SOCSC 13 - LT1

PHP 491

PH citizen live on around ___ daily

GNP

If San Mig, which is a filo company, makes beer in Thailand. Then, what is it part of? GDP or GNP?

GNP

• Gawa ng Filipino

• Output made of the Filipinos regardless of where they are 

GDP

• Gawa Dito sa Pilipinas

• Measures value of all production done domestically (within the Philippines) regardless of who did it

Gross Domestic Product

• The total final output of goods and services produced by the country’s economy, within the country’s territory by residents and nonresidents, regardless of its allocation between domestic and foreign claims 

• Bibingka analogy → Goal: Make it bigger (Emphasis on increased output)

• Transactions captured in formal economy are included in the GDP

  • Those without the receipts won’t be included in the the overall GDP (Informal Economy)  

Gross National Income

• The total domestic and foreign output claimed by residents of a country

• GDP + factor incomes occurring to residents from abroad - income earned in the domestic economy occurring to persons abroad.

Income per capita

Total gross national income of a country divided by its total population (GNI/total population) 

Economic Development

The process of improving the quality of human lives and capabilities by raising people's levels of living, self-esteem, and freedom.

Dualism

The coexistence of two extreme worlds, with one experiencing rapid growth and development while the other remains in poverty and vulnerability.

Absolute Poverty

The situation of being unable to meet the minimum levels of income, food, clothing, healthcare, shelter, and other essentials.

Subsistence Economy

An economy in which production is mainly for personal consumption and the standard of living yields little more than basic necessities of life.

Developing Countries

Countries with low levels of living and development deficits, including Asia, Africa, the Middle East, Latin America, Eastern Europe, and the former Soviet Union.

Buyer Goal

The goal of consumers to achieve consumer surplus, which is the difference between the actual price paid and the reservation price.

Seller Goal

The goal of producers to achieve product surplus, which is the difference between the average cost and the actual price received.

Traditional Economics

An approach to economics that emphasizes utility, profit maximization, market efficiency, and determination of equilibrium.

Development Economics

The study of how economies are transformed from stagnation to growth and from low-income to high-income status, focusing on overcoming problems of absolute poverty.

Globalization

The increasing integration of national economies into expanding international markets.

Values

Principles, standards, or qualities that a society or group considers worthwhile or desirable.

Social System

The organizational and institutional structure of society, including its values, attitudes, power structures, and traditions.

Gross National Income (GNI)

The total domestic and foreign output claimed by residents of a country, including GDP plus factor incomes occurring to residents from abroad and minus income earned in the domestic economy occurring to persons abroad.

Gross Domestic Product (GDP)

The total final output of goods and services produced by a country's economy, within the country's territory by residents and nonresidents.

Development

The multidimensional process of accelerating economic growth, reducing inequality, and eradicating poverty, involving major changes in social structures, popular attitudes, and national institutions.

Amartya Sen's Capability Approach

The perspective that development is the capability of a person to function, focusing on the expansion of capabilities rather than characteristics of commodities.

Subjective Well-being

A psychological state of being that could be pursued alongside other functionings, such as health and dignity, to measure overall well-being.

External Capabilities

The capacity to maintain valued social relationships and to network, which enhances a person's abilities to function.

Capabilities

The freedom that a person has in terms of the choice of functionings, given their personal features and command over commodities.

Health/Education and Social Inclusion/Empowerment

The importance of investing in health, education, and social inclusion to achieve development, as countries with high income levels but poor health and education standards are considered cases of "growth without development."

Real income

The actual amount of income a person receives, taking into account factors such as inflation and purchasing power.

Functionings

The capabilities or opportunities that individuals have to engage in different activities or achieve certain outcomes, such as health, education, and income.

Poverty

The state of being deprived of capabilities and opportunities, often due to lack of income, health, and education.

Well-being

The state of being in good health and having a high quality of life, including factors such as being well-nourished, well-clothed, literate, and long-lived.

Happiness

Part of human well-being that can expand an individual's capability to function and can increase with increases in average income.

Financial Security

One factor affecting happiness, referring to the level of security and stability in a person's financial situation.

Development

The process of improving the well-being and quality of life of individuals and societies, involving factors such as economic growth, education, and social progress.

