ECON21- ECONOMIC DEVELOPMENT 3.

Building infrastructure: Enhancing transportation, energy, and

communication systems to support industrial and social activities.
LESSON 1- INTRODUCTION TO ECONOMIC DEVELOPMENT
4. Enhancing human capital: Developing a skilled and healthy workforce
A. OVERVIEW OF ECONOMIC DEVELOPMENT through education and healthcare.

What is Economic? 5. Sustainability: Promoting long-term growth while ensuring the

responsible use of environmental resources.
The term economic refers to anything related to the production, distribution,
and consumption of goods and services. It describes aspects of the It is a long-term process that focuses on improving quality of life and creating
economy or the use of resources to create and exchange value. In various opportunities for all individuals in society.
contexts, "economic" can describe activities, policies, conditions, or systems
that are concerned with wealth, trade, industry, or financial management.
B. DISTINCTION BETWEEN ECONOMIC GROWTH AND
For example: ECONOMIC DEVELOPMENT

Economic growth refers to the increase in a country's output or GDP. Definition of Economic Development and Economic Growth

Economic policy involves government actions that influence the economy, Economic Development: Economic development refers to the qualitative
such as tax rates or interest rates. improvement in the standard of living, poverty reduction, income distribution,
education, health, and overall well-being of a population. It involves
Economic activity refers to the actions involved in producing, buying, and long-term structural changes in the economy that lead to improved living
selling goods and services. standards.

What is Economic Development? Economic Growth: Economic growth refers to the quantitative increase in a
country’s output or Gross Domestic Product (GDP). While growth is
Economic development refers to the process through which a country measured by the rise in GDP, development is more holistic, encompassing
improves the economic, political, and social well-being of its people. Unlike both quantitative and qualitative improvements in society.
economic growth, which focuses solely on increasing a country's output
(measured by GDP), economic development involves a broader spectrum of
progress, including: Differences between Economic Growth and Economic Development

1. Improving living standards: Increasing access to better healthcare, Economic Growth:

education, housing, and sanitation.
● Focuses on GDP growth and the increase in production.
2. Reducing poverty and inequality: Ensuring that wealth and resources ● Mainly quantitative.
are distributed more equitably across the population. ● Short-term focus.

Economic Development:
 By creating jobs, increasing productivity, and improving wealth
● Involves improvement in living standards, healthcare, education, distribution, economic development helps reduce poverty and
and equitable distribution of income. improves access to essential services for lower-income groups.
● Qualitative and long-term.
● Includes non-economic factors like human rights, political stability, 3. Job Creation
and environmental sustainability. Economic development stimulates business growth and
industrialization, which leads to job opportunities and a reduction in
unemployment rates.
C. MEASURING DEVELOPMENT
4. Infrastructure Development
Key Indicators of Economic Development Economic development fosters investments in vital infrastructure,
such as roads, schools, hospitals, and energy, which supports
● Gross Domestic Product (GDP): Total market value of all goods and further growth and improves quality of life.
services produced in a country.
● Human Development Index (HDI): A composite index measuring 5. Technological Advancement
life expectancy, education, and per capita income. As economies develop, they often adopt new technologies that
● Gini Coefficient: Measures income inequality within a nation. increase productivity, improve efficiency, and encourage innovation,
● Poverty Rate: The percentage of the population living below the further driving economic growth.
national poverty line.
● Unemployment Rate: The percentage of the labor force that is
unemployed and actively seeking employment. 6. Social Progress
Economic development often leads to improvements in education,
healthcare, and social welfare systems, resulting in a more
educated and healthier population.
D. IMPORTANCE OF ECONOMIC DEVELOPMENT
7. Sustainability
Economic development is crucial for several reasons, as it leads to Sustainable economic development incorporates practices that
both short-term improvements in the standard of living and ensure growth while preserving environmental resources, leading to
long-term, sustainable growth for a country. Here are the key long-term benefits for society and future generations.
reasons why economic development is important:
8. Reduction of Inequality
1. Improved Living Standards Proper economic development policies focus on inclusive growth,
Economic development leads to higher incomes, better access to which aims to distribute wealth more evenly and reduce social
education, healthcare, housing, and overall improvements in the inequalities across different regions and communities.
quality of life for citizens.
9. Political Stability
2. Poverty Reduction Economically developed countries tend to experience more political
stability, as a growing economy can reduce discontent, provide
social services, and address issues that lead to unrest.
 10. Global Competitiveness 3. Comparative Advantage:
Economic development helps a country become more competitive
in the global market by improving the skills of its workforce, David Ricardo's theory of comparative advantage proposed that countries
adopting advanced technologies, and increasing its export capacity. should specialize in producing goods where they have a relative efficiency,
which would promote international trade and overall economic development.

