Economics: Historical Perspective on Economic Development PDF

ECONOMICS major exports. The establishment of free trade with It’s the study of scarcity, the study of how people the United States through the Payne-Aldrich Act use resources and respond to incentives, or the (1909) and the Tydings-McD...

ECONOMICS major exports. The establishment of free trade with It’s the study of scarcity, the study of how people the United States through the Payne-Aldrich Act use resources and respond to incentives, or the (1909) and the Tydings-McDuffie Act (1934) study of decision-making. It often involves topics fostered economic growth but also deepened like wealth and finance, but it’s not all about money. dependency on the American market. [ Scarcity "refers to the basic fact of life that there IV. POST-INDEPENDENCE PERIOD (1946- exists only a finite amount of human and nonhuman PRESENT): resources which the best technical knowledge is capable of using to produce only limited maximum i. 1946-1960S: EARLY INDEPENDENCE amounts of each economic good." ] AND INDUSTRIALIZATION EFFORTS: After gaining independence in 1946, the Economics is a broad discipline that helps us Philippines faced the challenge of rebuilding its war- understand historical trends, interpret today’s torn economy. The government pursued import headlines, and make predictions about the coming substitution industrialization (ISI) policies to reduce years. dependency on imports and promote local industries. IMPORTANCE OF ECONOMICS Economics helps us understand historical trends, The Bell Trade Act (1946) and the Laurel- predict future outcomes, inform our decisions, and Langley Agreement (1956) continued economic ties become more efficient in our resource with the United States but constrained economic consumption. policy autonomy. Efforts to industrialize were hampered by inadequate infrastructure, limited HISTORICAL PERSPECTIVE ON ECONOMIC capital, and political instability. DEVELOPMENT ii. 1970S-1980S: MARTIAL LAW AND I. PRE-COLONIAL ERA: ECONOMIC CHALLENGES: Before the arrival of the Spanish in the 16th The declaration of martial law by President century, the Philippines was a collection of Ferdinand Marcos in 1972 marked a tumultuous independent barangays (villages) led by local period for the Philippine economy. The government chieftains. The economy was based on subsistence embarked on ambitious infrastructure projects and agriculture, fishing, and trading. Communities sought foreign loans to finance development. engaged in barter trade with neighboring regions, including China, India, and the Malay Archipelago, While some economic gains were made, the exchanging goods like pottery, textiles, and spices. period was marred by crony capitalism, corruption, and human rights abuses. The economy suffered II. SPANISH COLONIAL PERIOD (1565- from debt crises, high inflation, and declining 1898): productivity. By the mid-1980s, the economy was in The Spanish colonization of the Philippines severe crisis, leading to the People Power introduced significant changes to the economy. The Revolution in 1986, which ousted Marcos. encomienda system granted Spanish encomenderos control over land and local labor. iii. 1986-2000S: DEMOCRATIC The Manila-Acapulco Galleon Trade (1565-1815) RESTORATION AND ECONOMIC was a major economic activity, linking the REFORMS: Philippines to the global economy through trade The administration of President Corazon with Mexico. However, economic benefits were Aquino (1986-1992) focused on restoring unevenly distributed, with Spanish colonizers democracy and implementing economic reforms. reaping most of the rewards. Efforts were made to liberalize the economy, attract foreign investment, and reduce the fiscal deficit. The introduction of new crops (e.g., tobacco, corn, cacao) and the establishment of Subsequent administrations continued large-scale agricultural estates (haciendas) marked economic reforms, promoting privatization, significant shifts in agricultural production. Forced deregulation, and trade liberalization. The economy labor and heavy taxation burdened the local gradually stabilized, and growth rates improved, population, leading to widespread poverty and although poverty and inequality remained persistent unrest. challenges. III. AMERICAN COLONIAL PERIOD (1898- In 1986, when Aquino administration started 1946): they began to focused on improving the country's Under American rule, the Philippines image and paying off debts, leading to budget cuts underwent significant infrastructural and that worsened conditions for the lower class. educational reforms. The Americans invested in Privatizing government corporations was a priority. transportation, communication, and public health The administration believed that decentralizing systems. The introduction of a public education power would solve the problems left by the system aimed to create an educated workforce. previous government. The economy remained heavily reliant on Growth gradually began in the next few agriculture, with sugar, coconut, and abaca as years of the administration. There was a short- lived, patchy, and erratic recovery from 1987 to Key components