Economics Lecture

Chapter 1: Key Learnings

Chapter 1 of "Introduction to Economic Development: A Global Perspective" highlights the stark
disparities in global living standards, with 40% of the world's population living on less than $2 per day. It
was able to discuss about the life of others where it differentiates the lives of a nuclear family and an
extended family or the Filipino family. The chapter also discusses about the definition of development
and the subsistence economies that only meet basic needs. It was also able to show the experiences of
different people who suffered from poverty such as a poor woman from Uganda who experienced
inferiority and a blind woman from Tiraspol, Moldova who describe that everything is terrible. It explores
development economics, which addresses why some countries are more developed than others and how to
alleviate poverty. It was also able to discuss reasons for studying development economics where it
showcased the nature of it presenting the traditional economies which concerned primarily with the
efficient, least- cost allocation of scarce, the political economy which highlights that certain groups of
economic and political elites influence the allocation of scarce productive resources, and the development
economics which has an even greater scope. Key development values include sustenance (meeting basic
needs), self-esteem (enhancing individual worth), and freedom from servitude (choosing one’s path).
Development objectives aim to increase the availability of basic goods, raise living standards, and expand
economic and social choices. Women's roles are crucial in breaking the cycle of poverty. Additionally,
the Millennium Development Goals outline targets for eradicating poverty, achieving education, and
promoting health and sustainability. The chapter also differentiates between economic growth (GNP and
GDP) and development, noting that growth alone does not ensure broader human development.
Chapter 1: Introduction to Economic Development: A Global Perspective
 A majority of the earth’s nearly 7 billion people are much less fortunate.
 40% of the world’s population lives on less than $2 per day.
 Income – regular narereceive
 Wealth – stock
 Political Economy – TESDA – get certificate to have a more better job
 Nuclear Family – normal, nanay – tatay – anak
 The Filipino Family or Extended Family – Joint family, consist of eight or more people, including
parents, several children, two grandparents, and some aunts and uncles.
 A poor woman in Uganda – inferiority
 Subsistence economy - An economy in which production is mainly for personal consumption and
the standard of living yields little more than basic necessities of life—food, shelter, and clothing.
 Development - The process of improving the quality of all human lives and capabilities by raising
people’s levels of living, self-esteem, and freedom.

A. Why Study development economics?

Historical perspective of Economics
 Traditional economics – most efficient way to allocate resources, sees world as a perfect
market
 Political Economy – institutions, creating a framework for legal institutions, policies
needed to be followed by businesses, legal mandate that will protect people
– help people consumers meet their basic needs
– help develop schools and roadways
– fight market failures
 Development Economics – “why some countries are more developed than the others”
– looking into different ways to release the people from
poverty trap
– added income is not enough, create public schools, living
program, vocational schools or private degrees like TESDA
and DHVSU
How can development help people living in the poverty trap?
 presence of few but limited seller, limiter producers
 market in real world is imperfect
 best price budget needs
 consumers looking for product for their needs and products
 market power, seller controls the price
 Human Development Index – education and health, looking for changes in the people
 Question of policies – are the right beneficiary able to receive the benefits
Economic Development – how can you inflate change into human life
A. Three Core Values of Development
1. Sustenance: The ability to meet basic needs. – fulfilling basic necessities, expand availability
of resources, understand the problem, non-government organization helps provinces
2. Self- esteem: To be a person. – to be the person they want to be through the improvement in
their living standards, a sense of worth and self- respect of not being used as a tool by others
for their own ends.
3. Freedom from Servitude: To be able to choose. – equal opportunity, everyone have the rght to
choose their own path

B. The three objectives of development

1. To increase the availability and widen the distribution of basic life- sustaining goods
2. To raise levels of living – higher income, more jobs, better education, human values
3. To expand the range of economic and social choices - freeing from servitude and dependence

C. The Central Role of Women to the fulfillment of Economic development

Women have primary responsibility for child rearing, and the resources that they are able to bring
to this task will determine whether the cycle of transmission of poverty from generation to
generation will be broken.

The Millennium Development Goals

1. Eradicate extreme poverty and hunger
2. Achieve universal primary education
3. Promote gender equality and empower women
4. Reduce child mortality
5. Improve maternal health
6. Combat HIV/AIDS, malaria, and other diseases
7. Ensure environmental sustainability
8. Develop a global partnership for development

Economic Growth: GNP = GDP + NF/A

 GNP - income as a whole
 GDP – productive capacity
 NF/A – income outside the country

A country can always grow but not all achieve development.

Chapter 2: Key Learnings
Chapter 2 of "Comparative Economic Development" examines the indicators and characteristics of
economic development, highlighting the disparities between developed and developing nations. This
chapter was able to present the most common way to define the developing world and this is by per capita
income. Consequently, it mentions about the World Band, an international financial institution, which
classifies countries belong to low-income as those with a gross national income per capita of less than
$975, have incomes between $976 and $3,855; upper-middle-income countries have incomes between
$3,856 and $11,906; and high-income countries have incomes of $11,907 or more. Additionally, it
defined newly industrializing countries as those at a relatively advanced level of economic development,
least developed countries (LDC) as those with low income, low human capital, and high economic
vulnerability. A record of United Nations indicated 49 countries including in the LDC, 33 from Africa, 15
in Asia, plus Haiti. Key indicators of economic development were also mentioned and this includes
Purchasing Power Parity (PPP), which compares the economic activity and well-being across nations by
evaluating the currency's strength and the goods it can buy. Additionally, health and education metrics,
such as life expectancy and literacy rates, are crucial for assessing human resources. Common
characteristics of developing countries include lower levels of living and productivity, lower levels of
human capital, higher levels of inequality and absolute poverty, higher population growth rates, greater
social fractionalization, larger rural populations but rapid rural-to-urban migration, lower levels of
industrialization and manufactured exports, adverse geography, underdeveloped markets, and lingering
colonial impacts and unequal international relations. Along with these, for a nation to improve, it must
address these multifaceted issues, focusing on human resource development and equitable growth
strategies.
Chapter 2: Comparative Economic Development
Indicator of Economic Development
1. Purchasing Power Parity
– the strength of one currency compared to another
– GNI/GNP, GDP
– by measuring the basket of good that can be purchase in one currency
– 1$ = P50
– the most common measure of the overall level of economic activity, is often used as a
summary index of the relative economic well-being of people in different nations.
– Per Capita Income – average income received annually
– based or compared on other country’s currency
– US dollar
– Strong GDP, producing various products
– Capacity to produce, the greater to capacity to produce the greater income
– agriculture, industry, services
– GDP is strong because they produce various product that is needed

