SHS

APPLIED ECONOMICS
Quarter 2 -Module IX.1

EFFECT OF THE VARIOUS

SOCIOECONOMIC FACTORS AFFECTING
BUSINESS AND INDUSTRY

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Applied Economics – SHS
Quarter 2 – Module IX.1: Effect of the Various Socioeconomic Factors Affecting
Business and Industry

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Regional Director: Gilbert T. Sadsad

Assistant Regional Director: Jessie L. Amin

Development Team of the Module

Writer: Roselle P. Collantes

Editors: Romel G. Petajen

Carol P. Gil
Ma. Elena V. Carullo

Reviewers: Romel G. Petajen

Jesslyn T. Taway
Jezrahel T. Omadto
Carol P. Gil
Jogene San Juan

Illustrator: Roselle P. Collantes

Javine M. Tolledo
Vanessa Yvette A. Vargas

Layout Artist: Javine M. Tolledo

Vanessa Yvette A. Vargas

Language Editor: Ma. Elena Carullo

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 SOCIOECONOMIC IMPACT

Just like investors, suppliers, consumers, households, government and

international trade have also the socioeconomic impact in the business/ industry. Let
us now discuss the effect of socio-economic factors affecting business and industry.

“Explain the effect of the various socio-economic factors affecting

business and industry.”

 Power of Taxation is an inherent power of the state, acting through the

legislature, to impose and collect revenues to defray the necessary
governmental expenditures.
 International Trade is an organized way for countries to conduct business and
trade activities with each other.
 Structural changes refer to the transformation of the agricultural sector as the
stimulus of growth to development of the industrial sector. (Todaro, Economic
Development).
 Socio - economic Impact Study is a type of systematic analysis used to identify
and evaluate the potential effects a proposed development may have on the
social and economic aspects of the lives of the members of the community
 Demographics is the study of quantifiable characteristics of a population such
as age, gender, work experience, educational attainment, income, and other
related variables.
 Socioeconomic is the field of study which examines how economic activity and
social processes affect each other.

Answer the following questions.

Question Answer
Government:

1. What roles do the government and

its rules have in the establishment
of businesses?

2. How do the government and its

rules affect the establishment of
businesses?

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 3. Should the businesses be given
complete freedom by the
government?

International Trade:

1. How important it is for the

Philippines to build ties with
powerful countries?

2. How can our ties with other

countries help our economy?

3. How does our relationship with

other countries affect common
Filipinos?

From the above activity, here are among the various sectors that
are being affected by the socioeconomic impact of business:

 Government
 International trade

GOVERNMENT

Just like investors, suppliers, and consumers, the government also

plays a big role in establishing businesses. Businessmen have to follow
certain rules pertaining to their businesses, and they also have to seek
permission from the government before they can establish their
businesses.

THE ROLE OF GOVERNMENT IN THE ECONOMY

The government’s primary duty is to provide basic social services to

its citizens like health services, free education, and security. In order to do
this, the government needs to raise money to fund its functions. Thus, the
constitution mandates that the government collects fees fom individuals,
businesses, and the like. This process of collecting fees is called taxation.

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 Government Expenditures

Households Firms Government

Taxes

Figure 1. Government’s Role in the Economy

Figure 1 shows the government’s participation and role in the economy.
Government collects taxes from both households and firms. These are inflows, which
in turn are brought back to the economy as government expenditures. The flow is a
cyclical process where the participants benefit by giving and receiving something to
and from the economy. Taxes are seen as inflows for government, and government
expenditures are outflows to support basic services. Government spending, in theory,
should be able to help the poor by providing free basic services to uplift their
standard of living.

Why is there a government in one territorial jurisdiction?

The government is created by the people so that they may enjoy their basic
needs such as food, shelter, housing, education, peace and order, justice,
economic development, infrastructure, transportation, communication,
national defense, and such other necessities, however, these cannot be
realized unless there is a process of efficient and effective taxation, as
taxes are perceived to be the “lifeblood” of the government.

What is the purpose of collecting taxes to the people?

The purpose of taxation is primarily to raise revenues from all possible

sources in order to support governmental expenditures and services, and to
promote the general well-being and safety of its citizens. The government’s
collected revenues are used to fund government expenditures that will make
people’s lives better by giving them free basic services in the short run and
seek to alleviate poverty in the long run. Taxation is also designed to equitably
distribute wealth to the citizens of the country and to uplift social conditions(for
all types of taxes) or to protect new industries( as in dumping taxes).

What will happen if the tax are not imposed?

Of the state’s inherent powers, taxation is of primary significance,

because before police power and eminent domain can be effectively and
efficiently exercised, it is important to have a government to which the
people render habitual obedience. Without taxation, the state cannot collect
revenues (i.e.,products or fruits of taxation) for its expenditures. Thus, there
will be no government to speak of.

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 Let us now take a look at the table below that illustrates total
collection of the government taxes.These data are taken from the
actual report of the BIR.

