including: of life for individuals and communities. It includes various
forms of assistance, such as social security, healthcare,
2. Collect Data: Data collection is essential to determine the education, housing support, and unemployment benefits.
income or consumption levels of individuals or households.
This data is often gathered through surveys, censuses, or Key points of their relationship include:
other data-gathering methods.  Social welfare programs play a crucial role in combating
poverty by providing a safety net for individuals and
3. Compare with Poverty Line: Once the data is collected, it is families facing economic hardships.
compared with the established poverty line. Individuals or  These programs aim to alleviate poverty by addressing
households with incomes or consumption levels below the immediate needs and helping individuals meet their
poverty line are considered to be living in absolute poverty. basic requirements for survival and well-being.
 Social welfare initiatives can contribute to reducing
4. Calculate Poverty Rate: The poverty rate is the percentage inequality by providing equal access to essential services
of the population living below the poverty line. It is a crucial and opportunities, regardless of socioeconomic
indicator to assess the severity and extent of absolute background.
poverty in a country or region.
3. Social Welfare and Inequality:
It's important to note that measuring absolute poverty Social welfare also plays a vital role in addressing and
requires periodic updates of the poverty line to account for mitigating inequality within a society.
changes in the cost of living, inflation, and other economic
factors. Additionally, poverty measurement may be adjusted Key points of their relationship include:
for various factors, such as family size and regional cost  By providing support to those in need, social welfare
variations, to improve accuracy. programs can help reduce disparities in access to
resources and opportunities.
While measuring absolute poverty is relatively  Social welfare initiatives can enhance social mobility by
straightforward, addressing it requires comprehensive offering individuals the tools and resources needed to
poverty alleviation strategies, including improving access to improve their economic and social prospects.
education, health care, clean water, sanitation, and economic
 A well-designed and comprehensive social welfare 7. Access to Markets: Improved infrastructure and rural
system can create a more inclusive society, where development facilitate better access to markets for farmers,
individuals have an equal chance to succeed and thrive. enabling them to sell their produce at fair prices and reach
broader markets, both domestically and internationally.
In conclusion, poverty, inequality, and social welfare are 8. Gender Equality: In many rural societies, women play a
interconnected dimensions that impact the overall well-being significant role in agriculture. Empowering women in
and stability of societies. Addressing these issues requires a agriculture through access to resources, education, and
holistic approach that includes policies and programs aimed training not only benefits their well-being but also
at reducing poverty, promoting equal opportunities, and contributes to better agricultural outcomes and development
providing social support to vulnerable populations. By outcomes overall.
tackling these challenges, societies can work towards 9. Food Quality and Nutrition: Agricultural progress can
creating more equitable and prosperous environments for all support the production and availability of diverse, nutritious
their members. crops, contributing to improved diets and better nutrition
outcomes, particularly for vulnerable populations.

The imperative of agricultural progress and rural Agricultural Growth: Past Progress and Current Challenges
development Addressing the imperative of agricultural progress and rural
development requires a multi-faceted approach involving
The imperative of agricultural progress and rural investments in research and development, infrastructure,
development is a critical aspect of sustainable economic education, extension services, access to credit, and
growth and poverty reduction, particularly in developing supportive policies. Collaborative efforts between
countries. Agriculture plays a crucial role in providing food governments, international organizations, the private sector,
security, generating employment, and supporting rural and civil society are essential to ensure sustainable and
livelihoods. Advancing agricultural practices and investing in inclusive rural development that benefits farmers,
rural development are essential to address various global communities, and the broader society.
challenges and achieve broader development goals. Here are
some key reasons why agricultural progress and rural Agricultural growth has played a crucial role in shaping
development are imperative: human societies throughout history. The past progress in
agriculture has led to significant advancements in food
1. Food Security: Agriculture is the primary source of food for production, rural livelihoods, and economic development.
the world's population. Advancements in agricultural However, the agricultural sector faces various challenges in
technology, practices, and infrastructure are essential to the present day. Let's explore the past progress and current
increase productivity and ensure an adequate and stable challenges of agricultural growth:
food supply for a growing global population.