of economic development 1991 as the political situation stabilized a bit. include: Economic Growth: Increase in a country's Aquino’s administration focused on production of goods and services, usually restoring democracy and implementing economic measured by Gross Domestic Product (GDP). reforms. Efforts were made to liberalize the It tends to create higher profits for business economy, attract foreign investment, and reduce enterprises. the fiscal deficit. Social Progress: Improvements in health, education, and living conditions that lead to a Subsequent administrations continued higher quality of life. economic reforms, promoting privatization, Social progress is important to economic deregulation, and trade liberalization. The economy development because these two are interconnected gradually stabilized, and growth rates improved, and work together to achieve the overall although poverty and inequality remained persistent advancement of a country. challenges. Structural Change: Transformation of the economy from primarily agricultural to industrial and service- iv. 2000S-PRESENT: ECONOMIC GROWTH oriented activities. AND CHALLENGES: Structural change is important to economic MACAPAGAL-ARROYO ADMINISTRATION development because it brings about economic 2001-2010 transformations that strengthen and stabilize long- The Philippines experienced periods of term growth. robust economic growth in the 2000s, driven by the Sustainable Development: Ensuring that services sector, particularly business process economic progress does not compromise the ability outsourcing (BPO) and remittances from overseas of future generations to meet their own needs. Filipino workers (OFWs). The country became one Economic development without sustainability is not of the fastest-growing economies in Asia. efficient or effective in the long run. Institutional Development: Strengthening of Despite impressive growth, the Philippines institutions and governance structures to support continues to face challenges such as poverty, economic activities and provide a stable inequality, inadequate infrastructure, and environment for growth. vulnerability to natural disasters. Efforts to address Institutional development is important because it these issues include the implementation of social serves as the foundation of a stable and protection programs, investment in infrastructure prosperous economy or enables an economy to (Build, Build, Build Program), and measures to achieve this. improve governance and reduce corruption. ECONOMIC DEVELOPMENT is a comprehensive The country became one of the fastest- concept that involves more than just economic growing economies in Asia. Despite impressive growth; it also focuses on equitable distribution of growth, the Philippines continues to face wealth, social inclusion, and environmental challenges such as poverty, inequality, inadequate sustainability. infrastructure, and vulnerability to natural disasters. Efforts to address these issues include the implementation of social protection programs, investment in infrastructure (Build, Build, Build Program), and measures to improve governance and reduce corruption. ECONOMIC DEVELOPMENT refers to the process by which a nation improves the economic, political, and social well-being of its people. It encompasses various measures of progress, such as increases in income, reduction of poverty and unemployment, improvement in living standards, and the expansion GOALS OF ECONOMIC DEVELOPMENT of access to essential services like education, healthcare, and infrastructure. The goals of economic development are multifaceted and aim to improve the overall well- Economic Development is all about making the being and quality of life for a nation's citizens. place you live awesome! National Economic Development Authority For economic development to happen, a city has to (NEDA) provide things that make people happy. Formed: December 23, 1935 The country’s premier socioeconomic planning What is included in Economic Development? body is highly regarded as the authority in Policies undertaken by the government to meet macroeconomic forecasting, policy analysis, and economic objectives. research. It provides high-level advice to policymakers in Congress and the Executive Branch. NEDA Attached agencies: Resources (DENR) is the primary government 1. Philippine Statistics Authority (PSA) agency in the Philippines responsible for the 2. Philippine Statistical Research and Training conservation, management, development, and Institute (PSRTI) proper use of the country’s environment and natural 3. Philippine Institute for Development Studies resources. (PIDS) 4. Public-Private Partnership (PPP) Center f. Human Capital Development: Investing in 5. Tariff Commission (TC) education and training to improve the skills and productivity of the workforce, fostering 6. Philippine National Volunteer Services innovation and competitiveness. Coordinating Agency (PNVSCA) 7. Commission on Population and g. Infrastructure Development: Building and Development (CPD) maintaining physical infrastructure such as 8. Development Academy of the Philippines roads, bridges, and communication