Department of Finance
BUREAU OF INTERNAL REVENUE
Revenue Collection by Region
For The Year 2018 & 2019
(In Million Pesos)

Increase
Particulars 2018 2019
(Decrease)
N.C.R. - NATIONAL CAPITAL
1,630,613.40 1,805,223.75 174,610.35
REGION
C.A.R. - CORDILLERA
5,202.10 6,440.32 1,238.22
ADMINISTRATIVE REGION
REGION I - ILOCOS REGION 12,477.28 14,084.05 1,606.77
REGION II - CAGAYAN VALLEY 8,283.24 8,859.75 576.51
REGION III - CENTRAL LUZON 40,104.49 41,977.43 1,872.94
REGION IV - A CALABARZON 61,866.29 71,927.88 10,061.59
Region IV- B MIMAROPA 5,397.17 6,581.81 1,184.64
REGION V - BICOL REGION 7,700.24 9,090.97 1,390.73
REGION VI - WESTERN VISAYAS 9,443.75 18,962.28 9,518.53
REGION VII - CENTRAL VISAYAS 60,794.70 69,400.25 8,605.55
N.I.R. - NEGROS ISLAND REGION 9,308.88 7,046.72 -2,262.16
REGION IX - ZAMBOANGA
4,725.34 5,786.09 1,060.75
PENINSULA
REGION X - NORTHERN
9,214.48 11,106.46 1,891.98
MINDANAO
REGION XI - DAVAO REGION 32,847.99 37,618.48 4,770.49
REGION XII - SOCCSKSARGEN 6,468.08 6,757.15 289.07
REGION XIII – CARAGA 4,302.73 5,143.11 840.38
A.R.M.M. - AUTONOMOUS REGION
1,723.16 2,664.17 941.01
IN MUSLIM MINDANAO
I.BIR OPERATION 1,916,695.62 2,128,670.67 211,975.05
II. NON-BIR OPERATIONS 45,784.93 53,259.13 7,474.2
III. NON TAX REVENUES 161.96 173.44 11.48

GRAND TOTAL 1,962,642.51 2,182,103.23 219,460.72

Table 1. BIR Collection for 2018 and 2019 (in million of pesos)
Source: BIR website:www.bir.gov.ph
Table 1 shows the BIR (Bureau of Internal revenue) collection for 2018 and
2019 in million of pesos. In totality, the Philippines experienced an increase in
collection. It also shows that the National Capital region has the biggest share, while
the smallest contribution comes from the Autonomous Region in Muslim Mindanao.

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 Table 2. Proposed 2019 National Budget
The sector with the highest allocation is education, comprised of the budgets
of the Department of Education (DepEd), State Universities and Colleges (SUCs),
the Commission on Higher Education (CHED), and the Technical Education and
Skills Development Authority (TESDA). Its cash-appropriations in the proposed 2019
budget amounts to P659.3 billion, higher by P72.2 billion or 12.3% than its cash-
based equivalent in the 2018 budget. Consistent with Build Build Build, the Public
Works Department (DPWH) is allocated P555.7 billion, registering a P225.5 billion or
68.3% increase. Lastly, the ARMM is allocated P32.3 billion, P7.9 billion or 32.4%
higher than last year. It will support the livelihood, peace and order, and rural
development projects in the region.

What did you see in the two tables?

It seems that the budgeted allocation of the government is based on
what was collected. Collection is a little bit higher versus the budgeted
expenditures.

GOVERNMENT AND BUSINESS

In a mixed-market economic system where resources are owned by
government and private entities, public services are supposed to be maintained and
fulfilled by the government. However, the government does not always have the
financial capacity to maintain such services. One option is to enlist the help of private
entities in fulfilling said services.
Public-Private Partnerships or PPPs are government projects funded and
operated by private firm or entities. In exchange, the government guarantees that the
private counterpart gets the value of its investment plus a reasonable interest. PPP
projects include the construction and maintenance of airports, and massive
transportation systems like the Light Railway Transport and Philippine National
Railways.

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Take a look at the picture below.

Davao, Iloilo, Laguindingan, New Bohol and Bacolod Airports

Davao, Iloilo, Laguindingan, New Bohol ,and Bacolod Airports are potentially
capable of holding international flights that will help decongest NAIA 1, 2 and 3.
These expansions will boost tourism in the said provinces and will help improve the
flow of goods and services.

LRT Line 6, PNR and LRT2 maintenance

The LRT 6 projects seek to connect Metro Manila with Bacoor, Imus, and
Dasmarianas Cavite. This will entice people who live in Cavite and work in Metro
Manial to use the transport system because it is cheaper, more convenient, and is
much faster than any other transport system. The cooperation period is 30 years, and
the projects estimated cost is Php 65.09 million.

The Philippine National Railways (PNR) is in a state of disrepair. It has limited

coaches, its rails need maintenance, and it can no longer keep up with the
passengers’ demands. The North South Railway Project (NSRP) is a PPP which
seeks to revitalize and upgrade the PNR. NSRP’s estimated cost is Php 170.7 billion.

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 HOW BUSINESS CAN BE PARTNER TO THE GOVERNMENT

1. As a source of tax revenue

The government collects taxes from households and firms to fund public
services. This ensures the harmonious relationship between government and
business. Although taxes serve as outflows for business, they should also be seen as
tools for nation building, without them, development is impossible.

Have you ever heard the Train Law System?

Tax Reform for Acceleration and Inclusion (TRAIN) Act, officially

.
cited as Republic Act No. 10963, is the initial package of the
Comprehensive Tax Reform Program (CTRP) signed into law by
President Rodrigo Duterte on December 19, 2017.

