THE PHILIPPINE

ECONOMY: HOW DOES

AN ECONOMY GROW
 ECONOMY
An economy consists of the economic system of a country or other
area; the labor, capital and land resources; and the manufacturing,
trade, distribution, and consumption of goods and services of that
area.
An economy may also be described as a spatially limited and
social network where goods and services are exchanged according to
demand and supply between participants by barter or a medium of
exchange with a credit or debit value accepted within the network.
 T W O PA RT S O F T H E E C O N O M Y:
P U B L I C A N D P R I VAT E S E C T O R
PRIVATE SECTOR
 In economics, the private sector is that part of the economy,
sometimes referred to as the citizen sector, which is run by private
individuals or groups, usually as a means of enterprise for profit, and is
not controlled by the state. 
Private Sector is part of the economy where firms in response to the
demand or consumers’ needs and wants make production decisions. In
the private sector individuals are allowed to own the factor of
production.
PUBLIC SECTOR

The public sector, sometimes referred to as the state sector, is a part of

the state that deals with either the production, delivery and allocation of
goods and services by and for the government or its citizens, whether
national, regional or local/municipal.
Public Sector is responsible for the supply of public goods & services
and merit goods. These goods are provided free when used and are paid
by taxes e.g. roads, healthcare, street lighting. The central or local
government makes decisions regarding resource allocation in the public
sector.
In public sector, the state owns a significant proportion of production
factors.
 E C O N O M I C I N D I C ATO R S
DEFINED

Gross Domestic Product (GDP) is the broadest measure of

aggregate economic activity encompassing every measure of the
economy, measuring the total value of final goods and services
produced during a specific period. 
 Gross National Product (GNP) is the total market value of all
final goods and services produced by the citizens of a country in a
given year. 
Per Capita Income (PCI) refers to income per head. PCI is
obtained by dividing the national income by the number of
population.
 Unemployment rate is a measure of the prevalence of
unemployment and it is calculated as a percentage by dividing the
number of unemployed individuals by all individuals currently in the
labor force.
Inflation rate is a measure of inflation, the rate of increase of a
price index. It is the percentage rate of change in price level over
time. The rate of decrease in the purchasing power of money is
approximately equal. 
Consumer Price Index is a measure of the average price level of
a fixed basket of goods and services purchased by consumers.
changes in the CPI represent the rate of inflation.
Trade balance measures the difference between exports and
imports of both tangible goods and services. The level of the
international trade balance, as well as changes in exports and
imports, indicate trends in foreign trade.
Exports are sales of domestically produced goods which are by a
domestic country sold to the foreign countries or rest of the world
Imports are sales of foreign products bought by a domestic
country from the rest of the world.
 Exchange rate is the rate at which one currency will be
exchanged for another. It is also regarded as the value of one
country’s currency in terms of another currency.
Poverty threshold (poverty line) is the minimum level of income
deemed adequate in a given country.  The poverty threshold is
useful as an economic tool with which to measure such people and
consider socioeconomic reforms such as welfare and
unemployment insurance to reduce poverty. 
Government budget deficit is the amount by which some
measure of government revenues falls short of some measure of
government spending.
 T H R E E E C O N O M I C S E C TO R S
OF THE ECONOMY

Primary Sector (Agriculture Sector)

Secondary Sector (Industrial

Sector)
Tertiary Sector (Service Sector)
 ECONOMY OF THE
PHILIPPINES

Goldman Sachs estimates that by the year 2050, the Philippines

will be the 14th largest economy in the world. Goldman Sachs also
included the Philippines in its list of the Next Eleven economies. 
 According to HSBC, the Philippine economy will become the
16th largest economy in the world, 5th largest economy in Asia and
the largest economy in the Southeast Asian region by 2050. 
The Philippines is considered as a newly industrialized country,
which has been transitioning from being one based on agriculture
to one based more on services and manufacturing.
 The 40th largest in the world, according to 2013 International
Monetary Fund statistics, and is also one of the emerging markets
in the world.
 According to the World Bank ICP 2011, the estimated 2011
GDP (purchasing power parity) was $543.7 billion.
Primary exports include semiconductors and electronic products,
transport equipment, garments, copper products, petroleum products,
coconut oil, and fruits. Major trading partners include the United States,
Japan, China, Singapore, South Korea, the Netherlands, Hong Kong,
Germany, Taiwan, and Thailand. The Philippines has been named as one
of the Tiger Cub Economies together with Indonesia, Malaysia and
Thailand. It is currently one of Asia's fastest growing economies.
However, major problems remain, mainly having to do with alleviating
the wide income and growth disparities between the country's different
regions and socioeconomic classes, reducing corruption, and investing
in the infrastructure necessary to ensure future growth.
 N AT I O N A L E C O N O M I C D E V E L O P M E N T
A U T H O R I T Y N AT I O N A L E C O N O M I C A N D
DEVELOPMENT (NEDA)

