Chap. 13. dynamics of development

The Dynamics of Development

Development is a Sustained Effort

What is Economic Development?

With the construction activities going on around us, we cannot help but think that the country is making great strides towards economic growth and development.

Factories being built outside Metro Manila. Nipa houses are being changed into

modest concrete houses. Television antennas that uses to be

nonexistent before. Infant mortality has gone down Farmers used to harvest 25 canvas are

now harvesting 70 – 90 canvas

Indicators of Economic Growth and Development

Distinction between GROWTH and DEVELOPMENT

2.GROWTH- Growth means increase in output or production.

1.DEVELOPMENT- Economic Development means both more output or production and changes in the technical and institutional arrangements by which the factors of production are produced and distributed.

3-5Economic Development of any nation can be characterized by the following:

1.Increases in output or production has to be sustained over a long period of time.

2.Changes in economic structure would spread

out in the entire economy.

3.Growth has to be accompanied by an

increase in efficiency.

The Objective of the Development Process: 6.MAN

The provision for the social overhead capital like roads, bridges, railroads, airports, communication system and the provision for more efficient production process are very much needed because of the results and objectives for which they are built – for the welfare of man.

Increase in Real Income

• Increase in real income represents availability of more goods and opportunities for more people.

• We can see that when the necessary social overhead capital are provided and better technology and efficiency are worked for, real income per person increases.

The Goal of Development

• With more goods and opportunities provided for more people, the higher will be the level of development of more people.

The Human Factor in Economic Development

The development of the socio-economic welfare of each individual person is always the primary objective of any economic plan or development process.

If man is the object of any development process, man is also the central figure in any development process.

Innovation in the Development of Process

7.Innovation– application of the

stock knowledge to the process of production.

Innovation in the Development of Process

Characteristics of Less Developed Countries

• Many of the presently developing countries are poorer today than the presently developed countries at the time they began developing.

• Most of the people live in rural areas, and a large part of the national income is generated in agriculture.

• Income is more inequitably distributed in developing countries.

Structural changes in the Economy

• 8.Structure of the economy• Refers to the manner in which the elements or units of the

system are related to one another and to the whole.• For the development to take place, the structure of the economy

has to change, to change for the better.

Structural changes:

Sustained Increase in Per Capita Real Income

As we said before, 9.development is the process by which the per capita real income increase a sustained basis over a long period of time.

the performance of the Philippine economy

THE PHILIPPINE RECORD

The Philippines has been performing quite well compared with these international standards. The allegation that our economic growth is “low” cannot be accepted. The com-plaints that the real income in the Philippines is increasing only at 2% and that the economy is sluggish because because it is growing only at 5% per year, is not warranted.

Average Annual Rate

Major economic Indicators, Philippines, 1999-2003 (%)ITEM 1999 2000 2001 2002 2003

GDP 3.4 4.0 3.4 4.0 4.5

Gross domestic investment/GNP 17.8 16.9 16.6 18.0 18.5

Gross national savings/GNP 18.7 21.0 22.1 20.2 19.5

Inflation rate (consumer price index) 6.7 4.4 6.1 5.0 6.0

Money supply (M3) growth 19.3 4.6 6.8 10.0 11.0

Fiscal balance/ GNP -3.6 -3.8 -3.8 -3.2 -3.0

Merchandise export growth 19.1 9.0 -16.2 3.0 6.0

Merchandise import growth 4.2 3.8 -6.2 2.5 4.0

Current account balance 9.2 10.7 6.0 2.0 1.5

Debt servise ratio 13.4 12.7 16.4 15.0 15

Sectoral Changes in the Development Process