What is the objective of the Tax Reform?

The TRAIN Act is aimed to generate revenue to achieve the 2022

and 2040 vision of the Duterte’s administration, namely, to eradicate
extreme poverty, to create inclusive institutions that will offer equal
opportunities to all, and to achieve higher income country status.

What are the prominent features of Tax Reform?

The prominent features of the tax reform are lower personal income
tax and higher consumption tax. Individual taxpayers with taxable income
not exceeding ₱250,000 annually are exempted from income tax. The
exemption for minimum wage earners is retained in the revised tax system.
Tax rates for individual taxpayers still follow the progressive tax system with
the maximum rate of 35%, and minimum rates of 20% (taxable years 2018
to 2022) and 15% (2023 onwards). On the other hand, consumption taxes, in
the form of higher excise tax on tobacco products, petroleum products,
automobiles, tobacco, and additional excise tax on sweetened beverages
and non-essential, invasive cosmetic procedures were introduced. It also
expanded the VAT base by repealing exemption provisions in numerous
special laws.
Government reformed the previous tax system because they
thought this would be beneficial in the current situation of our economy.

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 2. Poverty Alleviation

Poverty alleviation is the method or model by which society seeks to

address poverty such as providing free education and health care,
among others. The Philippines has several programs related to
education and health like the Conditional Cash Transfer and the
Reproductive Health Law. Such programs seek to improve the lives of
the poor, who today comprise around 26% of the entire population.

The Pantawid Pamilyang Pilipino Program was initially a project of former President
Gloria Macapagal Arroyo, and was later adapted by the Aquino and Duterte
administrations. It is a conditional cash transfer which seeks to improve the health,
nutrition, and education of poor households, particularly of children aged 0 to 18.
Eligibility for enrolling in the program required an economic condition equal to or
below the poverty threshold, and having at least one child aged 0-15 and or/ a
pregnant woman in the household at the time of registration. Enrolled households
must also comply with a set of stipulations, including regular medical checkups for
mothers-to-be, and an 85% school attendance rate for children.

Luzon
20%
Mindanao
41%
Visayas
39%

Figure 2. Household coverage by Island Group as of September 2015

Figure 2 shows that Mindanao has the most coverage, followed by Luzon and
Visayas.
Education increases the level of output of individuals joining the labor force.
Table 3 below provides the Philippines adult literacy rate.

Table 3.Philippines Adult literacy Rate(1980-2015)

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 Figure 3. Philippines’ Adult literacy 1980-2015

In 2015, adult literacy rate for Philippines was 98.2%. Adult literacy rate of the
Philippines increased from 93.6 % in 1990 to 98.2 % in 2015 growing at an average
annual rate of 0.81%.

What is adult literacy rate?

Adult (15+) literacy rate (%) total is the percentage of the population age 15
and above who can, with understanding, read and write a short, simple statement on
their everyday life. Generally, ‘literacy’ also encompasses ‘numeracy’, the ability to
make simple arithmetic calculations. This indicator is calculated by dividing the
number of literates aged 15 years and over by the corresponding age group
population and multiplying the result by 100.

The government believes that education is deemed important that is why the
highest budget allocation of the government is given to the education department. It
is strongly believed that the power of education is a way ticket to escape from
poverty and education is a right that all should be given a chance.

Let us now take a look at the pupil-teacher ratio in primary education.

Figure 4. Pupil-teacher ratio in the Philippines (2001-2013)

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 Table 4. Pupil-teacher ratio in the Philippines (2001-2013)

In 2013, pupil-teacher ratio in primary education in Philippines was 31.4

students per teacher. Though the pupil-teacher ratio in primary education fluctuated
substantially in recent years, it tended to decrease through 1991 - 2013 period
ending at 31.4 students per teacher in 2013.

3. Provision of Services

This term refers to the amount of services provided by the

government.

The PDP 2017-2022 targets a 7-8 percent growth in Gross Domestic Product
(GDP) in the medium term by pursuing the government’s 10-point socioeconomic
agenda, which is ultimately aimed at reducing the poverty incidence to 14 percent by
2022 from 21.6 percent in 2015. As for job creation, PDP 2017-2022 wants to reduce
unemployment to as low as 3-5 percent by 2022 from 5.5 percent last year. PDP
2017-2022 is the first medium-term development plan anchored on the long-term
vision dubbed as “AmBisyon Natin 2040.” Launched last year, AmBisyon Natin 2040
aims at tripling the per capita income to $11,000 in 24 years by sustaining an annual
GDP growth of at least 6.5-percent along with the implementation of policies that
would make the Philippines a high-income country by 2040.
Based from a survey conducted in 2016, majority of the Filipinos aspire for a
“simple and comfortable life,” which NEDA had said reflected a middle-class lifestyle
– earning enough, educating all children until college, owning a car, owning a
medium-sized house, finding time to relax with family and friends, owning a business,
and being able to travel around the country. Last October, EO 5 was signed, which
adopted the AmBisyon Natin 2040 as the long-term vision for the Philippines, such
that “by 2040, the Philippines shall be a prosperous, predominantly middle-class
society where no one is poor.”

One of the aims of the government is the reduction of the unemployment rate
in the Philippines.