In summary, economic development is key to improving the quality

of life, creating equitable opportunities, and ensuring sustainable Relevance to the Philippines:
growth for both current and future generations.
The Philippines can apply classical principles by focusing on sectors where it
has a comparative advantage (e.g., agriculture, BPOs, and labor-intensive
LESSON 2: industries).

I. Theories of Economic Development: Classical and Classical thought also emphasizes the importance of free trade and open
Neoclassical Theories markets, crucial for the country's integration into the global economy.

A. Classical Theories of Economic Development

B. Neoclassical Theories of Economic Development
The classical theories of economic development emerged during the late
18th and early 19th centuries, focusing on how economies grow and The neoclassical theories, which emerged in the 20th century, built upon
accumulate wealth. Key contributors include Adam Smith, David Ricardo, classical ideas but introduced more mathematical and analytical approaches
and Thomas Malthus. to understanding growth. Key contributors include Robert Solow and Trevor
Swan.
Key Features of Classical Theories:
Key Features of Neoclassical Theories:
1. Capital Accumulation:
1. Solow-Swan Growth Model:
Growth is driven by the accumulation of capital (savings and investments).
Growth is driven by capital accumulation, labor force growth, and
Adam Smith, in The Wealth of Nations, emphasized the importance of labor technological progress.
specialization, division of labor, and free markets in enhancing productivity
and wealth creation. The model suggests that economies eventually reach a steady state where
output per capita grows only due to technological progress.
2. Labor and Population Growth:

Thomas Malthus' theory suggested that population growth would outpace

food production, leading to poverty and stagnation (Malthusian trap).
However, technology and industrialization countered this. 2. Diminishing Returns to Capital:
The theory argues that adding more capital (investment) will have 1. Role of Capital in Economic Development
diminishing returns unless there is technological improvement. This
emphasizes the importance of innovation in sustaining long-term growth. Capital refers to the resources used to produce goods and services,
including financial capital, machinery, infrastructure, and equipment. It is a
key component in increasing productivity and driving growth.
3. Role of Markets:
Importance of Capital in the Philippines:
Neoclassical theories emphasize market efficiency and the idea that free
markets, under minimal government intervention, allocate resources ● Investment in Infrastructure: The Philippines has been investing
effectively. heavily in infrastructure (e.g., roads, bridges, airports) through
programs like the "Build, Build, Build" initiative, improving
Relevance to the Philippines: connectivity and reducing production costs.
● Foreign Direct Investment (FDI): Attracting foreign capital is crucial
The Philippines can apply neoclassical models by encouraging technological for industrialization and modernization. FDI brings financial
innovation, improving productivity, and investing in human capital to sustain resources, technology, and expertise to key sectors like
growth. manufacturing and services.
● Human Capital: Investments in education, healthcare, and skills
Promoting market efficiency and creating a business-friendly environment development improve labor productivity, which in turn contributes to
are key for attracting foreign direct investment (FDI), essential for economic economic growth.
development in the country.
Example:

Conclusion: The rise of Business Process Outsourcing (BPO) in the Philippines is a

direct result of capital investment in IT infrastructure and human capital
Both classical and neoclassical theories offer valuable insights into development, contributing significantly to the economy.
economic development. Classical theories highlight the importance of
specialization, trade, and labor, while neoclassical theories stress the 2. Role of Labor in Economic Development
significance of technology, capital accumulation, and efficient markets. For
the Philippines, these theories can guide strategies for sustainable growth, Labor refers to the human workforce involved in producing goods and
poverty reduction, and long-term economic stability. services. The quality and quantity of labor are essential for economic
development, as a skilled and productive workforce can drive innovation and
II. The Role of Capital, Labor, and Technology in Economic efficiency.
Development
Importance of Labor in the Philippines:
In economic development, capital, labor, and technology are critical factors
that drive growth and improve living standards. In the Philippines, these ● Demographic Dividend: The Philippines has a young and growing
factors play a significant role in shaping the country's path toward population, providing a large workforce that, if well-trained and
sustainable development. employed, can drive economic growth.
 The adoption of e-commerce platforms like Lazada and Shopee has enabled
● Overseas Filipino Workers (OFWs): Remittances from OFWs are a businesses, particularly small and medium enterprises (SMEs), to expand
major contributor to the Philippine economy, supporting their markets and contribute to the digital economy.
consumption and investment.

● Human Capital Development: Investing in education and skills Conclusion:

training ensures that the labor force can adapt to changing
industries, particularly in the digital and technological sectors. In the Philippines, capital, labor, and technology are essential drivers of
economic development. Investments in infrastructure and human capital,
combined with a productive workforce and the adoption of advanced
Example: technologies, will help the country achieve sustained growth, reduce poverty,
and improve the quality of life for its people.
The BPO industry in the Philippines thrives due to the availability of
English-speaking, highly trainable labor, which has made the country a
global hub for outsourcing.
ECON 21- LESSON 3

CONTEMPORARY THEORIES OF DEVELOPMENT

3. Role of Technology in Economic Development
A. ENDOGENOUS GROWTH THEORY IN ECONOMIC
Technology enhances the efficiency of production processes, reduces costs, DEVELOPMENT
and fosters innovation. It is a crucial factor in sustaining long-term economic
growth, especially in the modern digital economy. Endogenous Growth Theory is an economic theory that explains long-term
economic growth as a result of internal factors, rather than external
Importance of Technology in the Philippines: influences. Unlike traditional theories that attribute growth to factors like
capital accumulation and population growth (which are subject to diminishing
● Digital Transformation: The Philippines is undergoing a digital returns), endogenous growth theory focuses on how innovation, knowledge,
revolution, with increasing use of technology in business, and human capital drive sustainable growth from within the economy.
education, healthcare, and government services.
● Key Concepts of Endogenous Growth Theory
● Agricultural Technology: The use of modern farming techniques,
machinery, and data analytics can improve productivity in the 1. Role of Human Capital:
agricultural sector, reducing poverty in rural areas.
Human capital—knowledge, education, and skills of the workforce—plays a
● Industrial and Service Sector Growth: Technology drives innovation central role in this theory. Investments in education and training lead to
in industries like manufacturing, healthcare, and financial services, continuous innovation and productivity improvements.
helping the country to compete globally.

Example:
The theory suggests that as people acquire more skills and knowledge, the
economy benefits from increasing returns, meaning that the more you invest Innovation and R&D
in human capital, the greater the potential for long-term growth.
Encouraging research and development, particularly in sectors like
2. Technological Progress: technology and agriculture, can help drive sustainable growth. The
government can provide incentives for businesses to invest in R&D and
Technological innovation is crucial for sustaining long-term growth. develop new technologies that improve efficiency.
Endogenous growth theory posits that technological progress is not random
or external but is influenced by intentional actions within the economy, such
as research and development (R&D). Policy Support
Endogenous growth theory suggests that government policies should focus
Firms and governments can invest in R&D to create new technologies that on supporting innovation, improving education, and fostering
improve productivity and lead to economic expansion. entrepreneurship. Initiatives like tax incentives for startups, funding for
science and technology, and investments in infrastructure are vital.

