Lesson 2

What are the two theories of Economic Development?

The ___________ of economic development emerged during the late 18th and early 19th centuries, focusing on how economies grow and accumulate wealth. Key contributors include Adam Smith, David Ricardo, and Thomas Malthus.

Who are the key contributors in the Classical Theories of Economic Development?

When did the classical theories of economic development emerged?

The classical theories of economic development emerged during the late 18th and early 19th centuries, focusing on ___________ and ________________.

What are the key features of classical theories of economic development?

Growth is driven by the accumulation of capital (savings and investments)

Capital Accumulation

_________, in ________, emphasized the importance of labor specialization, division of labor, and free markets in enhancing productivity and wealth creation.

Thomas Malthus' theory suggested that population growth would outpace food production, leading to poverty and stagnation (Malthusian trap). However, technology and industrialization countered this.

__________ suggested that population growth would outpace food production, leading to poverty and stagnation.

Thomas Malthus' theory is also known as "____________"

Thomas Malthus' theory suggested that _______ would outpace _______, leading to __________ and ___________.

David Ricardo's theory of __________ proposed that countries should specialize in producing goods where they have a relative efficiency, which would promote international trade and overall economic development.

David Ricardo's theory of comparative advantage proposed that countries should specialize in __________, which would promote ______________ and ____________.

Who proposed the theory of comparative advantage?

Who are the contributor of the following key features of classical theories:

Capital Accumulation - ?
Labor and Population Growth - ?
Comparative Advantage - ?

Relevance to the Philippines

_______ also emphasizes the importance of free trade and open markets, crucial for the country's integration into the global economy.

The Philippines can apply classical principles by focusing on sectors where
it has a comparative advantage (e.g _____, _____, and ____)

The ___________, which emerged in the 20th century, built upon classical ideas but introduced more mathematical and analytical approaches to understanding growth. Key contributors include Robert Solow and Trevor Swan.

When did the neoclassical theories emerged?

The neoclassical theories is built upon ______ but introduced more __________ and __________ approaches to understanding growth.

Who are the key contributors of the Neoclassical Theories of Economic Development?

What are the key features of Neocalssical Theories?

Growth is driven by capital accumulation, labor force growth, and technological progress.

The model suggests that economies eventually reach a steady state where output per capita grows only due to technological progress.

The theory argues that adding more capital (investment) will have diminishing returns unless there is technological improvement.

This emphasizes the importance of innovation in sustaining long-term growth.

Neoclassical theories emphasize market efficiency and the idea that free markets, under minimal government intervention, allocate resources effectively.

In economic development, _____, _____, and ______ are critical factors that drive growth and improve living standards.

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.

Importance of Capital in the Philippines

What importance of capital in the Philippines is potrayed in this:

The Philippines has been investing heavily in infrastructure (e.g., roads, bridges, airports) through programs like the "Build, Build, Build" initiative, improving connectivity and reducing production costs.

What importance of capital in the Philippines is potrayed in this:

Attracting foreign capital is crucial for industrialization and modernization. It brings financial resources, technology, and expertise to key sectors like manufacturing and services.

What importance of capital in the Philippines is potrayed in this:

Investments in education, healthcare, and skills development improve labor productivity, which in turn contributes to economic growth.

The rise of Business Process Outsourcing (BPO) in the Philippines is a direct result of capital investment in IT infrastructure and human capital development, contributing significantly to the economy

refers to the human workforce involved in producing goods and services. The quality and quantity of labor are essential for economic development, as a skilled and productive workforce can drive innovation and efficiency.

Importance of Labor in the Philippines

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.

What importance of labor in the Philippines is portrayed in this:

The Philippines has a young and growing population, providing a large workforce that, if well-trained and employed, can drive economic growth

What importance of labor in the Philippines is portrayed in this:

Remittances from OFWs are a major contributor to the Philippine economy, supporting consumption and investment

What importance of labor in the Philippines is portrayed in this:

Investing in education and skills training ensures that the labor force can adapt to changing industries, particularly in the digital and technological sectors.

enhances the efficiency of production processes, reduces costs, and fosters innovation. It is a crucial factor in sustaining long-term economic growth, especially in the modern digital economy.

Importance of Technology in the Philippines

The adoption of e-commerce platforms like Lazada and Shopee has enabled businesses, particularly small and medium enterprises (SMEs), to expand their markets and contribute to the digital economy.

What importance of technology in the Philippines is portrayed in this:

The Philippines is undergoing a digital revolution, with increasing use of technology in business, education, healthcare, and government services.

What importance of technology in the Philippines is portrayed in this:

The use of modern farming techniques, machinery, and data analytics can improve productivity in the agricultural sector, reducing poverty in rural areas.

What importance of technology in the Philippines is portrayed in this:

Technology drives innovation in industries like manufacturing, healthcare, and financial services, helping the country to compete globally.

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 technologies, will help the country achieve _____, ______, _____, and _____.