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Let us now take a look with the data below.

Figure 5. Unemployment Rate in the Philippines (2017-2020)

The unemployment rate in the Philippines jumped to 17.7 percent in the June
quarter 2020 from 5.1 percent in the same quarter a year earlier. This was the
highest jobless rate on record, amid ongoing coronavirus outbreak that led to an
economic shutdown in the country. The number of unemployed persons surged,
while the number of employed dropped by 8 thousand to 33.76 million. Meanwhile,
the labor force participation rate slumped to the lowest on record of 55.6 percent.
Among employed persons, workers in the services sector made up 57.1 percent of
the total, followed by those in the agriculture sector (25.9 percent) and industry (17
percent).

However despite all of these dilemmas, government continuously gives

assistance through Social Amelioration Program and other related services to help
Filipinos survive with the situation.

Figure 6. Philippine Population (2010-2020)

The total population in the Philippines is estimated at 108.8 million people in
2019, according to the latest census figures and projections from Trading Economics.

Figure 7. Government Spending 2017-2020

Government Spending in the Philippines increased to 563,543.97 PHP Million in
the first quarter of 2020 from 280,571.37 PHP Million in the fourth quarter of 2019.

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1. Why does the government needs the help of private entities to implement certain
projects? Discuss.
Due to financial crisis, the government seeks for an alternative way to fund
the increasing needs of the public through the Public Private Partnership. The
reason of the government is that by handing down to the private sector other
services by the government, technology and innovation will be introduced in
providing better public services through improved operational efficiency.
2. How important is the role of efficient tax collection in a country’s economy?
________________________________________________________________
________________________________________________________________
________________________________________________________________

3. Are public-private partnership beneficial to the economy? Explain.

________________________________________________________________
________________________________________________________________
________________________________________________________________

I. True or False.
_________1. The government’s primary duty is to provide its citizens with basic
services such as health care, free education, and security among
others.
_________2. Tax is the process of collecting fees.
_________3. The circular flow is the cyclical process where the participant benefit
by giving and receiving something to and from the economy.
_________4. Government spending, in theory, should be able to help the poor by
providing free basic services to uplift their standard of living.
_________5. The power of taxation is an inherent power of the state, acting
through the legislature, to impose and collect revenues to defray the
necessary governmental expenditures.

II. Essay (5 points)

1. What is the effect of the government in the business/industry as one of the
socioeconomic factors?
______________________________________________________________
______________________________________________________________
______________________________________________________________

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2. Since there is an increasing unemployment, population growth and higher
government spending, what do you think will be the end plan of the government
so that revenue collection will be maintained or there will be increased collection
to suffice the needs of the people?
________________________________________________________________
________________________________________________________________
__________________________________________________________

INTERNATIONAL TRADE

Just like the saying “No man is an island,” a sovereign country cannot
exist on its own. It has to interact with, and in some way, depend on
other countries to trade and protection, among others. This is the
reason why it is important for the Philippines to have friendly ties with
different countries.

THE ROLE OF INTERNATIONAL TRADE IN THE ECONOMY

The role of international trade in the economy is to widen existing markets

and to apply both comparative and absolute disadvantages where countries benefit,
such that opportunity cost is minimized. Comparative advantage is an economic
concept in which an economic factor can produce certain good or service at a lower
opportunity cost than other actors. If Country A has a comparative advantage in
producing Good A, and Country B has a comparative advantage in producing Good
B, they can both benefit by specializing in their respective goods, then trading with
each other.
Our country’s number 1 import and export products are electronics. We can
make integrated circuits at a lower cost than any other country in Asia, that is why
China imports these ICs from us. At the same time, we import finished electronic
products from the same country. This illustrates the theory of comparative advantage
happening between the Philippines and China, where both countries benefit from the
situation. This is the result of international trade. It gives the opportunity to excel and
specialize in one or several products while minimizing opportunity cost.
Consider the following tables.

Integrated
Country Gadgets TOTAL
Circuits
A 40 5 45
B 20 100 120
TOTAL 60 105 165
Table 5. Comparative Advantage (2 countries producing 2 goods before trade)
Table 5 shows the application of Comparative Advantage between two
countries producing the same goods at different levels of output. Country A can make
40 units of integrated circuits in 10 man-hours, but can produce only 5 gadgets in the

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same number of man-hours. Country B can produce 20 integrated circuits in 10-man
hours, but can produce 100 units of gadgets in the same amount of time. The total
output of Country A is 45, while Country B’s is 120. Both countries total output of
integrated circuits is 60, while their output gadgets is 105.

Country Integrated Circuits Gadgets TOTAL

40 5 45
A 40 140

20 100 120
B
100 140
60 105 165
TOTAL
80 200
Table 6. Comparative Advantage (2 countries producing 2 goods after trade)

STEP FOR IDENTIFYING COMPARATIVE ADVANTAGE AFTER TRADE

1. Identify the weakness of the Country A, which is producing gadgets, and to
identify its strength, which is producing integrated circuits.
2. To have Country A allocates all its man-hours to making integrated circuits, it will
no longer produce gadgets, but it will double its output of integrated circuits.
3. Identify the Weakness of Country B, which is producing integrated circuits, and
to identify its strength which is making gadgets.
4. To have Country B allocates its available man-hours to making gadgets, it will no
longer produce integrated circuits, but it will double its output of gadgets.
5. For Country A to exchange its excess integrated circuits with Country B’s excess
gadgets, this trade results in better output for both countries—a win-win
situation.