National Economic Development Authority National Economic and

Development (NEDA) is an independent cabinet-level agency of the
Philippine government responsible for economic development and planning.
As the central planning body of the government, the NEDA is the
responsible for the formulation and updating of long and short-term national
development plans as well as for the identification and coordination of
economic policies and measures that will bring about the optimal use of
scares resources, thus affording maximum development in the Philippines.
 HISTORY OF NEDA
Presidential Decree No. 1 – issued on September 24, 1972,
otherwise known as as the Integrated Reorganization Plan (IRP), was
the provision for an integrated organizational complex for
development planning program implementation to correct the
deficiencies of the of the system. 
 P.D 107 – as promulgated, dated January 24, 1973, creating the
NEDA as mandated in the 1973 Constitution. Dr. Gerardo Sicat served
as the first director general when NEDA was established in 1973.
 Executive Order No. 5 – was issued by Pres. Corazon Aquino on
March 12, 1986, directing a government-wide reorganization to
promote economy, efficiency and effectiveness in the delivery of
public services.
Executive Order No. 230 – was issued on July 22, 1987 ,
reorganizing the NEDA. Implementation of this EO was completed
on Feb. 16, 1988 when the NEDA commenced operations under its
reorganized setup
 FUNCTIONS OF NEDA
 1. Advise the President on matters concerning the status and
progress of the economy.

2. Formulate, in consultation with the private sector and other

appropriate government agencies, definite inconsistent long range
and annual economic social development plans and programs. 

3. Coordinate the formulation and implementation of national

policies on fiscal, budgetary, credit, tariff, investment, production,
price,  manpower, trade population,, land use, water resources use,
and other economic matters.
4. Analyze, coordinate and initiate, with the approval of the
President, major development projects requiring the utilization of
funds available to the government.

5. Coordinate the implementation of approved national and and

regional development plans and programs.

6. Coordinate and integrate foreign economic and technical

assistance programs from United Nations economic agencies,
international and economic organizations, foreign government and
private organizations dealing with the government and its agencies
and instrumentalities.
 7. Establish and maintain working relationships with the various
international financial institutions and assist government and
private entities in tapping foreign resources for credit or other
forms of assistance. 

8. Establish priorities and programs in the utilization of public

funds, manpower, equipment and other available resources. 

9. Review and recommend to the President for approval the

Investment Priority Plan, Export Priorities Plan and Public Utilities
prepared by the Board of Investment.
 10.Coordinate statistical activities of all agencies,
formulate statistical standards and methodology,
and prescribe their use by the government
agencies. 
 11.Provide general policies for the operations of
the agencies attached to and under administrative
supervision of NEDA.
  BANGKO SENTRAL NG
PILIPINAS (BSP)

The Bangko Sentral ng Pilipinas is the central bank of the

Philippines with the main function of implementing monetary
policy aimed at influencing money supply, consistent with its
primary objective to maintain price stability. It was rechartered on
July 3, 1993, pursuant to the provision of the 1987 Philippine
Constitution and the New Central Bank Act of 1993. The BSP was
established on January 3, 1949, as the country’s central monetary
authority. 
  ROLES AND FUNCTIONS OF
BSP

1. Liquidity management. Formulate and implement monetary

policy aimed at influencing money supply, consistent with its
primary objective to maintain price stability. 

2.  Currency issue. The BSP has the exclusive power to issue the
national currency. All notes and coins issued by the BSP are
fully guaranteed by the Government and are considered legal
tender for all private and public debts.
3. Lender of last resort. Extend discounts, loans and advances
to banking institutions for liquidity purposes.

 4. Financial Supervision. Supervise banks and exercise

regulatory powers over non-bank institutions performing
quasi-banking functions. 

5. Management of foreign currency reserves. Maintain

sufficient international reserves to meet any foreseeable net
demands for foreign currencies in order to preserve the
international stability and convertibility of the Philippine peso.
6. Determination of exchange rate policy. Determine the
exchange rate policy of the Philippines. Currently, the BSP
adheres to a market-oriented foreign exchange rate policy.

7. Be the banker, financial advisor and official depository of

the Government, its political subdivisions and
instrumentalities and GOCCs.

