THE DYNAMICS OF DEVELOPMENT

Development is a
Sustained Effort
 Complex
changes

Permissive Development is a
influence Sustained Effort interconnection

A single
system
 Economic
Development
 Economic
Growth

VS

Economic
Development
 The Objective of the
Development Process: Man

X
Roads and
Bridges

Bagui Manil
o a

Farmers Consumer
in Baguio s in Manila
 The Objective of the
Development Process: Man

Farme
r Better
Technolog
y

99 cavans of
palay
The Human Factor in
Economic
Development
“Human factor is
the ultimate
objective as well
as the main
instrument of
development. “

-UNICEF,
1988
 Innovation

• Application of stock of knowledge

Replaces old ways and continues to drive

growth upward
• New researches and technologies

Man
 Causes of Failure in
Innovation Process
• Poor goal definition

Poor alignment of actions to goals

• Poor participation in teams
• Poor monitoring of results
• Poor communication and access to
information
Human Capital Center

of Excellence
of Excellence
Increase in Real
Income
 Increase in Real
Income
• Availability of more goods and
opportunities
• With more goods and opportunities provided
for more people, the higher the development
of more people
Characteristics of Less
Developed Countries
 Low income

Less
Developed
Countries

Human
Economic
Resource
Vulnerability
Weakness
Less Developed Countries
Reasons for Underdevelopment

• Internal Factors
lack of adequate and inefficient use of resources

• low levels of savings

• low quality of human resources

lack of integration among the productive sectors

• unequal distribution of income

External Factors
Structural Changes in the
Economy and Society
Economy and Society
Higher Income

Rejection of
Anti- Industrial
Developmental Economy
Social Attitudes

Development

Equal
Competitive
Distribution
International
Of Income and
Trade
Wealth

Technological
Advancement
Sustained Increase in
Per Capita Income
 Per Capita Income
• Personal income

= all income received in a given year

• Disposable income

= Personal income – Personal taxes

• Per Capita disposable personal income

= Disposable income / Population

• Real Per Capita disposable personal income

= adjusting per capita disposable income for

inflation
 Per Capita Income
• Represents a national average
Not evenly distributed
• Differs in geographical region
• Differs between individual with diff.
education
• Used to compare the standard of living
in different countries
Development Means
Shift in the Structure
of Production
 Sufficient Modern
Traditional
Opportunit Econom
Economy
y y
 Industrialization

Economic
Development

Urbanization
 Agriculture

Services

Industry

Developing Countries
 Services

Industry

Agriculture

Developed Countries
 The
Task of Development:
To Overcome Scarcity
To Overcome Scarcity
To Overcome Scarcity
 Sectors Affected
by Scarcity
by Scarcity
SCARCITY

PRODUCERS CONSUMERS GOVÕT

 Choice vs.
Opportunity Cost
SCARCITY

CHOICE
CHOICE OPPORTUNITY OPPORTUNITY
COST COST
The Vicious Circle of
Poverty
LOW
PRODUCTION

LOW LOW
SAVINGS INCOME

LOW
CONSUMPTION
 The Rice Problem
SCARCITY OF
RICE

CITIZENS OF
GOVERNMENT
FARMERS THE
PHILIPPINES

LOW PEOPLE ARE IMPORT

MACHINERY
PRODUCTIVITY WILLING TO OF RICE
WERE
& LOW BUY RICE AT WITH
SACRIFICED
INCOME HIGH PRICE DOLLARS
Solution to the
Rice Problem
Rice Problem

International Rice Institute

Miracle Rice
 Production vs.
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120
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Total Production (TP) 120

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Total Production (TP)

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100 100
80 80
TP2
60 60
TP TP1
40 40
20 20

1 2 3 1 2 3
Hectares of land Hectares of land

INCREASE IN PRODUCTION INCREASE IN PRODUCTIVITY

 Scarcity at Present
OIL SHORTAGE

Petron, Shell, Caltex

buys oil from Middle East
at high prices
Government
Imports Oil
as a
temporary
Citizens are willing to solution
buy at high prices
even higher than rice
 Scarcity at the
Microeconomic Level
FAMILY INCOME
SCARCITY

Entertainment
Basic Needs and Luxury Savings
(Food, Shelter, (Cars, Movies, (Banks, Credit
Clothing and Concerts, Institutions)
Medicine) expensive items)
 High Income Family
vs. Low Income Family