3. Knowledge Spillovers: Conclusion

The theory highlights that knowledge and innovation tend to spill over to Endogenous growth theory highlights that sustained economic growth
other sectors and businesses, creating widespread economic benefits. For comes from within, driven by investments in human capital, innovation, and
example, when one firm invests in R&D, the knowledge gained may be technological progress. For countries like the Philippines, focusing on
adopted by other firms, fostering broader growth across industries. education, R&D, and supportive policies can help generate continuous,
self-sustaining growth and improve living standards over time.
4. Policy Implications:
B. STRUCTURALIST AND DEPENDENCY THEORIES IN
Endogenous growth theory emphasizes the role of government policy in ECONOMIC DEVELOPMENT
fostering long-term growth. Governments can promote economic
development by investing in education, infrastructure, and R&D, and by In the study of economic development, Structuralist and Dependency
creating an environment conducive to innovation and entrepreneurship. theories provide alternative perspectives to classical and neoclassical
theories, focusing on the dynamics between developed and developing
● Implications for the Philippines nations, and the internal structures of economies.

Education and Human Capital I. Structuralist Theory

To boost long-term growth, the Philippines must focus on enhancing the Structuralist theory emerged in the mid-20th century, particularly from Latin
quality of education and increasing access to higher education and skills American economists. It focuses on the structural challenges within
training. This will improve the workforce's productivity and innovation developing economies that prevent them from achieving sustainable
capabilities. development.
Key Concepts:

1. Dual Economy Key Concepts:

Developing economies are often characterized by a dual structure, where a
small modern, industrialized sector coexists with a large traditional 1. Core and Periphery
agricultural sector. This leads to inequalities and slow development. Dependency theory views the world economy as divided into the "core"
(developed, industrialized nations) and the "periphery" (developing nations).
2. Market Imperfections The core exploits the periphery by extracting raw materials and exporting
Structuralists argue that developing countries face market imperfections manufactured goods back to them at higher prices.
(e.g., monopolies, rigid labor markets, and unequal land distribution) that
hinder economic progress. These imperfections prevent developing nations 2. Exploitation of Resources
from benefiting from free trade and industrialization. Developing countries are dependent on exporting raw materials and
agricultural products, leaving them vulnerable to fluctuations in global prices
3. Role of Industrialization and exploitation by more powerful economies. This reliance on exports
Structuralists emphasize the need for industrialization and import keeps them in a cycle of poverty.
substitution industrialization (ISI) policies. Instead of relying on imports,
developing countries should focus on building their own industries to reduce 3. Economic Dependence
dependence on external markets. Dependency theory argues that developing nations are economically
dependent on the core countries for capital, technology, and markets. This
4. Government Intervention dependence reinforces underdevelopment by keeping developing countries
Structuralists argue that government intervention is necessary to correct subordinate and unable to fully industrialize.
market failures and promote industrialization, protect nascent industries, and
create policies that support long-term growth. 4. Breaking the Cycle
To break free from dependency, dependency theorists advocate for policies
Relevance to the Philippines: that reduce reliance on foreign capital, promote self-reliance, and emphasize
regional cooperation among developing nations.
The Philippines faces some of the structural challenges described by
structuralists, such as income inequality and a large agricultural sector. To Relevance to the Philippines:
develop, the country can adopt policies aimed at strengthening domestic
industries, addressing market imperfections, and investing in The Philippines, as a developing nation, faces dependency on foreign