2. Health – life expectancy, rate of undernourishment, under-5 mortality rate, birth rate
3. Education – education in other countries is developed even starting at primary education

Health and education help to improve human resources of a country

FILIPINO INCOME GROUPS AND HOW MUCH THEY’RE EARNING

 Poor – less than P12,030 per month
 Low Income (But not poor) – between P12,030 to P24,000 per month
 Lower Middle Class – between P24,000 to P48,120 per month
 Middle-Middle Class – between P46,000 to P84,210 per month
 Upper-Middle Class – between P144,360 to P240,600
 Upper Income (not rich) – between P144,360 to P240,600
 Rich – at least P240,000

The vast of the wealth is being enjoyed by the small portion of the society.

Developing World
The most common way to define the developing world is by per capita income.
 World Bank – international financial institution, provides development funds to developing
countries in the form of interest-bearing loans, grants, and technical assistance.
 Low-income countries – countries with a gross national income per capita of less than $976 in
2008.
 Middle-income countries – countries with a GNI per capita between $976 and $11,906 in 2008.
 Newly industrializing countries (NICs) countries at a relatively advanced level of economic
development with a substantial and dynamic industrial sector and with close links to the
international trade, finance, and investment system.
  Least developed countries a United Nations designation of countries with low income, low
human capital, and high economic vulnerability. (49 countries)
 Some country economic growth – GNP, GNI/GNP, needed for a country to develop, you need
high economic growth but this doesn’t mean you achieve economic development
 Because of railroads bumilis ang trading from the history

Economic Development
Common Characteristics of Developing Countries
1. Low Levels of Living and Productivity
– At very low-income levels, in fact, a vicious circle may set in, whereby low income leads to
low investment in education and health as well as plant and equipment and infrastructure,
which in turn leads to low productivity and economic stagnation. This is known as a poverty
trap or what Nobel laureate Gunnar Myrdal called “circular and cumulative causation.”

Population size land “geography” size are not corelated to economic development.

2. Lower Levels of Human Capital

– Human capital—health, education, and skills—is vital to economic growth and human
development. We have already noted the great disparities in human capital around the world
while discussing the Human Development Index. Compared with developed countries, much
of the developing world has lagged in its average levels of nutrition, health (as measured, for
example, by life expectancy or undernourishment), and education (measured by literacy).
3. Higher Levels of Inequality and Absolute Poverty
– Globally, the poorest 20% of people receive just 1.5% of world income. The lowest 20% now
roughly corresponds to the approximately 1.4 billion people living in extreme poverty on less
than $1.25 per day at purchasing power parity.
– East Asia: 9.1%; Latin America & Caribbean: 8.6%; Middle East & North Africa:
1.5%; South Asia: 31.7%; Sub-Saharan Africa: 41.1%
– Grass root program, start the change or help those who are at the end of the line
– Inequality could lead to slower growth
4. Higher Population Growth Rates
– From 1990 to 2008, population in the low-income countries grew at 2.2% per year, compared
to 1.3% in the middle-income countries
– the high-income countries grew at 0.7% per year, reflecting both births and immigration
– A major implication of high birth rates is that the active labor force has to support
proportionally almost twice as many children as it does in richer countries.
5. Greater Social Fractionalization
– The greater the ethnic, linguistic, and religious diversity of a country, the more likely it is that
there will be internal strife and political instability.
6. Larger Rural Populations but Rapid Rural-to-Urban Migration
– The world as a whole has just crossed the 50% threshold: For the first time in history, more
people live in cities than in rural areas. But sub-Saharan Africa and most of Asia remain
predominantly rural.
7. Lower Levels of Industrialization and Manufactured Exports
 – Along with lower industrialization, developing nations have tended to have a higher
dependence on primary exports. Most developing countries have diversified away from
agricultural and mineral exports to some degree. The middle-income countries are rapidly
catching up with the developed world in the share of manufactured goods in their exports,
even if these goods are typically less advanced in their skill and technology content.
8. Adverse Geography
– A great concern going forward is that global warming is projected to have its greatest
negative impact on Africa and South Asia.
9. Underdeveloped Markets
– lack of a legal system that enforces contracts and validates property rights;
– lack a stable and trustworthy currency;
– lack of an infrastructure of roads;
– lack of a well-developed and efficiently regulated system of banking and insurance;
– lack of a substantial market information; and
– lack of social norms
– Infrastructure Facilities that enable economic activity and markets, such as transportation,
communication and distribution networks, utilities, water, sewer, and energy supply systems.
– Imperfect market A market in which the theoretical assumptions of perfect competition are
violated by the existence of, for example, a small number of buyers and sellers, barriers to
entry, and incomplete information.
– Incomplete information the absence of information that producers and consumers need to
make efficient decisions resulting in underperforming markets.
10. Lingering Colonial Impacts and Unequal International Relations
– Despite important variations that proved consequential, colonial era institutions often favored
extractors of wealth rather than creators of wealth, harming development then and now.
– Tignan nyo yung isang bansang sumakop sa isang bansa, kung mayaman ang bansa,
mayaman din ba ang sinakop?