8.  Reasonably responsible for the faults of the people behind

it get the blame of the opposition to which it is grouped.
 THE PHILIPPINE DEVELOPMENT
P L A N ( 2 0 11 – 2 0 1 6 )

 The Plan, anchored on President Benigno S. Aquino III’s

16-point “Social Contract with the Filipino People,”
envisions inclusive growth for the country. Inclusive growth
means growth that is shared by all and opposed to the trickle
down, jobless growth that we have seen over the recent
years. The plan is prepared by NEDA.
 The Plan comprises 10 chapters, namely:

1. Introduction: In Pursuit of Inclusive Growth 

2. Macroeconomic Policy 
3. Competitive Industry and Services Sectors
4. Competitive and Sustainable Agriculture and Fisheries Sector 
5. Accelerating Infrastructure Development
6.  Towards a Dynamic and Resilient Financial Sector
7. Good Governance and the Rule of Law
8. Social Development
9.  Peace and Security
10. Conservation, Protection and Rehabilitation of the Environment and
Natural Resources Towards Sustainable Development
 THE ROLE OF
ENTREPRENEURSHIP
IN ECONOMIC
DEVELOPMENT
 WHY ENTERPRISE IS THE DRIVER OF
ECONOMIC DEVELOPMENT

Over the past several decades the role of entrepreneurship in economic

development has become an essential factor of employment, and
innovations bring enhanced the market competition. Entrepreneurship is
the primary factor in the growth of economies. Each new business
launched has an impact on an economy and affect people around it. The
Theory of Kirzner (1973-2005) about entrepreneurship explains how the
improvement of economic health affects individuals in the first world.
The creation of new goods and services improves the quality of living of
companies and individuals.
Entrepreneurs acquire capital from their equity sources or loans
from banks to build their business which adds value to the creation of
wealth, influencing the economy and industrial structure of a country
directly.
Entrepreneurship helps to eliminate disparities between regions
through an implementation of industry in countryside and areas less
developed. The growth of industries and companies in various fields
led to the development of services such as road, public transportations,
health, education, and entertainment. The implementation of those
industrial activities resulted in the development of a more vibrant
economy.
 ENTREPRENEURSHIP
SPREADS ECONOMIC POWER
The power of economy is, in fact, the natural consequence
of industrial and commercial activities. The industrial
development at times builds to a concentration of economic
power of only a few, while entrepreneurship and the growth
of companies acts to counter that concentration. Enterprise
is a force that multiplies the players of an economy and
reduces the concentration of economic power.
E N T R E P R E N E U R S C R E AT E A N D
D I S T R I B U T E W E A LT H
New businesses stimulate the fair redistribution of wealth
and incomes for the interest of the country through a large
population covering a larger geographical area and thus
offering benefits to larger sections of society.
Entrepreneurship leads to the emergence of secondary
activities and therefore allows a multiplier effect in the
economy.
Entrepreneurs are always seeking new opportunities. They explore and
exploit various possibilities encouraging the active mobilization of funds and
skills. They contribute to new products and services and develop new markets
which grow an economy.
An enterprise contributes to increasing the Gross Domestic Product (GDP)
and income per resident, which results in economic growth.
Improving the quality of life of a population is a characteristic of a
country’s economic development. Entrepreneurs play a vital role in improving
the quality of our communities and individuals’ lifestyles; they adopt the last
innovations in the production of vast and various goods and services on a
large-scale to reduce the cost. The goal is to offer a better product or service at
a lower cost.
Worldwide entrepreneurs also contribute
to a country’s exports and improves the
trade balance which is important in
economic development.
 ENTREPRENEURSHIP
E N C O U R A G E S I N N O VAT I O N

An entrepreneur is first of all someone who has new ideas,

who creates and innovates to solve a problem. An
entrepreneur embraces change and tries to maximize profits
while innovating. When a company approaches business
driven by the evolution of technology, it encourages the
economic development of the country.
Supporting entrepreneurship in a motivating,
innovating and stimulating environment will result
in economic development. It should be the
primary concern of decision-makers, which also
have the responsibility to lead and channel
entrepreneurship projects through sectors that are
part of the development strategy.
 7 ROLES OF ENTREPRENEURSHIP IN
E C O N O M I C D E V E L O P M E N T O F A C O U N T RY

1. Wealth Creation and Sharing

2. Create Jobs

3. Balanced Regional Development

4.  GDP and Per Capita Income

5. Standard of Living

6. Exports

7. Community Development
 AT T R I B U T E S , Q U A L I T I E S , A N D
CHARACTERISTICS OF AN
ENTREPRENEUR

 Role of an Entrepreneur

1. Entrepreneurs are innovators.

2. Entrepreneurs provide choice.

3. Entrepreneurs provide jobs.
4. Entrepreneurs help the economy grow.
The Qualities of an Entrepreneur

1. Inner Drive to Succeed

2. Strong Belief in themselves

3. Search for New Ideas and Innovation

4. Openness to Change
5. Competitive by Nature

6. Highly Motivated and Energetic

7. Accepting of Constructive Criticisms and Rejection