industrialization. investment, imported goods, and global markets, which can limit its growth
potential. Dependency theory suggests that to achieve long-term
II. Dependency Theory development, the country should focus on policies that promote economic
self-reliance and reduce external dependencies, such as developing its own
Dependency theory was developed in the 1960s and 1970s, with roots in industries and investing in local markets.
Marxist thought. It focuses on the unequal economic relationships between
developed (core) and developing (periphery) nations, arguing that global
capitalism perpetuates the underdevelopment of poorer nations.
Conclusion: Sen distinguishes between commodities (goods and services) and
capabilities (what people are actually able to do or be). For example, owning
Both structuralist and dependency theories offer alternative explanations for a bike (commodity) is less important than the capability to use it for
the challenges faced by developing countries like the Philippines. transportation or physical activity.
Structuralist theory emphasizes internal structural changes and government
intervention to promote industrialization and correct market imperfections, The focus is on what individuals can achieve with the resources available to
while dependency theory focuses on the unequal relationships between them, rather than just accumulating wealth or goods.
developing and developed nations and the need to reduce reliance on
external powers for sustainable growth. Together, these theories provide 3. Functionings
valuable insights into addressing the economic development challenges
faced by many nations. Functionings refer to the various things a person may value being or doing,
such as being healthy, being educated, participating in the community, and
having meaningful employment.
C. MODERN APPROACHES TO ECONOMIC DEVELOPMENT
(AMARTYA SEN’S CAPABILITY APPROACH) Development involves enhancing individuals' capabilities to achieve these
valuable functionings, allowing people to lead richer, more fulfilling lives.
The Capability Approach to economic development, introduced by Indian
economist Amartya Sen, represents a modern approach that shifts the
focus from traditional economic indicators, such as GDP, to human 4. Role of Public Policy
well-being and the expansion of individual freedoms and capabilities. Sen's
work emphasizes that true development goes beyond material wealth and Public policies play a crucial role in expanding people's capabilities. Sen
includes the enhancement of people's abilities to live fulfilling lives. emphasizes the need for governments to invest in healthcare, education,
and social welfare, ensuring that individuals have the necessary conditions
Key Concepts of Amartya Sen’s Capability Approach to expand their freedoms and capabilities.Social safety nets and equal
opportunities are essential to enable people to reach their full potential.
1. Development as Freedom
Implications for the Philippines
Sen argues that development is not merely about economic growth but
about expanding the freedoms that individuals enjoy. These freedoms 1. Human Development
include political freedom, access to education and healthcare, and the ability
to participate in economic and social life. The Philippine Development Plan aligns with Sen's Capability Approach by
focusing on improving education, healthcare, and social services, which help
According to this approach, economic development should enable people develop their skills and lead healthier, more fulfilling lives.
individuals to live lives they value by removing obstacles such as poverty,
illiteracy, and poor health.
2. Poverty Reduction
2. Capabilities vs. Commodities
Sen's approach emphasizes that reducing poverty is not just about
increasing income but also about improving people's ability to access
opportunities (e.g., education, healthcare). Programs like the Pantawid
Pamilyang Pilipino Program (4Ps) aim to improve the well-being of ● Absolute Poverty
vulnerable families by investing in their capabilities. This is a fixed threshold, typically defined by the World Bank as living on less
than $1.90 a day. Absolute poverty reflects the minimum income required to
3. Equality and Access meet basic life necessities.