GDP is not a good measure of economic performance, it’s not a good measure of well-being. It is
the start. The first step is to capitalize human resources. - Joseph Stiglitz
Chapter 3: Key Learnings
Chapter 3 of "Theories of Economic Development" discusses various economic development theories,
noting their applicability and limitations across different contexts. These theories include the four
approaches classic theories of economic development which are the linear-stage-of-growth model, the
theories and patterns of structural change, the international-dependence revolution, and the neoclassical
free-market counterrevolution. Each theories have subdivisions, depending on which individuals was able
to discuss them. For the linear stages theory where it outlines a progression from agriculture to services,
stressing investment in infrastructure and the importance of surplus income, we have Walt W. Rostow
and the Harrod-Domar Model. Walt W. Rostow was able to introduce a model of development which a
country passes through sequential stages in achieving development: 1) traditional society, 2)
preconditions to take-off, 3) take-off, 4) drive to maturity, and 5) age of high mass consumption. On the
other hand, the Harrod-Domar Model underscores foreign aid and investment as crucial for development,
especially for countries lacking natural resources. The Structural Change Model, proposed by Lewis and
expanded by Chenery, focuses on transitioning from traditional to manufacturing sectors, addressing both
economic and social aspects. Under the international dependence revolution, theories such as the neo-
colonial dependence was able to mention the indirect outgrowth of Marxist thinking, the False Paradigm
highlight the mismatch between proposed models and actual country conditions, while the Dualistic
Theory emphasizes the inherent economic inequality. The Neo-classical approach advocates for open
economies, promoting competition and lowering prices through free markets. Neo-Classical approaches
include Free Market Analysis, Public-choice theory, and Market-friendly approaches, each differing in
the role they ascribe to government intervention, with a consensus on the need for efficient market
operations and addressing market failures in developing countries. Lastly, the New Growth Theory, by
Robert Solow, emphasizes human capital investment and continuous technological advancement.
 Chapter 3
Topic: Theories of Economic Development
Theory – not 100% sure or effective
– phenomenon that was studied which may be applicable to different certain group
– not all could fit to all countries
– some may have different advantages, disadvantages, limitation
False Paradigm – the model being proposed or used does not match the country, the policy and program
will not work
Dualistic – poverty is in there from generation to generation, it requires a poor and a mayaman in an
economy to achieve baance pero hindi malaki ang disparity
– people are against the close economy
Neo-classical – open the economy, invite many sellers and producers and investors
– free market, many supply bababa ang price

1. Linear Stage Theory

Agricultural – Industry – Service Economic growth = GDP/GNP
High output: High productivity
Income High productivity: High Income

Demand to services
- - demanding for a better
Take-off
living standard
- short period of intensive growth
Pre-take-off
Traditional Society - investment to infrastructure, water, electricity, road

 ECON Q = f (K, L) *Capital and Labor

– everything is manual Mass Consumption

Highly diversified services,

income and services have high
Spill-over quality, sumosobra na income you
are starting to demand more
product and services
– Does it help to improve education and health needs?
– Is the excess income enough para makapagpaaral ka and makapagtapos?
– Because of growth, people start question, being exposed to the reality
– Opportunities gained by people on the lower levels are not enough for them
– Flavors of continues savings and investment
– But there will always be constraints, limitation on the availability of high heavy equipment
– process of development was viewed as a series of successive stages through which all
countries must pass
2. Harrod Model
– the importance of foreign aid
– sometimes the vast equipment and technology come from other countries
– foreign indirect investment, sometimes hindi available satin ang mga advancement sa capital
– highlighted the importance of foreign investment
– hindi lahat ng bansa nag start sa traditional economy kasi hindi sila mayaman sa land or sa
pagtatanim, like Singapore, nag start sila sa service and doon sila naka achieve ng
development

3. New Growth Theory “Robert Solow”

– the importance of Human Capital Investment
– the quality of a population
– technological process done thru continual research and development
– it should be continuous because of depreciation, re-investment
– you could improve output through the help of technology, inducement of technology leads to
higher quality of products
– importance of capital labor ratio, more greater output quantity, more competent labor force
means more competent quality output

4. Structural Change Model

Lewis’s Structural Change Model

Manufacturing Sector
More output,
more job opportunity more income,
Traditional Agriculture Manufacturing Sector more demand

savings - reinvested
Manufacturing Sector

Unemployed – people actively looking for jobs

Limitation
 More income, more demand
 Job mismatch
 Patronized labor saving capital, instead of living they just invest in machineries and
technology

Hollis B. Chenery
– Lewis is just focusing on economic side but how about the social side?
– establish trade policies, exchange rate, finance
– things you must look into when entering higher production
– protect labor right of women
– creating of new policies with the adopt to changes in the economy restructure
 – if entering to different kinds of industry you must create new social undertakings
– new legal framework for different changes, information dissemination

Neo-Classical
1. Free Market Analysis
– markets alone are efficient
– product markets provide the best signals for investments in new activities
– labor markets respond to these new industries in appropriate ways
– producers know best what to produce and how to produce it efficiently;
2. Public-choice theory
– governments can do nothing right
– politicians, bureaucrats, citizens, and states act solely from a self-interested perspective, using
– their power and the authority of government for their own selfish ends.
– minimal government is the best government.
3. Market-friendly approach
– there are many imperfections in LDC product and factor markets
– governments do have a key role to play in facilitating the operation of markets through
“nonselective” (market friendly) interventions
– market failures are more widespread in developing countries