2. Poverty Alleviation: The majority of the world's poor live in Past Progress:
rural areas and depend on agriculture for their livelihoods. 1. Green Revolution: In the mid-20th century, the Green
Enhancing agricultural productivity and diversification can lift Revolution brought about a transformation in agriculture
people out of poverty, reduce income disparities, and through the adoption of high-yielding crop varieties,
improve living standards in rural communities. improved irrigation, and increased use of fertilizers and
3. Employment and Livelihoods: Agriculture remains the pesticides. This led to substantial increases in crop yields,
largest employer in many developing countries. Investing in boosting food production and reducing hunger in many parts
rural development and modernizing agricultural practices can of the world.
create employment opportunities, especially for rural youth, 2. Technological Advancements: Advancements in
and help reduce urban migration and its associated agricultural technologies, such as mechanization, improved
challenges. irrigation techniques, precision agriculture, and
4. Sustainable Development: Sustainable agricultural biotechnology, have contributed to increased productivity
practices, such as conservation farming and agroforestry, are and efficiency in the sector.
essential to protect natural resources, preserve biodiversity, 3. Infrastructure Development: Investments in rural
and mitigate the impacts of climate change. Sustainable infrastructure, including roads, storage facilities, and market
agriculture contributes to the long-term health and resilience linkages, have facilitated better access to markets and
of ecosystems and rural communities. reduced post-harvest losses.
5. Economic Growth: Agriculture and agribusinesses are key 4. Market Access: Globalization and trade liberalization have
drivers of economic growth in many developing countries. expanded market opportunities for agricultural products,
Strengthening the agricultural sector can stimulate economic enabling farmers to access international markets and
activity, promote value addition, and enhance export diversify their income sources.
potential, leading to overall economic development.
6. Resilience to Shocks: Improving agricultural practices and Current Challenges:
rural development can increase the resilience of communities 1. Climate Change: Climate change poses significant
to shocks such as natural disasters, economic crises, and challenges to agriculture, with increased frequency and
health emergencies. Diversified and well-managed intensity of extreme weather events, changes in rainfall
agricultural systems can better withstand and recover from patterns, and rising temperatures affecting crop yields and
adverse events. livestock production.
2. Land Degradation: Soil degradation, deforestation, and
overexploitation of natural resources have led to declining 3. Agriculture and Food Security: Agriculture is a key
land productivity and reduced arable land, impacting economic sector in rural areas. Rural development initiatives
agricultural sustainability. that promote sustainable and modern agricultural practices,
3. Water Scarcity: Many regions face water scarcity, access to credit, technology, and markets can boost
impacting agricultural production and exacerbating agricultural productivity and contribute to food security for
competition for water resources between agriculture, the entire nation.
industry, and domestic use.
4. Urbanization: Rapid urbanization leads to land conversion 4. Employment and Livelihoods: Rural development can
and the loss of agricultural land, affecting food production create job opportunities and diversified livelihoods in non-
and rural livelihoods. agricultural sectors, including agro-processing, small-scale
5. Rural Poverty: Despite progress in some areas, rural industries, and services. This can help reduce rural-urban
poverty persists in many developing countries, with farmers migration and provide a better quality of life for rural
often facing low income levels, limited access to credit, and residents.
inadequate social safety nets.
6. Input Costs: The rising costs of agricultural inputs, such as 5. Sustainable Resource Management: Rural areas often
seeds, fertilizers, and pesticides, can burden farmers, encompass significant natural resources, such as forests,
particularly smallholders with limited access to affordable water bodies, and biodiversity. Sustainable rural
credit. development focuses on conserving these resources and
7. Food Security: Despite past progress, challenges in promoting responsible management practices for long-term
achieving food security persist, with millions of people still environmental sustainability.
facing hunger and malnutrition globally.
8. Inequality: Disparities in land ownership, access to 6. Social Services and Infrastructure: Investing in rural
resources, and market opportunities can lead to social and development improves access to essential services such as
economic inequalities within the agricultural sector. education, healthcare, clean water, and sanitation. Building
infrastructure such as roads, bridges, and electricity networks
9. Sustainable Practices: The need for sustainable agricultural enhances mobility and connectivity, improving overall well-
practices, conservation of biodiversity, and reducing the being and economic opportunities for rural communities.
environmental impact of agriculture remains a priority.
7. Social Cohesion and Inclusivity: Rural development fosters
Addressing these challenges requires coordinated efforts social cohesion by strengthening community ties and
from governments, international organizations, research promoting local participation in decision-making processes.
institutions, and the private sector. Investments in Inclusive rural development ensures that marginalized and
agricultural research, extension services, sustainable vulnerable groups, including indigenous communities, have
practices, climate-smart agriculture, and rural infrastructure equitable access to development benefits.
are essential to ensure agricultural growth while
safeguarding natural resources and livelihoods for current 8. Disaster Resilience: Many rural areas are prone to natural
and future generations. Additionally, policies that promote disasters such as typhoons, floods, and landslides. Rural
inclusive agricultural development, support smallholder development can incorporate disaster risk reduction
farmers, and address rural poverty are crucial to achieve measures, making communities more resilient and better
sustainable and equitable agricultural growth. prepared to face adverse events.