Another contribution of international trade to the economy is that it

allows industries to reach economies of scale. Firms achieve economies of scale
when they are able to increase their production output, yet keep their input cost at a
minimum, thereby decreasing per unit production cost. The rationale behind this is
that by producing more goods, the firms fixed cost (e.g. rent) are spread out over a
larger number of units, bringing average per-unit cost down. Firms can be driven
towards attempting to achieve economies of scale by competition. When rival firms
compete with each other by offering their goods and services at the lowest price
possible, smaller and less efficient firms are often unable to keep up with the
competition, while larger, more efficient firms can expand to achieve economies of
scale. The point at which economies of scale are achieved is called the minimum
efficient plant size.

HOW BUSINESSES AND INDUSTRIES IMPACT INTERNATIONAL TRADE

 Local Impacts in International Trade- businesses impact would be structural

changes and technical innovation. This can be seen mostly in developing

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 nations which start as an agricultural base then gradually change into
economies that manufacture goods and services.

 Lewis model-there is an increase in savings and investments as a perceived

change in structure that acts as a fuel for development.

 Hollis Chenery looks at changes in different industries, which is based on his

empirical study that includes both cross sectional and time series analysis. His
study includes the change in agriculture to industrial sector, a change in tastes
and preferences of consumers on food and necessities to desires and wants,
urbanization, decrease in the size of the family, and quality of education.

 Adopting structural changes in international trade changes the landscape of our

trading partners. Before, we were just interested on trading goods and services.
But change brought us to a new level of development. Our trading partners are
venturing now into Public-Private Partnerships where they become investors in
government projects where pipeline ventures already started. Build-Operate-
Transfer (BOT) schemes are prevalent in these projects. This is where the
investors put up the project, and then they operate at a profit. After getting their
return on investment, that’s the time that they transfer the venture.

 Lastly, the impact of technological progress in international trade can be seen

in big companies fighting it out in giving the best gadgets and technological
merchandises money can offer. This is the impact of emerging markets like our
country. We give out information telling the international community what we
desire and changes occur. Technology develops a taste and preference shift
from needs to what we desire, this is the main reason why we observe
improvement and shift of structures.

1. What is the Philippines comparative advantage over our Southeast Asian

neighbors?
Its strategic location can become the center for distribution of different kinds
of goods and a trading post for the rest of the Southeast Asian countries
aside from the fact that Filipinos are literate and flexible people that is why a
lot of BPOs invest here in the Philippines.

2. How important is the role of international trade in the economy of the

Philippines?

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______________________________________________________________
______________________________________________________________
_____________________________________________________________.

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True or False.
___________1. International trade is an organized way for countries to conduct
business and trade activities with each other.
___________2. The role of international trade in economy is to widen existing
markets and to apply both comparative and absolute advantages.
___________3. Comparative advantage is an economic concept in which an
economic actor can a produce certain good or service a higher
opportunity cost than other actors.
___________4. Another contribution in the economy of scale is that it allows
industries to reach economies of scale.
___________5. Firm achieve economies of scale when they are able to decrease
their production output, yet keep their input cost at a maximum,
thereby decreasing per-unit production cost.

SOCIOECONOMIC IMPACT

Every policy and law implemented by the government has an

effect on society and the economy. This is the reason why it
usually takes the government long time to enact laws, as they may
have huge effect on the country’s economy.

THE SOCIOECOMONIC IMPACT STUDY

In a socioeconomic impact study, analysis may involve demographics,
households, labor and employment, the market and government services. In
demographics, quantifiable characteristics such as age, gender, work experience,
educational attainment, income and other related variables are involved.

For example: A study in which the respondents are ten students from Far
Eastern University, two from Conservatory of Music, while eight are from the Faculty
of Business and Administration. Five are female and five are male; all are 17 to 20
years old. None is employed.

A narrative statement demographically describing the respondent would be:

There are 10 valid samples, of which 20% come from the Conservatory of Music and
80% come from the Faculty of Business and Administration. Fifty percent t(50%) are
female and 50% are male. Their ages range from 17 to 20 years old. All respondents
are unemployed.

Let us say the respondents are asked how they perceived the effects of
pandemic, to be damaging to their social and economic well-being. The narrative
statement would be 80 percent (80%) of the respondent perceived that pandemic is

19
damaging to one’s social and economic well -being, while the rest does not agree
with it.

If the question is about the impact of Conditional Cash Transfer Program on

labor, employment, and poverty, the narrative statement could be: The government‘s
Conditional Cash Transfer Program gives respondents an opportunity to get decent
jobs and help alleviate the poverty. As the government increases its expenditures, it
also increases opportunities for the poor to improve social and economic well-being.

CONDUCTING A SOCIOECONOMIC IMPACT STUDY:

 What is the impact of putting up a mall in a small town like in Panganiban?
 What is the impact of having a school and a hospital inside a mainland
coastal barangay?

The two questions can be answered by conducting a socioeconomic study.