May iba’t ibang impact etong mga theory depende on how a country would apply it. In all of this, we
need people who will work hand in hand to achieve change ang development.
Chapter 4: Key Learnings
Income inequality is a critical issue in economics, characterized by the uneven distribution of national
income among households and individuals. There are two primary ways to measure income inequality:
the size distribution, which focuses on the income received by individuals or households regardless of the
source, and the functional distribution, which examines the share of income attributed to factors of
production such as labor, land, and capital. Absolute poverty refers to the inability to meet basic needs
and is often measured by the number of people living below a specified income threshold. Addressing
inequality and poverty is essential for promoting economic efficiency and sustainable growth, as high
levels of inequality can lead to inefficiencies in credit access, education, and investment, while poverty
reduction can stimulate economic demand and participation. Reasons for concern about inequality
involves economic inefficiency, low savings rate, and inefficient asset allocation. Economic Inefficiency
is associated by high inequality which reduces the fraction of the population eligible for credit, hindering
education and business opportunities. Low Savings Rate is where inequality tends to lower the overall
saving rate, as wealthier individuals often save a smaller fraction of their income and invest less in
productive resources. Inefficient Asset Allocation could lead to misallocation of resources, with the rich
investing in non-productive assets. Additionally, the eradication of poverty relies on economic growth
and effective poverty programs. There are also characteristic of the poverty groups namely the rural
poverty, the women’s group, and the ethnic minorities and indigenous population. Lastly, the chapter was
able to present policy options for reducing poverty and inequality. Such includes altering functional
distribution, mitigating size distribution, progressive taxation, and public expenditures
Chapter 4: Problems and Policies
1. Inequality
 Poverty is the consistent problem in the world
 The issue is not just about money, it is about what can they afford to bur or to attain such
as education, health, and future possibilities
 The number of incidence of people living in poverty is higher in underdeveloped
countries compare to developed countries
 Hindi kasalanan ng mayayaman na madami sila
 Size distribution – total income received by individual person, organization, groups,
business ventures, firms
- interest – business venture
- rent – tenants
- dividends
- salaries
- interest rate
- hindi tinatanong hour of working
- if you wanted to receive higher income, you need to work more
 Functional Distribution – ¼ is from salary, majority is from wealth (jewelries, assets)
 Inequalities takes place because there is only a little amount of salary others enjoy from
the pre distribution of earnings
Chapter 5: Key Learnings
Chapter 5 delves into the complexities of global population dynamics, noting that while human mortality
rates are at their lowest in history, the swelling global population poses significant challenges. The
chapter emphasizes the critical role of social development, particularly women's education and
employment, in effective population management. As population growth outpaces economic expansion,
concerns arise regarding the capacity of economies to absorb and provide for growing populations. The
chapter provides extensive data on historical and projected population growth rates, highlighting the
disproportionate burden on developing countries. Factors such as modern medicine, vaccination
campaigns, and public education have significantly reduced mortality rates, particularly in Asia and Latin
America, while sub-Saharan Africa continues to face challenges. The youth dependency ratio and the
hidden momentum of population growth underscore the need for strategic interventions to stabilize
population growth. The chapter revisits Reverend Thomas Malthus's theory of population dynamics and
its limitations in the face of technological progress and individual decision-making. Ultimately, the
chapter advocates for comprehensive efforts to improve access to education, health, and employment,
particularly for marginalized groups, as crucial for both development and population management.
Chapter 5
Human mortality today is lower than at any other point in human existence.
 The central issue of our time may well turn out to be how the world addresses the problem of
ever-expanding human number. - James Grant, former director general, UNICEF
 Economic development may be far from “the best contraceptive,” but social development –
especially women’s education and employment – can be very effective indeed. – Amartya Sen,
Nobel laureate in economics
 There are higher chances of poverty when there are many children or the size of the family is big
for them to provide their needs.
 Why should population growth be an issue?
o Providing the required levels of living (housing, transport, sanitation, security, and health
and education coverage)
o Population growth vs. growth of the economy
 Capability of the economy na maabsorb ang population para maemploy or
maprovidan ng needs
 Nahihirapan ang government to provide services for example free education,
many students nagsisiksikan sa mga classroom sa public schools
o Poverty and family size
o Increasing influence of the rich to the global market
 In 2009, the world’s population was estimated to be 6.8 billion people
 Projection of United States by 2050 is 9.2 billion people
 More than 75 million people are being added every year, 97% is in developing countries
 The world is approaching the population milestone of seven billion people.
 The population growth rate over the years:
o 2000 years ago, 250 million (less than fifth of the China’s Population)
o 300 years ago, population grew at an annual rate not much greater than zero (0.002% or
20 per million)
o 1750 accelerated to 0.3% per year
o 1950s accelerated, tripling to about 1.0% per year
o 1970 it peaked at 2.35%
o Today growth rate remains at a historically high rate of 1.2% per year (1.1% in module)
o In Africa it is still extremely high about 2.4% per year (2.3% in module)
 Total population in 2010: 6.89 billion
o Europe 11%
o Africa 15%
o Northern America 5%
o Latin America 8%
o Asia and the Pacific 61%
 Total population in 2050: 9.5 billion
o Europe 8%
o Africa 22%
o Northern America 5%
o Latin America 7%
o Asia and the Pacific 58%
 Major factors that created sudden changes in world population
1. Famine
2. Disease
3. Malnutrition
4. Plague
5. War conditions
6. Changes in human mortality rate: modern medicines, sanitation
 Developed countries have much better living standard but they are experiencing low population
growth rate, example is Japan.
 If Bangladesh reaches replacement fertility in 2025 at a population of slightly over 200 million,
its population will not ultimately stabilize until 2150,
 Thinking tank of a country is on the adults and young adults ages.
 Rate of population – increase the growth rate of a population, calculated as the natural increase
after adjusting for immigration and emigration
 Natural increase – the difference between the birth rate and the death rate of a given population.
 Net international migration – the excess of persons migrating into a country over those who
emigrate from that country.
 Crude birth rate – the number of children born alive each year per 1,000 population (often
shortened to birth rate).
 Death rate – the number of deaths each year per 1,000 population.
 Total fertility rate (TFR) – The number of children that would be born to a woman if she were
to live to the end of her childbearing years and bear children in accordance with the prevailing
age specific fertility rates.
 Most developing nations have birth rates ranging from 15 to 40 per 1,000
 In almost all developed countries, the rate is less than 15 per 1,000.
 The total fertility rate (TFR) remains very high in sub-Saharan Africa (5.3) and western Asia
(3.1).
 Modern vaccination campaigns and public education have all worked together over the past three
decades to lower death rates by as much as 50% in parts of Asia and Latin America and by over
30% in much of Africa and the Middle East.
 Average life span remains about 12 years greater in the developed countries.
 In 1950, life expectancy in developing countries averaged 35 to 40 years, compared with 62 to 65
years in the developed world
 Under-5 mortality rate between 1990 and 2008 fell from 121 to 74 per 1,000 in South Asia, from
73 to 38 per 1,000 in South Eastern Asia, from 52 to 23 per 1,000 in Latin America and
Caribbean, and from 184 to 144 per 1,000 in sub-Saharan Africa.
 Sub-Saharan Africa had the lowest life expectancy of 51 year.
 High-income countries have life expectancy at birth averaged nearly 78 years, 74 years in East
Asia and 73 years in Latin America.
 Youth dependency ratio – the proportion of young people under age 15 to the working
population aged 16 to 64 in a country.
 Hidden momentum of population growth – the phenomenon whereby population continues to
increase even after a fall in birth rates because the large existing youthful population expands the
population’s base of potential parents.
 Two basic reasons:
1) First, high birth rates cannot be altered substantially overnight.
 2) The second and less obvious reason for the hidden momentum of population growth relates to
the age structure of LDC populations.
 The important message of population momentum is that every year that passes without reduction
in fertility means a larger multiple of the present total population size before it can eventually
level off.
 Reverend Thomas Malthus – father of the modern birth control movement.
 Modern economists have given a name to the Malthusian idea of a population, they have called it
the low-level equilibrium population trap or, more simply, the Malthusian population trap.
 Malthusian population trap – the threshold population level anticipated by Thomas Malthus
(1766–1834) at which population increase was bound to stop because life sustaining resources,
which increase at an arithmetic rate, would be insufficient to support human population, which
increases at a geometric rate.
 Preventive checks – birth control
 Malthusian positive checks – Starvation, disease, wars
 Limitations of the Malthusian Trap
o Technological progress
o Rate of population is directly related to national per capita income
o Micro level of decision making rather than macro level
 expanded efforts to make jobs, education, and health more broadly available to poverty groups in
general and women in particular will not only contribute to their economic and psychic wellbeing
(i.e., to their development) but can also contribute substantially to their motivation for smaller
families (i.e., their freedom to choose), which is vital to reducing population growth rates.