Why rural development is important to Philippines 9. Cultural Heritage and Identity: Rural areas often preserve
Rural development is crucial to the Philippines for various cultural traditions, customs, and heritage that are part of the
reasons, as it directly impacts the well-being of rural Philippines' identity. Rural development initiatives can help
communities and contributes to the overall economic and preserve and promote these cultural assets, contributing to
social progress of the nation. Here are some key reasons why national pride and tourism opportunities.
rural development is important to the Philippines:
10. National Stability: Strengthening rural communities and
1. Poverty Reduction: A significant portion of the Filipino economies contributes to overall national stability and
population resides in rural areas, and rural communities reduces the potential for social unrest and migration-related
often face higher levels of poverty compared to urban areas. challenges in urban centers.
Rural development initiatives that improve infrastructure,
livelihood opportunities, and access to basic services can help In conclusion, rural development is critical to the Philippines
reduce poverty and improve the living conditions of rural as it addresses issues of poverty, regional imbalances, food
residents. security, employment, and environmental sustainability. By
focusing on inclusive and sustainable rural development, the
2. Balanced Regional Growth: Focusing on rural development country can achieve more equitable economic growth,
ensures a more balanced distribution of economic activities improve living standards for rural populations, and enhance
and development across different regions of the country. This its overall development trajectory.
reduces the concentration of population and economic
activities in urban centers, alleviating pressures on why agricultural progress is important to philippines
infrastructure and services in cities.
Agricultural progress is of paramount importance to the
Philippines due to its significant impact on the nation's 12. Research and Innovation: Advancing agriculture
economy, food security, employment, poverty reduction, and encourages investments in agricultural research and
overall development. Here are some key reasons why innovation, leading to the development of new technologies,
agricultural progress is crucial to the Philippines: improved seeds, and better farming practices.

1. Food Security: Agriculture is the backbone of the country's To realize these benefits, the Philippine government, along
food supply. Achieving agricultural progress ensures a stable with relevant stakeholders, should prioritize agricultural
and sufficient food production, reducing dependency on food development, invest in research and extension services,
imports, and enhancing the country's ability to feed its improve access to credit and markets for farmers, promote
growing population. sustainable practices, and develop supportive policies that
foster the growth of the agricultural sector. By doing so, the
2. Economic Contribution: The agricultural sector contributes Philippines can harness the potential of its agricultural
significantly to the Philippine economy. It is a major source of resources and contribute to the country's overall economic
employment, income, and foreign exchange earnings through growth and development.
agricultural exports.
Rural development
3. Poverty Reduction: A substantial portion of the population Rural development refers to the process of improving the
in the Philippines lives in rural areas and depends on economic, social, and environmental conditions of rural areas
agriculture for their livelihoods. Agricultural progress can lift to enhance the well-being and quality of life of rural
farmers and rural communities out of poverty by improving communities. It encompasses a wide range of activities,
productivity, incomes, and access to markets. policies, and interventions aimed at addressing the unique
challenges and opportunities that rural areas face.
4. Employment Generation: Agriculture remains a vital source
of employment in the Philippines, providing livelihood Agricultural progress
opportunities for millions of people, particularly in rural Agricultural progress refers to the positive and continuous
areas. advancement and improvement in the agricultural sector. It
encompasses a range of positive changes and developments
5. Rural Development: Strengthening agricultural activities that lead to increased productivity, efficiency, and
and promoting agricultural value chains can foster rural sustainability within the agriculture industry. Agricultural
development, improving access to infrastructure, social progress involves adopting new technologies, implementing
services, and economic opportunities in rural communities. improved practices, and making innovative changes to
enhance agricultural outputs and outcomes.
6. Export Potential: The Philippines has a comparative
advantage in producing various agricultural products. Human Capital: Education and Health
Agricultural progress can enhance the competitiveness of
these products in international markets, leading to increased The Central Roles of Education and Health Basic Objectives of
agricultural exports and foreign exchange earnings. Development:
- Health – central to well-being
7. Industrial Linkages: Agriculture provides raw materials for - Education – essential for satisfying and rewarding
various industries, including agro-processing, textiles, and life
pharmaceuticals, contributing to value addition and industrial  Both are fundamental to the broader notion of
linkages. expanded human capabilities that lie in the heart of
the meaning of economic development
8. Climate Change Adaptation and Mitigation: Advancing Health: Why this became a essential in Economic
agricultural practices and technologies can enhance the Development?
resilience of farming systems to climate change impacts and - A prerequisite for increases in productivity, and
contribute to climate change mitigation efforts. successful education relies on adequate health as well.