Core Values of Development

Sustenance, self-esteem, and freedom from servitude, which form the conceptual basis and practical guideline for understanding the meaning of development.

Central Role of Women

The importance of empowering and investing in women as a means to break the cycle of poverty and transmit values to the next generation.

Objectives of Development

To increase the availability and distribution of basic life-sustaining goods, raise levels of living, and expand the range of economic and social choices available to individuals and nations.

Millennium Development Goals (MDGs)

A set of 8 goals aimed at ending global poverty and promoting sustainable development, including targets such as reducing extreme poverty and improving access to education and healthcare.

Sustainable Development Goals (SDGs)

A comprehensive set of goals and targets that build upon the MDGs, focusing on ending poverty, achieving economic, social, and environmental sustainability, and leaving no one behind.

Sector

A subset of an economy, referring to different aspects such as technology, activity, trade, and sphere.

Poverty, Inequality, and Development

The relationship between extreme poverty, income inequality, and the need for higher gross national income and sustained growth in developing countries.

Measuring Inequality

The different measures and indicators used to assess income distribution and inequality, including the Lorenz curve, Gini coefficient, and functional or distributive factor share of income.

Gini Coefficient

An aggregate numerical measure of income inequality ranging from 0 (perfect equality) to 1 (perfect inequality), calculated by dividing the area between the perfect equality line and the Lorenz curve by the total area lying to the right of the equality line.

Collective bargaining

The process of negotiation between employers and trade unions to determine wages and working conditions.

Power of rich people to manipulate prices

The ability of wealthy individuals to influence and control the prices of goods and services.

Absolute Poverty

The state of being unable to meet the basic needs of food, clothing, and shelter, or living below a specified minimum level of real income.

Headcount Index

The proportion of a country's population living below the poverty line.

Total Poverty Gap (TPG)

The sum of the difference between the poverty line and actual income levels of all people living below that line.

Average Income Shortfall (AIS)

The average amount by which the income of a poor person falls below the poverty line, calculated as the Total Poverty Gap divided by the Headcount of the Poor.

Normalized Income Shortfall (NIS)

The ratio of the Average Income Shortfall to the Income of the Poor.

Extreme inequality

A high level of income disparity among individuals, which can lead to economic inefficiency, capital flight, and social instability.

W = W (Y, I, P)

A welfare function that considers income per capita (Y), inequality (I), and absolute poverty (P) to assess overall welfare in developing countries.

Dualistic Development

The concept of economic growth characterized by the expansion or enrichment of a modern sector while the traditional sector experiences limited growth.

Kuznet's Inverted U-Hypothesis

The hypothesis that suggests a non-linear relationship between a country's income per capita and its income distribution inequality.

Multidimensional Poverty Index (MPI)

A poverty measure that considers multiple dimensions such as health, education, and standard of living to identify the poor.

Chronic Poverty

A state of persistent poverty where individuals or households remain in poverty over an extended period of time.

Economic Growth

Shared and sustainable growth that benefits all segments of society and helps reduce poverty.

Poverty Programs

Government initiatives and resources aimed at addressing and alleviating poverty.

Economic Characteristics of High-Poverty Groups

The combination of low per capita income and highly unequal income distribution that contributes to the magnitude of absolute poverty.

Rural Poverty

Poverty concentrated in rural areas, often among agricultural workers, women, children, and minority ethnic groups.

Women and Poverty

The disproportionate impact of poverty on women, including limited access to education, employment opportunities, and resources.

Household income

A measure of income within a household, which may not accurately reflect individual welfare or the distribution of resources within the household.

Female participation rates

The level of involvement and engagement of women in educational, training, and employment programs to improve their economic status and living conditions.

Legalizing informal-sector employment

The act of making informal-sector employment legal, which can improve the economic status of women.

Consequences of declines in women's economic status

The negative effects of decreases in women's relative or absolute economic status, which have ethical and long-term economic implications.

Low status of women and economic growth

The correlation between the low status of women and slower rates of economic growth.

Educational attainment and future financial status

The idea that the educational attainment and future financial status of children are more likely to reflect those of the mother rather than the father.

"Add women and stir"

The concept of including women in various aspects of society to bring about positive change and progress.

Ethnic minorities, indigenous populations, and poverty

The relationship between ethnic minorities, indigenous populations, and poverty, with 370 million globally and 15% of the extreme poor population belonging to these groups.