If we do not voluntarily bring population growth under control in the next one or two decades, the nature
will do it for us in the most brutal way, whether we like it or not. – Henry W. Kendall
Chapter 6: Key Learnings
Chapter 6 explores the intricacies of unemployment, defining it as the state of individuals actively seeking
work but unable to find employment. Key concepts include the labor force, potential labor force, and
discouraged workers, with the unemployment rate serving as a critical indicator of economic health.
Underemployment is also highlighted, reflecting individuals working below their potential and earning
insufficient salaries. Reasons for unemployment range from frictional and cyclical factors to structural
mismatches in skills and job demand. Full employment is defined as an economic state with minimal
unemployment, typically around 6%, while Okun's Law illustrates the inverse relationship between
unemployment and national output. The chapter emphasizes the personal and economic costs of
unemployment, underlining the need for both government policies and individual efforts to address skill
development and job creation.
Chapter 6: Unemployment
 Employment – number of people who have a job.
 Unemployment – number of individuals who are actively looking for work pero wala silang
mahanap
 Labor force – the sum of employment and unemployment
 Potential labor force – all 15 years old and above, hanggang 60-65
 one thing na hinahanap din ng mga policy makers or binabantayan ng mga economist is yung
number of the labor force compared to the number of potential labor force, yung difference is the
number of people na wala sa labor force
 Discourage workers – mga wala sa labor force, gave up on looking for jobs
 Unemployment rate – the ratio of the number of people who are unemployed to the number of
people in the labor force
 Pwedeng imanipulate ang unemployment rate such that kapag panahon na magsusurvey na for
unemployment rate, may ibang agency na magpapaimplement ng short term job hiring.
 One of the important aspect is also by looking at the underemployment rate – these are the
number of people who are performing their jobs which are way below their potentials, skills,
capabilities, and they are earning salaries that are way below what they deserve to earn
 When unemployment rate is 6-8% that is still normal to the economy.
 Reasons of unemployment
o Nagkakaroon ng jump sa mga jobs kasi mas kinukuha yung mga job na mas beneficial sa
employee (frictional unemployment)
o May times na maganda yung economy, lumalaki, mataas ang labor demand pero may
times na lumalamya din kaya nagkakaroon ng lay off or hindi na sila naghahire (cyclical
unemployment)
o May mismatch sa skills sa kakayahan na hinahanap or to the need of the industry
(structural unemployment)
 Full employment – refers to an economic situation in which unemployment is very low
 The natural rate of unemployment is the rate of unemployment that corresponds to full
employment, around 6% unemployment due to frictional unemployment and structural
unemployment.
 Cyclical unemployment causes a slight variation above and below this natural rate.
 When unemployment rate is at the nature rate of unemployment, economy is operating at full
capacity.
 When unemployment rate is below the nature rate of unemployment, economy is operating above
full capacity.
 When unemployment rate is above the nature rate of unemployment, economy is operating below
full capacity.
 Four basic causes of unemployment in a healthy, working economy:
1) minimum wage laws
2) labor unions
3) efficiency wages, and
4) job search
 Unemployment is a macroeconomic phenomenon that directly affects people.
 Types of Unemployment
1) Frictional Unemployment – simply between jobs, being hired elsewhere or simply
relocating, are not actively searching for a job, but instead just waiting to begin their next job.
 2) Structural Unemployment – structure of the job is incompatible with the skills offered by
the worker; workers have a mismatch of skills for the job or geographic area that they want to
work
3) Cyclical Unemployment – it is attributable to changes in output due to the cycles of the
economy, some workers may be laid off as the economy slows down. These workers possess
the necessary skills, but there is simply not enough demand for their firms to continue to
employ them.
Cost of Unemployment
– Let go the capability to afford your bills that you need to pay
– Negative physical and mental effects
– Negative effect in the economy