PURPOSE OF SOCIOECONOMIC STUDY

1. Examine proposed developments or official state program and policies.
2. Predict what do their effects would likely be
3. See whether or not they might have adverse consequences
4. Evaluate whether or not they are the appropriate courses of action to take
to uplift the socioeconomic well-being of the community in question.

CRITERIA NEEDED IN MAKING SOCIOECONOMIC IMPACT STUDY

1. The problem statement should seek to address known problems like issues on
poverty, illegal drugs, economic growth, unemployment, health, education,
environmental degradation among others.

2. The researcher must gather as much related literature on the topic as

possible-reviews in journals, books, theses, and online-resources-both foreign
and local. This will help the researcher collect preliminary information on the
topic before conducting the actual study.

3. The study should be within the boundaries of socioeconomic impact issues

with solid theoretical framework that could explain the phenomena. For
example, unemployment issues are addressed through proper health and
education. Economic development may be achieved through structural
changes, as mentioned in economic growth models.

4. There should be identified independent and dependent variables. Independent

variables are those that explain dependent ones. For example, a firm’s output,
all other things being equal. As previously mentioned, employment is
dependent on education and health. Better education and health result in an
increase in employment.

20
 5. The study’s scope should neither be too broad such that its objectives can no
longer be achieved nor should its limitations be too narrow such that it’s no
longer viable. Since this is an introduction to a socioeconomic study, it should
be feasible to be completed in one month in a specific area that is accessible
to the researchers.

6. The study should be able to aid researcher, government, and public sectors,
business sectors, economic planners, and the academic community.

7. A questionnaire shall be used as the primary data.

8. Since we will be using a questionnaire, it is best to let the course facilitator do

the final draft. The initial draft shall be done by the students.

9. Research design is descriptive to introduce the concept of a socioeconomic

impact study.

10. Data gathered shall either be nominal, interval, ordinal, or ratio. Nominal data
are those that assign labels like gender, what region the respondents belong
to, and what barangay respondents belong to. Ordinal data are those that
represent the order of values, e.g., excellent is 5, very good is 4, good is 3,
needs improvement is 2, and poor is 1. Interval scales are those with exact
numeric representation or distance, like 10 to 20 miles per hour or 40 to 50
miles per hour. Ratio scales give the order and interval values of data, and
also have a true zero, which means that these variables can be meaningfully
added, subtracted, multiplied, or divided.

SAMPLE STUDY
One of the causes of poverty is the lack of capital to initiate a small business. Let
us assume that the lending firm intends to offer its services to poverty-stricken area
composed of 10 families.
The lending firm wants to find out how much is the potential clients will
borrow, what kinds of business they will venture into, their demographic profile, and
their capacity to payback their loans.
Here is the example questionnaire the lending firm might give its respondents.
First is the cover letter:
October 10, 2019

Dear Respondents,

We are lending firm currently conducting a survey that may help you put up a small
business. We need you to answer the following questions completely, honestly and truthfully to help
us gauge factors such as initial capital, payment, income and expenses.

Thank you for your cooperation and may this future venture becomes a reality.

Sincerely yours,

______________________
ROSELLE P. COLLANTES
Researcher
21
 Name(Optional)__________________________

Age:_______

Gender
▢ Male ▢ Female

Status
▢ Single ▢ Married

No. of Children:
▢1 ▢2 ▢ More than 2

Highest Educational Attainment

▢ Elementary ▢ Highschool ▢ College

Who is working to support the family?

▢ Husband ▢ Wife ▢ Both

How much are your earning/month?

▢ 1-5,000 ▢ 5,001-9,999 ▢ 10,000-14,999 ▢ 15,000-above

How much are your expenses/month?

▢ 1-5,000 ▢ 5,001-9,999 ▢ 10,000-14,999 ▢ 15,000-above

What kind of business do you want to start after getting a loan? Pls specify?
________________________________________________________________
How much capital do you initially need? Pls. specify.
________________________________________________________________
Within how many months can you pay us back? Pls .specify.
________________________________________________________________

Let us now compile the answers of the ten families and interpret them using
graphs and tables. You may improve on some things but be sure to benchmark this
sample for future studies.

10 Gender Frequency Percentage

FREQUENCY

5 Male 2 20%
Female 8 80%
0
Male Female Total 10 100%
GENDER

Figure 8. Gender of Respondents Table 7. Gender of Respondent

Make a table showing the frequency and pecentage of male and female
repsondents. You can make a figure representing the table to appreciate the
difference between the number of male and female respondents. We can conclude
that most of the repsondents are female.

8 Age Frequency Percentage

20-24 2 20%
FREQUENCY

6
4 25-29 1 10%
2
30-34 6 60%
0
20-24 25-29 30-34 35-39 35-39 1 10%
AGE Total 10 100%
Figure 9.Age of Respondents Table 8. Age of Respondents
22
 Figure 9 and Table 8 shows that 60% of the respondent are aged 30-34.

10
Status Frequency Percentage

FREQUENCY
Married 8 80% 5

Single 2 20% 0
Married
Total 10 100% STATU

Figure 10. Marital Status Table 9. Marital Status

Figure 10 and Table 9 shows that majority of the repsondents are married.