systems to (DAP) support economic activities and connectivity. a. Poverty Reduction: Decreasing the number The Department of Public Works and Highways of people living below the poverty line (DPWH) is responsible for the planning, design, through inclusive economic growth and targeted construction, and maintenance of infrastructure social programs. projects, particularly public works such as roads, bridges, highways, flood control systems, and The National Anti-Poverty Commission (NAPC) public buildings. of the Philippines is tasked with coordinating and overseeing the implementation of anti-poverty The National Telecommunications Commision programs and initiatives. (NTC) is the regulatory body for telecommunications in the Philippines. It oversees the establishment, operation, and maintenance of telecommunications services and facilities throughout the country. h. Technological Advancement: Encouraging the adoption and development of new technologies to improve productivity, efficiency, and innovation. The Department of Information and Communications Technology (DICT) is the executive department of the Philippine government responsible for planning, developing, and promoting b. Employment Generation: Creating more job the national ICT development agenda. The DICT opportunities and reducing unemployment rates plays a crucial role in fostering the growth of to ensure that more people have access to information and communications technology (ICT) in stable and sustainable incomes. the country, ensuring the availability of reliable and affordable ICT services, and supporting the digital The Department of Labor and Employment transformation of various sectors. (DOLE) is the primary government agency in charge of employment. DOLE is responsible for i. Economic Diversification: Reducing promoting gainful employment opportunities, dependence on a single industry or sector by developing human resources, protecting workers promoting a diverse range of economic and promoting their welfare, and maintaining activities. industrial peace. j. Social Inclusion: Ensuring that all groups c. Income Equity: Reducing income inequality within society, including marginalized and by ensuring that economic gains are disadvantaged populations, have equal distributed more evenly across different opportunities to benefit from economic segments of society. development. d. Improved Standards of Living: Enhancing the The Department of Social Welfare and quality of life through better access to essential Development (DSWD) is the primary government services such as healthcare, education, agency in the Philippines responsible for the housing, and clean water. protection of social welfare rights and the promotion of social development. The DSWD provides e. Sustainable Economic Growth: Promoting assistance to disadvantaged individuals, families, economic growth that is environmentally and communities, focusing on poverty reduction, sustainable and does not deplete natural social protection, and the enhancement of the resources for future generations. quality of life for vulnerable populations. The Department of Environment and Natural k. Institutional Strengthening: Enhancing the  capacity and effectiveness of institutions to control systems. create a stable, transparent, and conducive Impact on Economic Development: Quality environment for economic activities. infrastructure is essential for facilitating economic l. Global Competitiveness: Improving the activities, improving connectivity, and attracting country's ability to compete in the global market investments. DPWH’s projects enhance by enhancing its economic policies, business transportation efficiency, support regional environment, and workforce skills. development, and contribute to overall economic growth. These goals collectively aim to foster a balanced and inclusive approach to economic development, e. Department of Social Welfare and ensuring that progress benefits all members of Development (DSWD): society while preserving the environment for future Role: DSWD focuses on social protection, poverty generations. alleviation, and welfare services. It administers programs like the Pantawid Pamilyang Pilipino ROLES OF INSTITUTIONS AND GOVERNANCE Program (4Ps) and disaster response initiatives. IN PHILIPPINE ECONOMIC DEVELOPMENT Impact on Economic Development: By providing 1. Government Institutions: social safety nets, promoting inclusive growth, and Government institutions play a crucial role in enhancing the welfare of vulnerable populations, shaping and implementing economic policies, DSWD contributes to human capital development managing resources, and ensuring the effective and social stability, which are vital for sustainable delivery of services. In the Philippines, several key economic progress. institutions contribute to economic development: 2. Governance and Institutions: a. National Economic and Development Governance plays a critical role in ensuring that Authority (NEDA): institutions effectively contribute to economic Role: NEDA is the country’s premier socio- development. Key aspects of governance that economic planning body. It formulates and influence