Discrimination faced by ethnic populations

The fact that 40% of the world's nation-states have multiple ethnic populations facing economic, political, and social discrimination.

Indigenous groups and extreme poverty

The majority of indigenous groups living in extreme poverty, leading to higher chances of malnourishment, illiteracy, poor health, and unemployment.

Poverty in poor countries

The connection between poverty and poor countries, with many sub-Saharan African countries experiencing declines in per capita income and countries like Brazil still having a significant population living in extreme poverty.

Altering the functional distribution

Returns to labor, land and capital as determined by factor prices, utilization levels and the consequent shares of national income that accrue to the owners of each factor.

Traditional economic approach and labor price distortion

The impact of institutional constraints and faulty government policies on the distorted price of labor in the formal, modern, urban sector.

Mitigating the size distribution

The need to address the concentration and distribution of productive assets and labor skills in the population to determine the size distribution of income.

Asset ownership and income distribution

The ownership of land, physical capital, human capital, and financial resources that generate income and contribute to the distribution of personal income.

Retribution from growth

The idea of redistributing a proportion of annual savings and investments to low-income groups as a way to gradually redistribute additional assets and promote inclusive growth.

Progressive taxation and wealth redistribution

The use of progressive taxation of personal income and wealth to decrease the size distribution at the upper levels and invest in human capital and lagging infrastructure needs.

Direct transfer payments and public provision of goods and services

The implementation of policies to raise the incomes of the poor through direct cash transfers, public employment creation, and the provision of primary education and health care.

Progressive income and wealth taxes

The concept of increasing tax rates with increasing personal incomes to ensure a fair distribution of tax burden.

Regressive taxes

Taxes that decrease as income increases, placing a heavier burden on lower-income individuals or households compared to higher-income ones.

Indirect taxes

Taxes levied on goods purchased by consumers, such as customs duties, excise duties, sales taxes, and export duties.

Need for tax funding, redistribution, and behavior control

The reasons for implementing taxes as a tool for funding government activities, redistributing wealth, and influencing behavior related to vices and pollution.

Direct transfer payments and public consumption

The use of tax revenues for public expenditures to raise the incomes of the poor through cash transfers, public employment creation, and the provision of goods and services.

Subsidies and their problems

Financial assistance provided by the government, which can face challenges such as limited resources, dependency, diversion of productive individuals, and resentment from the nonpoor.

Workfare program

A poverty alleviation program that requires beneficiaries to work in exchange for benefits, aiming to provide a "hand up" rather than a "handout" and encourage self-sufficiency.

Package of policies for poverty and inequality

The need for a comprehensive set of policies, including correcting factor distortions, bringing structural changes in asset distribution, modifying the size distribution, and improving the well-being of the poor.

Characteristics of developing countries

Common features shared by developing countries, including lower living and productivity levels, lower human capital, higher inequality and poverty, higher population growth rates, social fractionalization, rural-to-urban migration, lower industrialization levels, and adverse geography.

Underdeveloped financial and other markets

Lack of development in financial and other markets, hindering economic growth and opportunities.

Lingering colonial impacts

The long-lasting effects of colonialism, including poor institutions and external dependence, shaping the economic game rules in developing countries.

Colonialism

The historical practice of establishing and maintaining control over territories and peoples by foreign powers.

Defining the Developing World

The classification of countries based on per capita income, international indebtedness, or level of human development.

International Bank for Reconstruction and Development (World Bank)

An international financial institution providing development funds to developing countries through loans, grants, and technical assistance.

Low-income countries (LCIs)

Countries with a Gross National Income (GNI) per capita of less than $1,025.

Middle-income countries

Countries with a GNI per capita between $1,025 and $12,475.

High-income countries

Countries with a GNI per capita of $12,475 and above.

Newly Industrializing Countries (NICs)

Countries with advanced economic development, a dynamic industrial sector, and close links to international trade, finance, and investment.

Least Developed Countries

Countries with low income, low human capital, and high economic vulnerability, as designated by the United Nations.

Human Capital

Productive investments in people, including skills, values, and health, resulting from education, training, and healthcare expenditures.

Basic Indicators of Development

Real income, health, and education as fundamental measures of development, including indicators such as literacy, life expectancy, and undernourishment.