The Philippine government can further promote economic development by ● Relative Poverty
ensuring equal access to resources and opportunities, reducing inequality, This is measured in comparison to the average income of the society in
and enhancing the ability of all Filipinos to participate fully in society. which a person lives. Even if someone is above the absolute poverty line,
they may still be considered poor relative to the overall wealth distribution
Conclusion within their country.

Amartya Sen’s Capability Approach provides a broader, more Inequality is broader than poverty and refers to the unequal distribution of
human-centered perspective on economic development. Rather than wealth, resources, or opportunities across a population. Income inequality is
focusing solely on income or material wealth, it emphasizes the importance often the focus, but it can also include disparities in access to healthcare,
of expanding people's capabilities to live the lives they value. In the education, and political influence.
Philippines, adopting this approach encourages policies that enhance
human development, reduce poverty, and create equal opportunities for all While poverty focuses on those who have very little, inequality considers the
citizens, promoting a more inclusive and sustainable form of development. gap between the wealthiest and the poorest in society. High levels of
inequality can exist even in relatively wealthy countries and can lead to
social unrest and stunted economic growth.

● Poverty measures how far people are from a minimum acceptable

LESSON 4 - ECONOMIC DEVELOPMENT standard of living, while inequality looks at the disparity between
different income levels or access to opportunities in a society.
Poverty, Inequality, and Economic Development
II. Measuring Poverty
I. Concepts of Poverty and Inequality
Understanding how to measure poverty is crucial for developing policies that
Poverty and inequality can effectively address it. There are several ways to measure poverty and
are two key issues that challenge economic development, particularly in inequality:
developing countries. They are closely interrelated, yet distinct concepts:
Absolute Poverty:
Poverty The World Bank uses the poverty line of $1.90/day to define extreme poverty
refers to the condition where individuals or communities lack the financial globally. This threshold is based on what a person needs to afford basic
resources to meet their basic needs, such as food, shelter, and healthcare. living essentials, such as food and shelter, in the world’s poorest countries.
Poverty is often divided into:
 ● Challenges:
While absolute poverty lines are useful for tracking extreme poverty, they III. Causes and Consequences of Poverty
don’t capture the varying cost of living in different regions or the
non-financial aspects of well-being, such as access to healthcare and Causes of Poverty:
education.
Lack of Education
Relative Poverty: This measure is context-specific and reflects poverty as it Education increases job prospects and earnings potential. Those without
relates to others in a given society. It’s often defined as people earning less access to quality education are often stuck in low-paying jobs, perpetuating
than 60% of the median income in a country. It acknowledges that poverty is poverty.
not just about survival but also about the ability to participate fully in society.

● Challenges: Unemployment
Relative poverty can persist even in wealthier nations because it Lack of job opportunities is a direct cause of poverty, particularly in
depends on income distribution rather than absolute living economies with stagnant or declining industries.
standards.

Poor Health and Access to Healthcare

The Gini Coefficient: Illness can trap people in poverty due to high healthcare costs and lost
income from the inability to work.
This is a statistical measure used to represent income inequality within a
nation. The Gini coefficient ranges from 0 to 1:
Economic Policies
A score of 0 represents perfect equality (everyone has the same income). Government policies that do not prioritize inclusive growth can exacerbate
poverty. For instance, tax systems that disproportionately burden the poor or
A score of 1 represents perfect inequality (one person has all the income, limited social welfare programs leave vulnerable populations without safety
and everyone else has none). nets.

Most countries fall between 0.25 and 0.60, and a higher Gini coefficient
indicates greater income inequality. Social Discrimination
Marginalized groups (e.g., based on gender, ethnicity, or caste) may face
Limitations: The Gini index only measures income inequality and does not systemic barriers to accessing education, jobs, and healthcare.
consider differences in wealth or access to resources like education and
healthcare.
Geographic Disparities
● Measuring poverty and inequality provides a basis for Rural areas tend to have fewer economic opportunities and less access to
policymakers to craft interventions. Absolute poverty focuses on services, which can concentrate poverty in certain regions.
survival, relative poverty on social inclusion, and inequality
measures the distribution of resources.
Consequences of Poverty: to meet specific conditions, such as sending children to school or attending
health check-ups.
Health Outcomes
Poverty is linked to poor health outcomes. Those in poverty often live in Unemployment benefits: In countries with more developed welfare systems,
areas with inadequate sanitation, healthcare, and nutrition, leading to higher unemployment benefits provide a temporary financial buffer for those who
rates of disease and lower life expectancy. lose their jobs, helping them avoid falling into poverty.

Education 2. Progressive Taxation

Children from poor families often drop out of school earlier and have lower
educational attainment. This creates a vicious cycle where low education Progressive tax systems, where wealthier individuals pay a higher proportion
levels lead to low-paying jobs, perpetuating poverty. of their income in taxes, can reduce income inequality. This revenue can
then be used to fund social programs that benefit the poor, such as
Social Unrest healthcare, education, and housing.
High levels of poverty can lead to political instability, crime, and social
unrest. Inequities within a society can breed discontent, as people feel Tax reforms aimed at closing loopholes and addressing tax evasion are also
disenfranchised or left behind by economic progress. essential to ensure the wealthy contribute their fair share.