Number of Children Frequency Percentage

6
FREQUENCY

4 1 2 20%
2 2 3 30%
0 More than 2 5 50%
1 2 More than
NUMBER OF CHILDREN 2 Total 10 100%

Figure 11. Number of Children Table 10. Number of Children

Figure 11 and Table 10 shows that half of the respondent have more than 2
children.

6 Educational
Frequency Percentage
Attainment
FREQUENCY

4
Elementary 5 50%
2 High School 5 50%
0 College 0 0%
Elementary High School College
EDUCATIONAL ATTAINMENT Total 10 100%
.
Figure 12. Educational Attainment Table 11. Educational Attainment

Figure 12 and Table 11 shows that half of the respondents finished

elementary while the other half finished high school.

10 Breadwinner Frequency Percentage

FREQUENCY

8
6 Husband Only 8 80%
4
2
Wife only 0 0%
0 Both 2 20%
Husband Only Wife only Both
BREADWINNER Total 10 100%

Figure 13. Family breadwinner Table 12. Family breadwinner

Figure 13 and Table 12 shows that most of the family’s breadwinners are husbands.

23
 15 Earnings Frequency Percentage

FREQUENCY
10 1-5,000 0 0%
5 5,001-9,999 0 0%
0
10,000-14,999 10 100%
15,000-above 0 0%
EARNINGS Total 10 100%
Figure 14. Monthly Earnings Table 13. Monthly Earnings

Figure 14 and Table 13 shows that all families earn Php 10,000-Php 14,999
monthly.

Expenses Frequency Percentage

12
10
FREQUENCY

8 1-5,000 0 0%
6
4 5,001-9,999 0 0%
2
0
10,000-14,999 0 0%
15,000-above 10 100%
Total 10 100%
EXPENSES
Table 14. Monthly Expenses
Figure 15. Monthly Expenses

Figure 15 and Table 14 shows that all the families have monthly expenses of
P15,000 and above.

6 Kind of Business Frequency Percentage

FREQUENCY

4 Selling Fish 5 50%

2 Sari-sari Store 1 10%
0 Selling BBQ 2 20%
Selling Sari-sari Selling Selling
Fish store BBQ Fruits Selling Fruits 2 20%
KIND OF BUSINESS
Total 10 100%
Figure 16. Kinds of Business Table 15. Kinds of Business

Figure 16 and Table 15 shows what kinds of business the families would like
to put up. Most of them would like to sell fish.

24
 6
Amount of Capital Frequency Percentage
4
Frequency
5,000 5 50%
2
10,000 4 40%
0 More than 10,000 1 10%
5,000 10,000 More than
Amount of Capital 10,000
Total 10 100%
Figure 17. Amount of Capital Table 16. Amount of Capital

Figure 17 and Table 16 shows that most of the families would prefer a Php
5,000 loan.

Months Frequency Percentage

6
6 5 50%
Frequency

4
2 12 4 40%
0 18 1 10%
6 12 18 Total 10 100%
Months

Figure 18. Payback Period Table 17. Payback Period

Figure 18 and Table 17 show that most of the families prefer to payback the
loan in six months.

Summary and Conclusion:

The study was conducted in a community with 10 families. It shows that 8 out
of 10 respondents are wives and 2 out of 10 are husbands. Most of them are aged 30
to 34, and mostly are married.Half out of 10 families have more than 2 children, and
most of the income earners are husbands, and 2 out 10 families are both parents
working. Half of the respondents are elementary graduates. And the other half are
high school graduates. None of them finished college. All families show that their
incomes are less than their expenses, and all families want to get a loan to start a
business engaged in selling.This implies their willingness to earn more income,
because most have big families with high expenses.
The study suggests that a family of 4 to 5 members with only 1 breadwinner
is incapable of living descently, and loans for a small business engaged in selling
should be made available.

Recommendations:
The study recommends that the lending firm starts to offer loan applications.
However, it is also recommended to check the financial capacity of the families to
pay if they wish to get a bigger loan. The lending firm should also see to it that it has
another plan for families that cannot pay on time. A post test survey is needed.

25
 1. What should be analyzed in developing a socioeconomic impact study?
Discuss.
Analysis may involve demographics, households, labor and employment, the
market and government services.

2. What data do you get if you have demographics? Explain.

_______________________________________________________________
_______________________________________________________________
___________________________________________________________.

3. Is it possible to make a socioeconomic study that is too limited, yet, at the same
time has a high level of significance?Explain.
_______________________________________________________________
_______________________________________________________________
____________________________________________________________.

True of False.
___________1. A socioeconomic impact study is a type of systematic analysis used
to identify and evaluate the potential effects of proposed
development may have on the social and economic aspects of the
lives of the members of a community.
___________2. Socioeconomic impact study involves demographics, households,
labor and employment, market, and government services.
___________3. Socioeconomics is the study of quantifiable characteristics of a
population such as age, gender, work experience, educational
attainment, income, and other related variables.
___________4. Demographics is the fields of study which examines how economic
activity and social processes affect each other.
___________5. One of the problems usually studied in socioeconomic impact study
usually revolves to poverty.

