The document discusses the nature and definition of economy. It begins by explaining that early humans were nomadic hunters and gatherers who later formed permanent settlements and developed agriculture. It then defines key economic terms like economy, economics, factors of production, and different economic systems including traditional, planned, market, and mixed economies. The document also examines issues faced by the Philippine economy such as inequality, unemployment, and foreign debt. It provides both governmental and nationalist solutions that have been proposed to address these problems.

2. NATURE AND DEFINITION OF ECONOMY
From the first appearance of man on the planet, his first and foremost concern is his survival.
His activities are primarily centered on the satisfaction of his economic needs, such as food,
water,clothing,and shelter.
NOMADS
- The first inhabitants of the planet were hunters or foragers, food gatherers and fishers.
- The wandering people who transferred from one place to another to extract food from the
environment.
- Later on, they banded together and formed permanent settlement.
- They developed agriculture and domesticated animals.
- They also engaged in other activities like pottery, handricrafts, woodcrafts,carpentry,
metallurgy, and other skilled and semi-skilled occupation.
- With the advent of Industrial Revolution, the factory system, and other forms of
mechanical industries, trade, and commerce flourished and surplus goods were produced.
- The system of production, consumption, distribution, and exchange of material goods and
services referred to as the ECONOMY.

3. ECONOMY
- isa system of organizations and institutions that either facilitate or play a role in the
production and distribution of goods and services in a society.
- it deals with the three Economic Problems:
a. What goods and services should be produced?
b. How should these goods and services be produced?
c. For whom should these goods and services be produced?
- refers to the system of producing and distributing the material needs of the society. (e.g.
a capitalist economy)
ECONOMICS
- refers to the study of the way in which natural resources are used and how the wealth
they produce is divided and of the application of the underlying principles to the needs and
prosperity of the society.

4. THE SOCIAL STRUCTURE OF ECONOMY: THE ECONOMIC SYSTEM
4 FACTORS OF PRODUCTION
1.Land
- Is not only the soil for growing agricultural products, it is also the source of all
materials and food whether in liquid, solid or gaseous form, in or above the earth.
2. Labor
- Refers to the human effort , when the effort is rewarded by some kind of pay.
- Refers also to the available physical and mental talents of the people who have to
produce goods and services.
3. Capital
- The words comes from the latin word “ caput” “ which means “head.”
- It refers to the tangible, physical good (a capital good) that a person or society
creates in the expectation that its use will improve or increase future production.

5. 4. Entrepreneurship
- means that people combining the other three factors of production to create some
product or services to sell.
- they hope for profit, but take risk loss or bankrupcy.
CAPITAL FORMATION
- The process of creating a capital good.
- common term of capital formation of economics is INVESTMENT.
ECONOMIC SYSTEM
- refers to a set of economic institutions that dominate a given economy with the
main objective of solving the basic economic problems.

6. Four Economic System/ Categories
1.Traditinal Economy
a) Communal land ownership
b) The leader decides on the management of agricultural production which is the
basis of the economy.
c) The production, distribution, and use of economic resources are based on
traditional practices
d) New technologies are not welcomed since they are in contrast with the traditional
practices of their ancestors
e) The economy is only its third priority while culture region are its foremost priorities
f) Mines are used to gather raw materials for production.
g) Only the government plays the role in setting legal framework for economic life
production and distribution of goods and services
h) The product s of the people are distributed based on priorities set by the
committee.

7. 2. PLANNED/COMMAND ECONOMY
 Resource allocation is done by Government.
 Presence of central planning of all economic activities;
 There is no free competition(the government is only seller);
 Only the government plays the role in setting legal framework for economic life
production and distribution of goods and services;
 The products or needs of the people are distributed based on the priorities set by
the committee.
3. MARKET ECONOMY
 The private sector owns and manage the means of production;
 The price system in a market structure applies to determine how much will be paid
for a certain commodity or services;

8.  It is also known as laissez-faire or free enterprise;
 There is minimum government interfererence on decisions pertaining to the
management of economy (protection of the society against internal and external
aggression)
 Existence of competition often results to monopoly
 There is presence of economic power.
4. MIXED ECONOMY
 The means of production are owned and controlled by the private sector as well as the
government
 The people decide on economic activities within the economy
 The combination of the best features of capitalist and command economics are
observable in the market.
 The problem of distribution of goods and services and allocation of economic resources
are determined through the combination of the market and governmental laws and
policies.

9. CLASSIFICATION OF DIFFERENT SOCIETIES
1. CAPITALISM
- Is a market-based economic system where individuals own all resources.
- In pure capitalism, the only role of the government is to enforce the rules of the
marketplace – preventing illegal activity from destabilizing the economy – and to
protect the property rights of individuals.
2. SOCIALISM
- is an economic system in which individuals own their human capital.
3. COMMUNISM
- the last major economic system is becoming less and less common today, but for
much of the 20th century was popular in eastern Europe and parts of Asia.