 Arthur Okun looked at the relationship between unemployment and national output over the
past 50 years.
o He noticed a general pattern and stated an equation to explain it.
o His equation, Okun's Law, relates the percentage change in real GDP to changes in the
unemployment rate.
 In particular, the equation states:
% change in real GDP = 3% - 2 x (change in unemployment rate)
For example:
let's say a country had an unemployment rate of 8% in one year and 6% in the next. Using Okun's law, it
would be hypothesized that the percentage change in the real GDP would be 3% - 2 * (-2%) = 7%.
Because 2% fewer people were unemployed the nation produced 7% more output.

“It’s a recession when your neighbor loses his job; it’s a depression when you lose yours.” – Harry S.
Truman
“It’s not just about calling for the government to create more jobs, it is also responsibility of the people
to improve their skills and competencies, with the help also of the government to create policies that will
paive the way to the people to build their competencies” -
Chapter 7: Key Learnings
Chapter 7 delves into the dynamics of migration, particularly focusing on rural-urban migration and its
implications. The Michael Todaro Migration Model outlines factors driving migration, emphasizing
economic stimuli, expected benefits, and urban employment dynamics. Urbanization emerges as a
consequence of rural-urban migration, accelerated by industrialization and economic growth, though
often accompanied by challenges such as overcrowding, inadequate social services, and environmental
degradation. The informal sector plays a significant role, offering employment opportunities but also
contributing to labor vulnerabilities and imbalances between rural and urban areas. Addressing migration
challenges requires comprehensive policies addressing employment, education, healthcare, and urban
planning to mitigate the negative impacts and foster sustainable development.
Chapter 7: Urbanization and Rural – Urban Migration: Theory and Policy
Migration – movement of people from their home to another city, state or country for a job, shelter or
some other reason
Migrant – a person who is temporarily moving from their home country, home province, home city to
another country, province, or city
Immigrant – a person who will be permanently moving to another country
Michael Todaro Migration Model – first three ano yung factors that will lead to high migration while
number 4 states about what happen to the economy if there is a high migration
1. Migration is economically stimulated – higher income, better job opportunities, better living
condition
2. Migration is based on expected rather than actual – majority ng mga nagmamigrate hindi nila
tinetake into consideration yung mga cost na associated when they are migrating when in actual
migration meron kang actual na marereceive na benefit pero meron ka ding actual cost na
maiincur like explicit cost
3. Urban job is directly related to employment rate and inversely or indirectly related to
unemployment rate – if there is a high employment rate will result in a high migration, if there is
low employment rate and there is high unemployment rate, this could result in a low migration
rate
4. High imbalance in the economic opportunities between rural and urban are what causing high
excess job seekers in urban areas
Urbanization - is a consequence mainly of rural-urban migration. This process began in Europe in the 19 th
century. Although large cities existed before 1800, the vast majority of the world's population lived in
small, often self- sufficient village communities. Industrialization and population growth in Europe in the
19th century resulted in radical change: sometimes the excess peasant population moved to towns to seek
paid work, often having to live in unhygienic slums and dying of infectious diseases.
– Term na ginagamit to specifically identified yung mataas na migration ng mga tao from the
rural areas papunta sa urban areas
Industrialization – height of economic growth in Europe due to machineries, equipment that allows the
organization to produce many manufactured goods
It is a right move if you would able to receive a high income or a stable income and you could help your
family.
Some would end up living in the streets, namamalimos, doing criminal acts just to survive.
Challenges of over crowding
– Availability of social services: Housing; medical care; education.
– Increased crime
– Pollution – no proper waste disposal
– Congestion – transfer of disease mabilis
– Transportation “Traffic”
 Caused of Urban problems:
– First City Bias – government improvements and investments were focused on bigger cities
– Misguided urban planning policies – creating a lot of problems regarding housing, pollution,
traffic
– Political move – nagkakaroon ng mindset yung mga nasa slum areas about their political biases
na doon sila masaya, eto yung nagpasaya samin so eto iboboto naming, kaya hindi gumagawa
ng way ang mga politico to help these people

Informal sector- also known as the underground economy, black economy, shadow economy, or gray
economy, is part of a country's economy that is not recognized as normal income sources. People who
work in the informal sector do not declare their income and pay no taxes on them.
 Labor intensive;
 family owned;
 low technology;
 high vulnerability to negative impact to environment;
 no labor protections;
 high creativity and more...

Contributions of Informal sector

– Training ground
– Temporary source of income
– Business opportunities for small capital entrepreneurs; self-employed semi-skilled individuals

Imbalances as a result of Rural- Urban Migration

– Over supply of job seekers in Urban areas, while “brain drain” in rural areas; - nawawalan ng
thinking tank
– Urban job creation is more difficult and costly than rural job creations; and
– High cost of living put pressure to wage/salary increase to maintain productivity

