Economic Development – Lecture Review

34 question-and-answer flashcards covering definitions, metrics, development theories, factors, and government roles in economic development.

What is economic development?

The long-term process through which a country improves its people’s quality of life by raising incomes, enhancing health and education, building infrastructure, and reducing poverty and inequality.

Name the three main components of economic development.

1) Economic growth, 2) Improved living standards, 3) Poverty and inequality reduction.

In focus, how does economic development differ from economic growth?

Economic growth is quantitative—more output measured by GDP—while economic development is qualitative, emphasizing better lives, equity, and human welfare.

Give two reasons why economic development is important.

It raises quality of life (health care, clean water, education) and promotes social stability by reducing poverty-driven crime.

Which metric is most commonly used to measure economic growth?

Gross Domestic Product (GDP).

What does GNP stand for and how is it calculated?

Gross National Product; GDP plus income earned by citizens abroad minus income earned by foreigners within the country.

Which index combines life expectancy, education, and per-capita income to gauge human welfare?

The Human Development Index (HDI).

What does a low GINI Index value indicate?

Greater income equality within a country.

Who proposed the Invisible Hand theory and in which landmark book?

Adam Smith, in ‘The Wealth of Nations.’

According to the Invisible Hand theory, what happens when individuals pursue their own self-interest?

They unintentionally benefit society as a whole by allocating resources efficiently.

Which Philippine industry exemplifies the Invisible Hand in practice?

The Business Process Outsourcing (BPO) industry, which grew through private entrepreneurship and now provides millions of jobs.

Who developed the concept of Comparative Advantage?

David Ricardo.

State the basic principle of Comparative Advantage.

A country should specialize in producing goods it makes relatively efficiently and import goods others produce more efficiently.

Give one Philippine export that demonstrates the country’s comparative advantage.

Agricultural products such as bananas, coconuts, or pineapples.

Which economist criticized capitalism for exploiting workers?

Karl Marx.

In Marxist theory, who captures the surplus value created by labor?

Capitalist owners, not the workers who produce it.

Name a Philippine situation that reflects Marxist concerns about worker exploitation.

Low-wage labor in Export Processing Zones controlled by large corporate oligarchies (e.g., Ayala, SM).

Who authored Modernization Theory outlining five stages of development?

Walt Rostow.

At which Modernization Theory stage is the Philippines currently placed?

The ‘Drive to Maturity’ stage, marked by a diversified economy and growing service sector.

What central claim does Dependency Theory make about former colonies?

They remain economically dependent on—and exploited by—their former colonizers, hindering their own development.

Who is the main scholar behind Dependency Theory?

Andre Gunder Frank.

According to Wallerstein, what are the three categories of nations in the world-systems model?

Core, Semi-Periphery, and Periphery nations.

Historically, into which world-systems category does the Philippines fall?

The Periphery, as a supplier of raw materials.

List two natural resource examples that contribute to Philippine development.

Nickel and fertile farmland for rice or coconuts.

How does human capital influence economic development?

A healthier, better-educated workforce is more productive, boosting growth and living standards.

What is the role of physical capital in development?

Infrastructure such as roads, machinery, and reliable power lowers business costs and raises productivity.

Explain how technological innovation can boost Philippine agriculture.

Agritech tools (e.g., improved seeds, precision farming) raise crop yields and farmer incomes.

What is the purpose of the Anti-Red Tape Act?

To streamline government processes, reduce corruption, and improve the ease of doing business.

Which Philippine law punishes monopolies and promotes competition?

The Philippine Competition Act.

Distinguish between fiscal and monetary policy.

Fiscal policy involves government spending and taxation; monetary policy controls the money supply and interest rates (managed by the BSP).

Name one Philippine fiscal measure designed to fund infrastructure.

The TRAIN Law (Tax Reform for Acceleration and Inclusion).

How can the Bangko Sentral ng Pilipinas manage inflation?

By adjusting interest rates or regulating the money supply.

Give two examples of public goods supplied by the Philippine government.

Roads and public schools (others include hospitals and clean water systems).

What is the objective of the Universal Health Care Act?

To ensure all Filipinos have access to affordable, quality health services.