Economic Growth 3. Investment in Human Capital

Widespread poverty can stifle economic growth by limiting the consumer
base and workforce productivity. Without investment in education and Education
healthcare, countries struggle to improve human capital, leading to stagnant Providing universal access to quality education, especially at the primary
economies. and secondary levels, can equip individuals with the skills needed for
higher-paying jobs. Programs that focus on marginalized groups can also
● Poverty is both a cause and consequence of underdevelopment. It help reduce gender, ethnic, and regional disparities.
traps individuals and societies in a cycle of low income, poor health,
and limited educational opportunities. Healthcare
Access to affordable healthcare improves productivity by keeping people
IV. Strategies to Reduce Poverty and Inequality healthy and able to work. Public health initiatives, such as vaccination
campaigns and maternal health services, are vital for reducing poverty in the
Addressing poverty and inequality requires a multifaceted approach that long term.
combines economic, social, and political reforms. Here are some strategies
to consider:
4. Inclusive Economic Growth
1. Social Safety Nets
Governments should design economic policies that promote job creation in
Cash transfers (both conditional and unconditional) can directly alleviate industries that can absorb large numbers of workers, particularly in
poverty by providing the poor with immediate financial support. Conditional developing countries. Infrastructure development, rural employment
cash transfers, such as Mexico’s Oportunidades program, require recipients schemes, and incentives for small businesses can help create jobs for the
poor.
 1. Pre-industrial Stage: High birth and death rates due to limited access to
Microfinance: Providing small loans to low-income individuals (often healthcare and family planning. Population growth is slow.
targeting women) to start businesses can be an effective way to promote
entrepreneurship and reduce poverty. Microfinance initiatives have shown 2. Transitional Stage: Death rates decline because of improvements in
success in places like Bangladesh (Grameen Bank). healthcare and sanitation, but birth rates remain high. This leads to rapid
population growth.
5. Empowerment and Legal Reforms
3. Industrial Stage: Birth rates begin to fall as economies develop, women
Addressing structural inequalities through legal reforms that promote equal gain better access to education and employment, and family planning
rights to education, property, and work can empower disadvantaged groups. becomes widespread. Population growth slows.
Gender equality, for example, has been shown to reduce poverty rates by
enabling more women to participate in the workforce. Anti-corruption 4. Post-industrial Stage: Both birth and death rates are low, and population
measures can ensure that resources meant to reduce poverty are not growth stabilizes or declines slightly.
diverted for personal gain.
● Poverty and inequality can be reduced through a combination of The Philippines is currently in the transitional to early industrial stage,
social welfare programs, equitable tax policies, investment in experiencing high birth rates but gradually declining as family planning and
education and healthcare, and inclusive economic growth healthcare improve.
strategies.

Conclusion ● Relationship Between Population Growth and Economic

Understanding the complex relationship between poverty, inequality, and Development
economic development is key to formulating effective development
strategies. Measuring poverty and inequality allows us to track progress and Population growth can both positively and negatively impact economic
pinpoint areas for intervention, while addressing their root causes ensures development:
that development is inclusive and sustainable. Strategies to combat poverty
and inequality must balance immediate relief with long-term investments in Positive Impacts: A large working-age population (demographic dividend)
human capital, legal reform, and economic policy. can boost economic productivity and foster economic growth if the labor
force is well-educated and employed.

Negative Impacts: Rapid population growth can strain resources like

LESSON 5 education, healthcare, and infrastructure. It can also lead to
Population Growth and Economic Development underemployment, poverty, and slower economic development if job creation
does not keep pace with population growth.
● Demographic Transition Theory

Demographic transition theory explains the transformation of a country’s In the Philippines, high population growth has challenged infrastructure
population from high birth and death rates to low birth and death rates as it development, job creation, and the delivery of social services, but efforts in
develops economically. The process happens in four stages: improving human capital (education and health) can harness the potential for
economic gains.
 ● Population Policies and Their Impacts

Population policies refer to government measures aimed at managing

population growth to balance it with economic resources. There are two
main types:

1. Pro-natalist policies: Encourage higher birth rates, often in countries

facing aging populations (e.g., tax incentives for families).

2. Anti-natalist policies: Aim to reduce birth rates through family planning

programs, education, and healthcare (e.g., China’s former one-child policy).

In the Philippines, the Responsible Parenthood and Reproductive Health Act

of 2012 (R.A. 10354) supports access to family planning services and
maternal healthcare. This policy seeks to address high birth rates, improve
family welfare, and foster sustainable economic growth by aligning
population growth with available resources.

Conclusion:

The relationship between population growth and economic development is

complex. By understanding demographic transitions and implementing
effective population policies, countries like the Philippines can manage
population growth to enhance economic development.