LESSON 01 INTRODUCTION IN ECONOMIC DEVELOPMENT

Facts about POVERTY

Nearly 22,000 children die each day due to living in poverty.
A quarter of humanity, 1.6 billion people, lives without electricity.
One Frappuccino at Starbucks costs more than the median income for people in the developing world
($3 a day).
Nearly 2.8 billion people rely on wood chips, crop waste or animal dung for cooking and
heating their homes.
Some 54 percent of Americans are considered to be living below the poverty line.
ECONOMICS
Is a branch of Social Science that deals with the study of the allocation of limited resources for
production, distribution and consumption of goods and services to satisfy the unlimited needs and wants of
people.
SCARCITY
Unlimited wants and needs but limited resources.
CHOICES
Because ALL Resources, Goods and Services are LIMITED – We Must Make;
WHY CHOICES?
We Make CHOICES about how we spend our time, money, energy
DIVISION OF ECONOMIC
 Macro economics
 Micro economics
MACRO ECONOMICS
Study of economy- wide phenomena ; Study of the economy as a whole
The big picture, inflation, unemployment, National Income, National Output, Includes national and
regional global economies, national output
MICRO ECONOMICS
Factors that influence individual economic choices
Labor economics, Decisions of individual households, how demand and prices are determined in
individual markets, Decisions of individual consumers, Decisions of individual firms
Branch of Economics that focuses on improving fiscal, social conditions in developing countries.
Development Economics consider factors such as
*Health *Education *Working Conditions *Domestic and International Policies, Market Condition
*With a focus in improving conditions in the World’s poorest countries
How Emerging Countries become PROSPEROUS COUNTRY
LOW INCOME – HIGH INCOME and Overcome Problems Of ABSOLUTE POVERTY
What do we mean by “Development”?
Term means different things to different peoples
Amartya Sen’s (Indian Economist)
Is the process of expanding human freedom.
It is “The Enhancement of freedoms” that allow people to lead lives that they have reason to live”.
Hence “development requires the removal of major sources of unfreedom: Poverty as we as tyranny, poor
economic opportunities as well as systematic social deprivation, neglect of public facilities as well as
intolerance or overactivity of repressive states” – Sen 1998
Three Core Values of Economic Development
 Sustenance – The ability to meet basic needs
 Self-esteem – To be a Person
 Freedom of servitude – To be able to choose
The Three Objectives of Development
• Increase availability of life-sustaining goods
• Raise levels of Living
• Expand range of economic and social choices
The Millennium Development Goals
Eight Goals Adopted by the United Nations in 2000
• Eradicate Extreme poverty and hunger
• Achieve universal primary education
• Promote Gender equality and empower women
• Reduce child mortality
• Improve Maternal Health
• Combat HIV/AIDS, Malaria and other diseases
• Ensure environmental sustainability
• Develop a global partnership for development
LESSON 02
Development and Happiness
Happiness is part of well-being ∙
findings: average level of happiness or satisfaction increases with a country’s average income
Prof. Richard Layard
7 factors that affect average national happiness
Family relationships Health
Financial situation Personal freedom
Work Personal values
Community and friends
How can we identify if a country is Rich?
Economic Performance
Money, Building, House, Architecture
Measures of Development

Gross Domestic Product

Gross National Income
Human Development Index

GROSS DOMESTIC PRODUCT

Is the total monetary or market value of all the finished goods and services produced within a
country’s borders in a specific time period.

GROSS NATIONAL INCOME

is the total income received by the country from its residents and businesses regardless of whether they
are located in the country or abroad.

ALL FILIPINO WORKER’S WORKING INSIDE THE PHILIPPINES IS PART OF GNI AND GDP
COMPUTATION
HUMAN DEVELOPMENT INDEX (HDI)
Is a tool used to measure a country's overall achievement in its social and economic dimensions.
Minimum and Maximum Values for Each Indicator

DIMENSION INDICATOR MINIMUM MAXIMUM

HEALTH LIFE EXPECTANCY 20 YEARS 85 YEARS
EDUCATION EXPECTED YEARS 0 18
(EYS) OF SCHOOLING
EDUCATION EXPECTED YEARS 0 15
(MYS) OF SCHOOLING
GNI (INCOME) GNI PER CAPITAL $100 $75,000

HDI (LEI) – Singapore Life expectancy: 83.6

( ¿−20 ) 83.6−20
Life expectancy Index ( LEI )= = =0.978
( 85−20 ) 85−20

(HDI) Education Index Expected years of schooling in Singapore = 16.4

Mean years of schooling in Singapore = 11.6
(MYSI + EYSI )
Educational Index=
2
16.4 0.91+0.77
EYS= =0.91 =0.84
18.0 2
11.6
MYS= =0.77
15.0

(HDI) GNI (Income) NOTE: Per Capita of the Singapore (2019) = $88,155

¿ ( GNI pc )−¿(100) log 88155−log 100 2.945

¿ = = =1.024
¿ (75000 )−¿(100) log 75000−log 100 2.875

HDI OF SINGAPORE
Life Index = 0.978
Education Index = 0.84 √3 0.978 x 0.84 x 1.024 = 0.841 √3 0.841 = 0.948
Income Index = 1.024