26
MULTIPLE CHOICE:
1. These are the government projects funded and operated by private firms or
entities.
a. Public-Private Partnership
b. Mixed-Market economic System
c. Demographics Project
d. Bureau of Internal Revenue
2. This is an inherent power of state, acting through the legislature, to impose and
collect revenues to defray the necessary governmental expenditures.
a. Police Power
b. Power of Taxation
c. Eminent Domain
d. Constitutional Power
3. This is also designed to equitably distribute wealth among the citizens of a
country, to uplift social condition and to protect new industries.
a. Taxation
b. Government
c. Bureau of Internal Revenue
d. Department of Budget and Management
4. This can be seen as the inflows of government.
a. Taxation
b. Tax
c. Fees
d. Penalty
5. This is an organized way for countries to conduct business and trade activities
with each other.
a. International Market
b. International Trade
c. Local-International Import/Export
d. None of the Above
6. It an economic concept in which an economic actor can produce a certain good
or service at a lower opportunity cost that other actors.
a. Comparative Advantage
b. Absolute advantage
c. Relative advantage
d. Economic Scale
7. This is a type of systematic analysis used to identify and evaluate the potential
effects of proposed development that have the social and economic aspects to
the lives of the members of the community.
a. Socioeconomic impact study.
b. Imperical Study
c. Scientific analysis
d. Demographics.
8. It is the field of study which examines how economic activity and social
processes affect each other.
a. Socioeconomics
b. Economics

27
 c. Social science
d. History
9. These data are those that assign labels like gender, what regions the
respondents belong to, and what barangay the respondents belong to.
a. Nominal
b. Interval
c. Ordinal
d. Ratio
10. The following are the roles of the government EXCEPT.
a. Provide basic social services to its citizens
b. Maintain competition in the marketplace.
c. Their certain action is to destabilized the economy.
d. Redistribute income.

Write a journal specifying your insights about the following:

1. What are the roles of the government as a socioeconomic factor?
________________________________________________________
________________________________________________________
________________________________________________________
________________.
2. What are the roles of international trade as a socioeconomic factor?
________________________________________________________
________________________________________________________
________________________________________________________
_________________.
3. What is the criteria needed in making socioeconomic impact study?
________________________________________________________
________________________________________________________
________________________________________________________
__________________

28
 ANSWER KEY

Let’s do it#1

2. How important is the role of efficient tax collection in a country’s economy?

Suggested answer: Efficient tax collection creates more revenues for the
government, thus better social and economic services to offer to the public.

3. Are public-private partnerships beneficial to the economy? Explain.

Suggested answer: Yes, because more innovative and technological services

will be made available to the public.
You can Do it #1
I. True or False.
1. True 2. False 3. True 4. True 5. True
II.
1. What is the effect of the government in the business/industry as one of the
socioeconomic factors?

Suggested answer: Every policy and law implemented by the government

has an effect on society and economy. That is why the government is the
captain of the ship, and in its hands lie what direction we will go.

2. Since there is the increasing unemployment, population growth and higher

government spending, what do you think will be the end plan of the
government so that revenue collection will be maintained to suffice the needs
of the people?
Suggested answer: The government could concentrate to what is the
basic as what they visualized for 2040 that people be contented to live in a
simple and happy life which is no one will be poor. Regaining agricultural
sectors in more technological but organic ways of farming. Philippines has still
its resources that is just waiting to be cultivated and explored.

Let’s Do it # 2

2. How important is the role of international trade in the economy of the

Philippines?
Suggested Answer: International trade provides an opportunity to
make friends with neighboring countries. Currently, USA, Russia, Japan and
other neighboring countries are continuously helping us to fight the pandemic.
As said “No man Is an Island,” that is, we cannot live on our own and we need
the help of others. International Trade allows industries to reach economies of
scale, thus increasing production output yet keeping input costs at a

29
 minimum. This also widens existing markets and apply the comparative and
absolute advantages wherein countries benefit such that opportunity cost is
being minimized.

You can Do it #2
1. True 2. True 3. False 4. True 5. False
Lets Do it #3.

2. What data do you get if you have demographics? Explain.

Suggested Answer: Age, race, ethnicity, gender, marital status,

income, education, and employment.
3. Is it possible to make a socioeconomic study that is too limited, yet, at the
same time has a high level of significance?

Suggested Answer: No, the study’s scope should be neither too broad
nor too narrow.
You Can Do it # 3
1. True 2. True 3. False 4. False 5. True

Check Your Understanding

1. a 6. a
2. b 7. a
3. a 8. a
4. b 9. a
5. b 10. a

REFERENCES

Manapat, C.L. 2018. Applied Economics for Senior High School. Quezon City:
C&E Publishing Incorporated
Websites:
https://data.worldbank.org/indicator/SE.XPD.TOTL.GD.ZS?locations=PH

https://www.dbm.gov.ph/index.php/secretary-s-corner/press-releases/list-of-press

https://en.wikipedia.org/wiki/Tax_Reform_for_Acceleration_and_Inclusion_Act

https://travelandculture.expertscolumn.com/advantage-and-disadvantage-philippines-
geographical-location-releases/1118-proposed-2019-budget-to-prioritize-education-and-
infrastructure

30
https://knoema.com/atlas/Philippines/topics/Education/Literacy/Adult-literacy-rate#

https://tradingeconomics.com/philippines/unemployment-rate

https://tradingeconomics.com/philippines/government-spending

https://tradingeconomics.com/philippines/population-imf-data.html

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