“So if people have an opportunity for a decent job, a decent education, a decent health care system and
security, I know that forceful migration will be reduced to zero” – Nayib Bukele
Chapter 8: Key Learnings
Chapter 8 underscores the intricate relationship between population, food supply, agriculture, and the
environment. Historically, human population growth has been closely tied to food availability, with
advancements in agricultural technology driving rapid population increases. However, this productivity
comes at a cost to the environment, as inputs such as fertilizers, pesticides, and irrigation systems have
adverse effects. As population expands, so do demands on the environment for sustenance, leading to
challenges like water scarcity, food security, and environmental degradation. Land use changes,
inequalities in food distribution, and environmental impacts of agriculture further complicate these issues.
Further, agriculture’s impact on the environment involves soil erosion, degradation, negative effect of
fertilizer use, pesticide use which created super-pests, irrigation and water resources which sped the
building up of salinization and alkinization. Looking ahead, sustainable agriculture, guided by
agroecological principles, emerges as a crucial paradigm for balancing food production with
environmental preservation, ensuring stable output without compromising the ecosystems that sustain it.
Part 8: Agriculture, Food, and Environment
Feeding the world: Population and food supply
Food supply constitutes a fundamental relationship between any human society and its environment. In
the wild, animal populations wax and wane based largely on food availability. For many centuries, human
numbers were also linked closely to food abundance or scarcity. In the past two centuries, increasingly
productive agricultural technology has spurred the rapid increase in human population.
There are people who are against the idea of Malthusian Trap.
Due to a lot of productivity in agricultural technology and this increase the human capability to produce
food. However, the inputs that includes the fertilizers, irrigation system, pesticides, ay meron ding balik
sa environment.
Habang lumalaki ang population, tumataas ang human activity and this human activity is nafufulfill from
the environment.
All living organism sa earth is nangangailangan ng food supply na nangggaling din sa environment.
As the society expands, it demands for food supplies, thus it affects the environment
Environmental Challenges
– Water Accessibility – umiinto ang water supply dahil sa init
– Food security – capability of our environment to still create food for the current number of
population and the need of future generation
– agriculture capability, climate/natural disaster, population size, environmental
challenges
o The Mayan Civilization & Easter Island – traces of drought

Give the environment the opportunity to renew itself.

Necessity results to different inventions which results to the rise of technology, modern medicines,
modern infrastructure, proper sanitation, and many more but these also leads to different environmental
issues, health problems, food security, and may more issues.
Maldives conducted a cabinet meeting sa ilalim ng dagat because the president is trying to call the
attention of international organization and the leaders of the world to address the problem against global
warming.
They also conducted press briefing addressing to the media, showing to the world na ginaawa nya yon sa
may shore ng dagat ng Maldives to call the attention of the world about the pressing issues na hinaharap
ng Maldives.
Several factors that cast a different light on the issues of population, agriculture, and the environment:
Land use – mula ng nag expand ang population may mga land na nagamit na hindi naman intended for
agriculture and this land are called marginalized land example forest, mountain
– may mga nagtransform din na land from agriculture ginawang residential, commercial, or
industrial areas
Inequalities in food distribution – many countries receive lower amount of food supply
 – based from United Nation Food and Agriculture Organization, there are 7.3 billion people suffering
from chronic undernourishment
Environmental impacts of Agriculture – because of expanded land use, it resulted to a lot of deforestation,
loss of wild life habitat, erosion, and fast deflation of nutrients from the soil
– likewise the use of fertilizers resulted to eutrophication, which is yung part ng mga fertilizer
like nitrate, phosphate, and potassium na napupunta sa bodies of water kaya nagkakaroon ng
unnecessary growth ng mga plants na nagcause ng slow photosynthesis
– irrigation systems results to high concentration of salts or the salinization, when there is high
concentration of salt in the soil it creates a high tendency that it will limits the growth of a lot
of crops
– alkalinization prevents the roots to properly absorb water

Projection for the future

Distribution of the existing output is significantly unequal
– Consumption levels throughout much of the developing world are sufficient for an adequate
non–meat-centered diet, but inequality of distribution within countries leaves many of the
poorest with inadequate levels of food consumption.

Future Production and Yield Requirements

A number of factors could adversely impact projections for future yield increases. These include:
1. Biofuels expansion:
2. Climate change
3. Other negative impacts on yields arising from environmental degradation, overdraft of water
supplies, and loss of soil fertility due to intensive agricultural production.

Agriculture’s impact on the environment

 Soil Erosion and Degradation – mabilis nawawalan ng nutrients yung lupa kasi laging nagtatanim
 Environmental Effect of Fertilizer use – to produce more crops dinadamihan ang gamit ng
fertilizer pero hindi lahat naabsorb ng crops kaya nagkakaroon ng effect sa mga bodies of water
– 50 percent of India’s grains and feed about 40 percent of India’s population, are experiencing
multiple nutrient deficiencies in their soils.
 Pesticide Use – because of excessive use we tend to create a super pest
 Irrigation and Water Resources – mabilis ang build up ng salinization and alkalinization
A lot of experts in economic development are always looking towards sustainable agriculture specifically
the agroecological thought.
Agroecological thought highlight or supports the sustainable agricultural thought which is dapat yung
production is hindi gumagawa ng degradation sa environmental system.
Sustainable agriculture for the future
A sustainable agricultural system should produce a stable level of output without degrading the
environmental systems that support it.
In economic terms, this means no significant un-internalized externalities, user costs, or excessive use of
common property resources.
From an ecological point of view, a sustainable system minimizes disruption to natural cycles and
promotes long-term soil fertility and ecological balance.
 Integrated pest management
 Monoculture vs. species diversity – rather than having one crop dapat may multiple crops ka na
tinatanim
 Agroforestry
 Intercropping – magtatanim ka ng iba para bumalik yung nutrients sa lupa
 Agroecological