10. - Under a communist system, all factors of production (capital, land, and labor) are
owned and controlled by the state.
- You don’t even control your own labor. You work where you are told.
- The government is fully engaged in central planning to determine what is
produced, how much is produced, and who gets it.
SCARCITY
-refers to the condition that all resources are available only in limited
supply
LAW OF SCARCITY
- states that goods are scarce because there are not enough resources to
produce all the needs that the people want to consume.

11. TYPES OF RESOURCES
 Society
 Human
 Manufacture aids to production
 Commodities
 Production
 Consumption
THE CORPORATION
- is an organization created by law that has an ongoing existence and
powers and liabilities that are distinct from those of its owners and employees.

12. TWO TYPES OF INTERNATIONAL CORPORATION
1. MULTINATIONAL COMPANIES/ MNC’s
- operates in more than one country and have a centralized management
- they are more focused on adapting the products and service to each individual
local market.
e.g : Unilever, proctor & gambler, Mc Donald’s, Seven-Eleven
2. TRANSNATIONAL COMPANIES
- companies that many companies around the world but do not have a centralized
management system.
e.g: Petroleum, I.T, consulting, pharmaceutical industries (shell, Accenture, Deloitte,
etc.)

13. THE PHILIPPINE ECONOMY AND ITS CONTEMPORARY PROBLEMS AND ISSUE
 The Philippines, like many nations of the world, is a mixed economy
 It manifests capitalist market economy in its cities and more advanced
municipalities and command economy most especially in its major industries like
energy and transport, the agricultural and subsistence economy persist among its
barrio folks and indigenous groups.
 Thus, the Filipinos have been aporically described as “ beggars sitting on top of a
mountain of gold”
1. Defects in the economic structure, such as great disparity in the distribution of
wealth and material goods; gross inefficiency and lack of dynamism of the
manufacturing sector and the subsequent persistent balance of payments
deficits and recurrent huge public sector defecits as a major problem.

14. 2. Slow economic growth and rapidly rising population make it difficult to expand education
and health services and improve their quality
3 government reliance on and support of foreign investors, MNC’s and foreign debts
And foreign aid.
4. Lack of political will on the part of government to support local entrepreneurs and
develop local industries as well as to assert its self- determination by promoting Filipinos
First and protectionalism policy
5. Low real wages and little job opportunities
6. Huge foreign and domestic debts.
7. Inefficient tax collection, tax evasion, tax credits, and tax holidays given to foreign
investors rob the nation of needed reveneus.
8. Bureaucracy and massive graft and corruption in government
9.Colonial mentality of the people to patronize foreign goods rather than their locally made
products
10.Economic instability brought about by peso devaluation, political instability, and
unstable peace and order situation in the country.
11.Unemployment and underemployment.

15. GOVERNMENTAL SOLUTIONS TO THE ECONOMIC PROBLEMS
1. Among the plans/programs that aim to make the Philippine economy grow is the
conversion of the former American naval base, Subic Naval Bases into a free port
zone under the management of the Subic Bay Metropolitan Authority.(SBMA)
2. Inviting foreign investors to set up business in the country and providing incentives,
such as tax breaks, tax credits, and tax holidays
3. Organized livelihood projects to help the poor be self-reliant
4. Entering into treaties and joint ventures agreements with foreign nationals and foreign
corporations in the exploration and development of our natural resources.
5. Opening of the Philippine markets to world commerce, import liberalization policy,
lifting of protectionist policies, and adherence to the idea of globalization.
6. More foreign debts and foreign aids from the World Bank and the IMF to solve budget
deficit
7. Privatization and commercialization of government-owned or controlled corporations.
8. Joining in treaties and agreements with world trade bodies whose goals and objectives
are advantageous to the more technological advanced economies.(e.g.
WTO,APEC,GATT. Etc..)
9. Imposing dictatorship or strong presidency to control political and economic power.

16. NATIONALIST ALTERNATIVES
 Governmental support to local entrepreneurs and development of local
industries.
 Industrialization of agriculture
 Development of the national steel industry.
 Provision of the real wages and profit sharing in business.
 Countryside development and regional development
 Political will to stop graft and corruption in government
 Protectionism policy and governmental regulations on prices of commodities
 Campaigns on Filipino First Policy, patronizing local goods and product, and pride
in being a Filipino.
 Genuine land reform
 More trade and commercial relations with Asian neighbor countries.

17. CURRENT STATUS OF THE PHILIPPINE ECONOMY
• ECONOMIC AND POLICY DEVELOPMENT
 The Philippine has emerged as one of the most dynamic economies in the East
Asia region.
 The Philippine economy has grown at a rapid pace over the past five years,
supported by sound macroeconomic fundamentals and a highly competetive
workforce.
 Strong capital investment and robust domestic demand have helped secure the
Philippines’ position as the leading growth performer among major economies in
East Asia and the Pacific.

18. THANK
YOU!!