economic development in the Philippines coordinates the national development plan and include: policies, including the Medium-Term Philippine Development Plan (MTPDP) and the Ambisyon a. Rule of Law and Regulatory Environment: Natin 2040 vision. Importance: A stable and predictable legal and Impact on Economic Development: NEDA regulatory environment is essential for economic provides strategic direction for economic growth development. It ensures that businesses can and poverty reduction, facilitates investment in operate efficiently, contracts are enforced, and infrastructure, and promotes sustainable property rights are protected. development. It also conducts research and Impact: Reforms to improve the ease of doing analysis to inform policy decisions and track business, reduce corruption, and enhance legal progress toward development goals. frameworks help attract investment, foster economic activity, and support entrepreneurship. b. Department of Finance (DOF): Role: The DOF oversees the management of the b. Anti-Corruption Measures: country’s financial resources, including budgeting, Importance: Corruption undermines economic taxation, and public debt. It plays a key role in fiscal development by distorting markets, reducing policy formulation and implementation. investor confidence, and diverting resources from Impact on Economic Development: By ensuring productive uses. effective tax collection, prudent management of Impact: Institutions like the Commission on Audit public funds, and debt sustainability, the DOF (COA) and the Office of the Ombudsman play roles supports economic stability and growth. It also in investigating and prosecuting corruption. facilitates reforms to improve the investment Effective anti-corruption measures promote climate and promote economic resilience. transparency, accountability, and trust in government institutions. c. Department of Trade and Industry (DTI): Role: DTI is responsible for promoting and [ The Philippines ranked 115th in the 2023 facilitating trade and industry growth. It supports Corruption Perceptions Index, a one-notch entrepreneurship, provides business development improvement from its previous 116th ranking, the services, and regulates various economic activities. Transparency International disclosed. Impact on Economic Development: DTI's initiatives, such as the promotion of small and According to the global organization, the medium-sized enterprises (SMEs), investment Philippines obtained a score of 34 out of 100, which promotion, and trade facilitation, contribute to was an increase from its score of 33 in 2022. economic diversification, job creation, and industrial growth. The Transparency International said that the 2023 CPI has shown that corruption is thriving across the d. Department of Public Works and Highways world. It ranks 180 countries and territories around (DPWH): the globe by their perceived levels of public sector Role: DPWH is tasked with the planning, corruption, scoring on a scale of 0 (highly corrupt) construction, and maintenance of national to 100 (very clean). infrastructure, including roads, bridges, and flood The global group noted that more than two-thirds of countries scored below 50 out of 100, which strongly indicates that they have serious corruption problems. It said that the global average was stuck at only 43, while the vast majority of countries have made no progress or declined in the last decade. ] c. Decentralization and Local Governance: Importance: Decentralization allows local governments to tailor development initiatives to regional needs and priorities. It empowers local authorities to manage resources and implement programs more effectively. Impact: Strengthened local governance enhances the delivery of public services, supports regional development, and ensures that economic benefits are distributed more equitably across the country. d. Public-Private Partnerships (PPPs): Importance: PPPs leverage private sector resources and expertise to deliver public infrastructure and services. They can enhance efficiency and innovation in project implementation. Impact: Successful PPPs contribute to infrastructure development, improve service delivery, and attract private investment in critical sectors such as transportation, energy, and education. e. Citizen Participation and Accountability: Importance: Engaging citizens in decision-making processes and holding institutions accountable to the public are essential for effective governance. Impact: Mechanisms for citizen participation, such as public consultations and oversight bodies, ensure that government actions align with public needs and priorities. They also enhance transparency and accountability, fostering trust in institutions. The roles of institutions and governance are integral to economic development in the Philippines. Effective government institutions drive policy formulation and implementation, while strong governance practices ensure that resources are managed transparently and efficiently. Together, they contribute to creating an environment conducive to sustainable economic growth, poverty reduction, and improved quality of life for Filipinos.