The natural environment sustains the life of all beings universally. – Dalai Lama `
Because of the comfortable living that we aimed, yung environment ang namroblema. So now bumabalik
tayo sa dati, sa mas environment friendly.
We are just receivers of the past actions of our predecessors but we cannot blame them.
Chapter 9: Key Learnings
Chapter 9 explores the multifaceted phenomenon of globalization, which entails the acceleration of
movements and exchanges across the globe, encompassing human beings, goods, services, capital,
technologies, and cultural practices. It emphasizes how globalization fosters increased interactions
between regions and populations worldwide, leading to greater global interdependence and
interconnectedness. The narrative delves into the complexities of regional cooperation, trade policies, and
economic integration, highlighting both the challenges and benefits associated with globalization. While
globalization presents opportunities for economic growth, technological advancements, and expanded
markets, it also raises concerns about labor practices, trade controversies, and cultural identity loss. The
chapter underscores the importance of addressing these issues while harnessing the potential of
globalization to promote equitable development and prosperity for all nations. Through regional
cooperation, trade policies, and concerted efforts towards sustainable practices, countries can navigate the
complexities of globalization to achieve higher economic growth and development.
Chapter 9: Globalization
Globalization means the speedup of movements and exchanges (of human beings, goods, and services,
capital, technologies or cultural practices) all over the planet.
One of the effects of globalization is that it promotes and increases interactions between different regions
and populations around the globe.
Regional Cooperation – when the countries that are near to each other decided to create one trading pack
or agreements.
Globalization also talks about the promotion and increase of human population interaction
Mga fans ng KPOP nagkakaron ng exchanges, nagkakaroon ng promotion or advocacies through different
social media platforms.
Globalization move for more interdependence between different countries. That’s why nagkakaroon ng
opposition, contradiction, movement against globalization kasi hindi naman daw umuunlad ang mga
mahihirap na bansa.
Raul Prebisch – pagyumaman yung bansa dapat yumaman din yung mga katransaction nya
Globalization create greater global interdependence.
Even in terms of money, in terms of finances nagkakaroon ng international trading.
Nadedehado ang mga less developed countries sa globalization dahil tumataas ang mga labor
malpractices, tumataas ang mga cases of child labor or other labor issues.
Not all predator are coming from the international market or multinational company, mostly are actually
coming from their local market and this are the ruling elites because the market is underdeveloped.
Kulang ang information system, kulang ang financial system to allow yung mga nasa laylayan to allow
them na magstart ng business or to enter in different business venture.
Autarky is when you consume whatever product you produce.
The more na mas pinoprotektahan mo yung local market, the more na hindi mo sya ineexpose, the more
na walang magiging growth ang local market.
Hindi laging negative ang international market. Definitely may competition and laging agrabyado ang
mga less developed countries pero it gives them opportunity to be open to the international market for
opportunities.
With international trade there is always risk. When there is risk, there is higher opportunity which could
lead to higher economic activity, development, and growth.
The call toward environment protection is not just a local issue but is now part of a global issue.
Globalizations pushes countries to be united
GLOBAL INTERDEPENDENCE
Less Developed Countries Developed Countries Developing Countries

International Expand Expand Exploitation of

Trade Market Economic the
Activity environment

This international trading also prompt an association or interaction between countries that are close
together.
ASEAN – Association of Southeast Asian Nations. Involves countries such as the Philippines, Brunei,
Burma (Myanmar), Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, Singapore, Thailand and
Vietnam.
Trade policy:
– Trade Bloc (Trade Discrimination through the cooperation among trading partners countries)
– Trade Creation
– Trade Diversion
Globalization also pushes for these countries to be united, to act as a united body, to promote their
products to each other.
Trade discrimination – they are discrimination against other countries na hindi nila ka member
Trade creation – because of the regional cooperation, nakakakuha ka ng mas mura, mas economical na
sources na products, goods, and services combined. Example insurance, mula sa mas mahal, may option
ka na sa mas mura.
Trade Diversion – mula sa mas murang product wala ka ng choice kasi bawal ng makipagtrade don, bago
mo unahin yon dito ka muna sa kapartner mo na bansa.
Free Trade Area – selected final goods and services, tradable goods, walang internal trade barriers, no
quota, no tariff
Quota – sineset na maximum quantity at minimum quantity na pwede mong itrade, depends on the
quantity control
Tariff – naglelevied ka ng tax sa mga goods para tumaas yung cost para magkaroon ng competitiveness
ang local markets
Custom Union – no internal barriers plus magseset sila ng certain or same na external tariff sa products na
naidentified sa agreement
Single Market – trading factors of production such as even manpower, the reason for K12 in the
Philippines for minimum standard requirment of education, pwede mga banks or financial institutions
Monetary Union – pare-pareho ng currency, you don’t have control over your economic policy
Economic Union – highlight is on common economic policy, fiscal policy, rate of tax, example is
SOVIET Union
This economic integration aims to help each country na magkakatulong to help one another for a higher
economic prosperity, for a country to gain higher economic growth, and to achieve higher economic
development.

Stage of Economic No Internal Common Factor and Common Common

Integration Trade External Tariff Asset Currency Economic
Barriers Mobility Policy
Free Trade Area X
Customs Union X X
Single Market X X X
Monetary Union X X X X
Economic Union X X X X X

Globalization: Issues and Benefits

Issues
a. Poor Workers in Poor Countries – not entirely true
- Many activist blame Globalization for widespread child labor, terrible working conditions,
and mass poverty in poor countries. One claim is that rising international competition drives
firms to pressure their governments for weaker regulations – a race to bottom.
b. International Trade Controversies
- Controversies about fighting against ideologies – example is in Guatemala, naniniwala sila sa
breastfeeding, they wanted to strengthen it as opposed to formula milk so they banned sana
formula milk pero lumaban yung mga malalaking company, you could just limit promotional
of formula milk
- United States VS Mexico, ayaw tumanggap ng Tuna ni US from Mexico and other resources
because it was fished out using illegal methodologies and illegal apparatus sa batas ni US.
Nagfile ng complaint ang Mexico sa WTO and sabi ng WTO sa US you can implement your
own law in your own sea area but because it was done outside your territory, you cannot ban
or restrict the exportation of Mexico
c. The Negative Effects of Globalization on Cultural Loss
- As we enter into globalization, some countries is mabilis maattract sa culture ng ibang
countries and nakakalimutan yung sariling culture, nawawala ang cultural identity

Benefits
- Multinational corporations offer better compensation packages
- Export promotion creates more opportunities: larger market
- New technology and methodology
- Improved and more variety of goods and services

“Somehow agrabyado talaga ang mga less developed na bansa, that’s true, but is does not mean na
forever na silang magiging dehado.” – Ms. Mharree Joie Shynne Gomez, 2024