Economic

1. PHASES OF ECONOMIC DEVELOPMENT
 ARE THE DISTINCT STAGES INVOLVED IN THE TOTAL PROCESS OF ECONOMIC DEVELOPMENT IN A
PARTICULAR COUNTRY

2. OBJECTIVES:
1.DEFINE ECONOMIC DEVELOPMENT
2.DIFFERENTIATE THE PHASES OF ECONOMIC
DEVELOPMENT AND ITS IMPACT TO BUSINESS
ENVIRONMENT
3.APPRECIATE THE IMPORTANCE OF STUDYING
ECONOMIC DEVELOPMENT

3. ACTIVITY:
Instruction: Based on the images below, identify which among the picture shows; an
economic growth or economic development. Explain.

4. Key Differences between Economic Growth and
Economic Development
Economic growth means change in value of goods and
conomic growth services over time normally for a
period of one year.
Economic development means changes in the socio-
economic structure of country that relates to growth
to human development indexes (HDIs), decrease in
equality, changes in standard of living of public

5. Economic growth is measured through gross domestic
product (GDP), GDP per capita, gross national product
(GNP), and net national product (NNP).
Economic development is measured through human
development index (HDI), gender-related index (GDI),
human poverty index (HPS), literacy rate, infant
mortality, socio-economic development

6. Economic growth brings only quantitative changes in
the economy while
Economy development brings both qualitative and
quantitative changes in the economy

7. To measure the performance of two countries
economic growth is used as a parameter while
economic development is only used to measure the
progress of developing countries or nations.
● Economic growth deals with the

8. Economic growth deals with the change in the
country’s economy output while economic
development deals with the structural changes in the
economy.

9. Phases/Stages of Economic Development
1. Traditional Society
The first stage of Rostow's model and the one in which societies
begin.
This stage was prevalent prior to the 1700s, when most societies
operated in a relatively stable state and productivity didn't rise or fall
dramatically.
Trade existed, such as the spice route between Asia and Europe, but
it was timely, costly, and more of a luxury than a necessity.
Technology was very limited.

10. 1. Traditional Society
Humans had access to little more than handmade tools,
transportation, and the printing press. That meant that
producing goods was very human capital intensive, which
created large gaps in income inequality.
These societies also relied heavily on agricultural labor
because a tremendous amount of labor was required to
grow enough food to sustain the societies.

11. 1. Traditional Society
This stage is characterized by a subsistent,
agricultural-based economy with intensive labor and
low levels of trading, and a population that does not
have a scientific perspective on the world and
technology..

12. 2. Preconditions for Take-Off
A period of transition between the traditional society and a society
that takes off, and for a certain time that society is establishing the
preconditions for take-off.
It is mostly marked by an increase in productivity, such as was found
in Europe during the 1700s and 1800s.
A number of factors came together to make productivity increase; for
example, population hit a critical mass that made agriculture take up
such a high percentage of labor, which provided opportunities for the
establishment of educational institutions, banks, and a market for
luxury goods.

13. 2. Preconditions for Take-Off
Here, a society begins to develop manufacturing and a
more national/international—as opposed to regional—
outlook.
This generally described as “prerequisites for rapid
economic growth.”
It is the intermediary step between a traditional, agrarian
society and industrial explosion. It primarily involves
external investment and a much greater exploitation of
natural resources.

14. 3. Take-Off
When the preconditions for take-off are met, a society can
take off.
Educated individuals start inventing new processes and
tools, and access to capital through financial markets and
banks make it possible to produce goods and services on a
larger scale.
This requires a different type of skill set from human
laborers, so the economy shifts from agriculture to
production.

15. 3. Take-Off
This increases wages for everyone, taking the economic
structure from a structure of kings and servants to a
wealthy class, middle class, and lower class.
A lower class still exists at this stage, either
because of social norms that discriminate against people or
simply because the number of middle class jobs are fewer
than the total number of people.

16. 3. Take-Off
Rostow describes this stage as a short period of intensive
growth,
in which industrialization begins to occur, and workers and
institutions become concentrated around a new industry.
This is where the societies move toward full industrialization
in certain specific ways, such as technological innovations,
urbanization, production of secondary goods such as textiles,
and intense growth in specific sectors.

17. 4. Drive to Maturity
The next of Rostow's five stages has a general length
of time associated with it, the drive to maturity.
It is about a 60-year period between the take-off and
the final stage, the age of mass consumption. During
this short period, an economy (the collective of all
consumers and producers) is able to reinvest 10-20%
of what it creates into more production.

18. 4. Drive to Maturity
Processes are improved, quality of life is improved,
and technology and new ideas continue to become
more central to society, while the cost of producing
the needs for survival (like food and shelter) becomes
a smaller part of the economy.
More importantly, the middle class grows at the
quickest rate of any economic class.

19. 4. Drive to Maturity
For the modern-day U.S., this stage really took place
from after WWI, from about 1915, until around 1980,
when the technology era began.
This stage takes place over a long period of time, as
standards of living rise, the use of technology
increases, and the national economy grows and
diversifies.

20. 5. Age of Mass Consumption
After the drive to maturity, an economy reaches maturity
and begins the final stage, the age of mass consumption.
The quantity and quality of products and services
increase.
A society or economy in this stage is able to export
production, bringing in money from other countries that
help the economy grow larger beyond actual consumption.

21. 5. Age of Mass Consumption
Rostow believed that Western countries, most
notably the United States, occupied this last
"developed" stage.
Here, a country's economy flourishes in a capitalist
system, characterized by mass production and
consumerism.

22. 5. Age of Mass Consumption
In the age of high mass-consumption, a society is able
to choose between concentrating on military and
security issues, on equality and welfare issues, or on
developing great luxuries for its upper class..

23. ASSIGNMENT:
Scenario:
World leaders gathered for the Millennium Summit, and thus adopted the United Nations Millennium
Declaration. They had committed their nations to a global partnership in the pursuit of Millennium
Development Goals (MDG).
1. Make a research on the goals of MDG to be fulfilled to a global partnership.
Scenario:
In the Philippines, the National Economic and Development Authority (NEDA) has laid out the
Philippine Development Plan (PDP) 2011-2016, which “adopts a framework of inclusive growth,
which is high growth that is sustained, generates mass employment, and reduces poverty.” The PDP
is focused on economic and industrial goals of the Philippines but also the social, environmental,
and peace and security aspects.
2. Research also on the focused of the PDP to sustain a high growth, generate a mass employment
and reduces poverty?
3. What are the four main Economic Forces or Trends that affect modern business markets?