9. Environmental Sustainability: Sustainable agricultural Education: Why this became a part of Economic
practices promote resource conservation, biodiversity Development?
protection, and environmental sustainability, safeguarding - Plays key role in the ability of a developing country
natural resources for future generations. to absorb modern technology and
- To develop the capacity for self-sustaining growth
10. Social Stability: Strengthening the agricultural sector and and development
improving rural livelihoods contribute to social stability by
reducing income disparities, enhancing rural-urban balance, • Both Health and Education is seen as vital
and addressing migration-related challenges. components of growth and development –which are inputs
to the aggregate production function.
11. Food Diversity and Nutrition: Agricultural progress can • Their dual role as both input and outputs
promote the production of diverse and nutritious crops, gives health and education their central importance in
contributing to improved diets and better nutrition outcomes economic development.
for Filipinos.
HUMAN CAPITAL – Productive Investments embodied in - Income is spent on other goods besides food, and
human persons, including SKILLS,ABILITIES, TALENTS, part of the increased food expenditures is used to
HEALTH, and LOCATIONS, often resulting from expenditures increase food variety without necessarily increasing
on EDUCATION,ON-THE-JOB TRAINING PROGRAMS, and the consumption of calories.
MEDICAL CARE.
Investing in Education and Heath: The Human Capital
Health and Education Development as Human Capital Approach
Issues: INVESTMENT IN HUMAN CAPITAL (EQUITY AND - Analysis of investments in health and
EFFICIENCY) = POSITIVE EFFECTS ON INCOMES education is unified in the human capital approach.
• Health and Education has close relationship. - Human capital – term that the economists use for
• There are dual impacts of the effects of health education, health, and other human capacities that can raise
spending on the effectiveness of the educational system and productivity when increased.
vice versa. - An analogy is made to conventional investments in
• We should need to invest in health and education physical capital.
• Despite of their close relationship, we still - This is done by estimating the present discounted
see a higher household income is no guaranteed of value of the increased income stream made possible by these
improved health and education. investments and then comparing it with their direct and
• Human capital must be given direct attention in its indirect costs.
own right, even in economies that are growing rapidly. - Discount Rate – in present value calculations, the
• REALITY: Health and education may be distributed annual rate at which future values are decreased to make
very unequally, just as income and wealth are. But, them comparable to values in the present.
IMPROVED health and education help families to escape - Health and education also contribute directly to
some various circles of poverty in which they are trapped. well-being.
• We need to take a close look at educational and -Basic human capital approach – focuses on the indirect
health systems in developing countries: to identify the ability to increase well-being by increasing incomes.
sources of the severe inequalities and inefficiencies that - The impact of human capital investments in
continue to plague them. developing countries can be quite substantial.
- Incomes vary over the life cycle for people with
Education and Health as Joint Investments for Development various levels of education. •
- Health and Education are closely related in economic -Those with higher levels of education start full-time
development work at a later age but their incomes quickly outpace
-Greater health capital may improve the return of those who started working earlier.
investments in education, in part because health is an - Future income gains from education must be
important factor in school attendance and in the formal compared with the total costs incurred to understand the
learning process of a child. value of human capital as an investment.
- A LONGER LIFE raises the RETURN TO INVESTMENTS - Education costs include direct tuition and other
in EDUCATION, in part because better health at any point related expenditures
during working life may in effect lower the rate of
depreciation of education capital. Child Labor
- Greater education capital will improve the return to - Child labor is a widespread problem in developing
investments in health because many health programs rely on countries. When children under age 15 work, their labor time
basic skills often learned at school including personal hygiene disrupts their schooling and, in a majority of cases, prevents
and sanitation. them from attending school altogether. Compounding this,
- Education is also needed for the formation and the health of child workers is significantly worse, even
training of health personal. accounting for their poverty status, than that of children who
Linkages between Investments in Health and education do not work; physical stunting among child laborers is very
- Health and education are investments made in the common. In addition, many laboring children are subject to
same individual especially cruel and exploitative working conditions.

Improving Health and Education: Why Increasing Income is

not sufficient?
- Health and education levels are much higher in high-income
countries
- With higher income, people and governments can afford to
spend more on education and health, and with greater health
and education, higher productivity and incomes are possible.
-We need a multipronged strategy to address the stubborn
problems of absolute poverty.
- People will spend more on human capital when income is
higher. But even if we were able to raise incomes without a
large improvement in health and education, we could not
count on that income increase being used to
adequately invest in children’s education and health.