Philippine Development Plan Market Power​- ability of a single/group entity

3 Pillars: can influence the market price of a product

- ​Malasakit​- enhancing social fabric Pure competition​- No singular entity can
-​Pagbabago​- Inequality reducing dictate market price.
transformation II. Development Economics
- Patuloy na Pag-unlad​- Increasing growth GDP (Gross Domestic Product)- ​value of
potential total goods and services produced in a single
Goals: year
- Matatag GNP (Gross National Product)​- GDP +
- Maginhawa abroad remittance)
- Panatag na Buhay Per Capita Income- ​GNP/ Population
I. Introduction 2.4 New Approaches
1.1 Economics and Scarcity Human Development Index
Resources​- basis for making products - ​Per Capita Income
- Natural Resources - Life Expectancy at Brith
- Capital Good Resources - Educational Attainment
- Human Resources Green GNP- ​GNP taking into account
Production Possibilities​- maximum amounts depletion of natural resources.
of two different goods that can be produced 2.5 Comparisons between countries
during a particular time period Exchange Rate Method- ​exchange rate
Effiicency- Maximum use of resources. between local currency and USD
No Unemploylment, no Idility. Proper PPP (Purchasing Powe Parity)- ​number of
allocation of resources. units of a country’s currency is required to buy
Equity (1.3)- Fair distribution of the same amount of goods and services a USD
resources would value at.
Opportunity Cost- ​the best alternative that is III. Growth and the Asian Experience
forgone to produce something else. 3.2.1 Components of Input and Output
Unemployment Y = f(K, L)
Economic Growth​- quality/quantity of Y= output income
resources increases (Outward Shift) K= Capital
Services L= Labor
Goods 3.2.2 Total Factor Productivity
- consumer goods g(Y)= g(K)W(K) +g(L)W(L)
- capital goods g(Y)= growth rate ofincome
-private goods g(K)=GR capital/investment
- public goods g(L)= GR labor
1.2 Economics and Distribution W(K)/(L)= weighted shares
Law of Demand- ​Price and Qtty. demand are 3.2.4 Technical Progress
inversely proportional, Cetaris Paribus. Embodied TP- ​changing nature of inputs into
Law of Supply- ​Price and Qtty. demand are production process
directly proportional, Cetaris Paribus. Disembodied TP- ​refers to to how factors are
Equilibrium- ​Demand=Supply combined.
Shortage​- Demand>Supply 3.3 Growth Theories
Supply- ​Demand<Supply Keynesian Growth/Harrod-Domar
1.4 Market Failures g(Y)= Savings ratio/Capital output Ratio
Spillover- ​costs/benefits affect people not
directly involved in the production/
consumption of a product

Solow/Neo-classical Model- ​incorporates law
of diminishing returns
Power Balance Theory​- poor countries export
raw materials to industrial countries in exchange
for industrial goods. Asserts that poor countries
need to export more raw materials to avoid
regression as a result of deteriorating value of
trade terms.
- saving rate not is not independent to income
due to poverty.
Structuralist Approach​- shifts resources
among sectors. Stresses rigidities that hinder
shifting. (Agriculture, Industry, Services)
New Growth Theory- ​includes technology and
higher levels of education.
3.4 Asian Growth Miracle
1.Outward looking Policies, Emphasis on
exports and Foreign direct investments
2.Macroeconomic Policies and Role of
Government
3. Education, Labor Force Growth, Labor
Productivity
4. Labor Market Flexibility
IV. Asian Crisis
Hedging- ​buying foreign stocks done to protect
business from sudden fluctuations in exchange
rate.
Started in June-​September 1997
Bubble Economy- ​surge in activity resulting in
over inflated prices that are not sustainable.
Non Performing Loans- ​economy overheats in
1995-1996. ​Risky and unsupervised loaning
Moral Hazard- a​ gents take more risk with
being insured of negative consequences.
External Difficulties
Overvalued Exchange Rates
Collapse in Exports from 1995-1996
Contagion, Globalization, Financial Integration
Slowdown growth in europe and USD
strengthened.
- Investors withdrew without discrimination.
- Other countries were forced to take competitive
devaluation to keep pace with thailand’s
devaluation.
4.3 Post-Crisis Experience
World output growth fell ay ​1998​, growth was
negative in the 5 crisis countries: Indonesia,
Korea, Malaysia, Philippines, Thailand
2002-2007 recovered.
Overall, the downturn wasn’t caused by a fall of
export but a mass withdrawal of funds, a collapse
in exchange rates, and bankruptcies.
Social Impact
- made banks reluctant to lend
- reverse migration- urban residents moved back
to the province.
- Mental health problems.
- High school dropout rates