Chapter 16

*
*
*Economic development is a progressive process of
improving human conditions
Economic Factors: capital, technology, & market
Non-Economic Factors: government, geography,
religion, education, population, social structure,
attitudes, & values.
*Economic growth refers to the goods and services
produced by economic development.

*
According to British economist, Colin Clark
*Stage 1 - Agriculture is the main source of
employment and income.
*Stage 2 - Manufacturing industry becomes the
major economic activity as a country develops'
*Stage 3 - service industries grow to be the
dominant feature of the economy as a country
further develops.
*
According to Rostow, American historian
*Traditional society
*Pre-conditions for take-off
*Take-off
* Drive to maturity
*Age of high mass consumption
*
*Highly developed countries (PCI > $20,000)
USA, Japan, France, Russia, etc.
*Intermediate countries
Spain, Singapore, Saudi Arabia, etc.
*Less developed countries (PCI > or < $100)
Kenya, Vietnam, Philippines, etc.
*
According to:
*Holy Scriptures and code of laws, justice,
mercy and charity: Trade
*Adam Smith (Leader of the classical
economists): Industrial production
*Friedrich List (German economic professor):
Development of productive resources
*
*Ricardian model - The key factor is land.
Agriculture is the first priority in the
attainment of economic growth.
*Harrod-Domar model - The key factor is
physical capital like machines, buildings,
equipment and so forth.
*Kaldor model - The key factor is technology
which is embodied in physical capital.

*
*Subsistence agricultural economy
*Low per capita income
*High birth rate
*High illiteracy
*Poor health
*Negative attitudes, values and institutions
*Inefficient public administration
*High rate of unemployment
*
*
Unchecked breeding
of men causes
population to grow by
geometric progression
whereas food supply
can not grow rapidly
or more than in an
arithmetic ratio
*
*Planning must be realistic.
*Planning must be based mostly on the felt need
of the masses.
*Planning must come from below.
*Planning must be multisectoral.
*Planning must be flexible.
*Planning must have the full support of top
government officials.
*Planning must start with simple projects.


Chapter 17
*
*


*Global economies may be defined as the
proper allocation and efficient use of the
available resources of the world for the
maximum satisfaction of all the peoples in
every country
*
*The very few rich countries own most of the
productive resources of the world
*The poor countries have remained the traditional
sources of cheap raw materials and labor for the
rich countries.
*The same poor countries are the regular customers
of the finished products of the rich countries.
*Rich countries buy cheap raw materials and labor,
but they sell finished products at high prices.
*Instead of helping the poor countries in their
miserable conditions, the rich countries even
impoverish them.
*Whenever the rich countries extend technical and
financial assistance to the poor countries, there are
conditionalities or strings attached. As a result, the
rich countries get more economic benefits.


*
*The International Economic Order is a politico-
economic framework which provides the
international economic relationships among
sovereign nations.
*The less developed countries organized themselves
to pursue their economic demands on the
developed countries. Their organization became
known as the Group of 77. The United Nations
supported their demands in 1974 by declaring the
establishment of a "New International Economic
Order.
*
*The remaining vestiges of alien and colonized domination
continue to be among the greatest obstacles to the full
emancipation and progress of the developing countries
*Present economic conditions require the active, full and
equal participation of the developing countries in the
formulation and application of all decisions that concern
the international community.
*The political, economic and social well-being of the
present and future generations depends more than ever
on cooperation among all members of the international
community on the basis of sovereign equality and the
removal of the disequilibrium that exists between the less
developed countries and the developed countries
*
*The new international economic order should be founded on the
following principles:
-Sovereign equality of countries;
-Broadest cooperation of member countries of the international
community;
-Full and effective participation of all countries in solving the
economic problems of the world;
-Every country has the right to adopt its most appropriate
-Economic and social system;
-Colonial territories have the right to achieve their liberation and
to regain their natural resources and economic activities;
-Fair prices for the raw materials, primary products and
manufactured goods being exported by the less developed
countries; and
-Access of the less developed countries to the product of science
and technology, and promoting the transfer of technology
*
Afghanistan Bangladesh Benin
Bhutan Botswana Burkina Faso
Burundi Cape Verde Central African Republic,
Chad Comoros Democratic Yemen
Djibouti Ethiopia Equatorial Guinea
Gambia Guinea Guinea-Bissau
Haiti Kiribati Lao People's Democratic
Lesotho Malawi Maldives
Mali Mauritania Myanmar
Nepal Niger Rwanda
Samoa Sierra Leone Sao Tome and Principe
Somalia Sudan Tanzania
Togo Tuvalu Uganda
Vanuatu Yemen
*
*
*Poor countries have basically an agricultural
economy.
*For lack of technology, machine and money, the poor
countries can not transform their natural resources
into finished products.
*To accelerate their development of our idle natural
resources, their government has attracted foreign
investments. They have plenty of money, modern
technology and management expertise. These are
the multinational corporations which supply many
products.

*
*Rich countries have industrial economies, that is, a
greater portion of their national incomes come from
the industrial sector.
*With modern technology, they are most efficient in
manufacturing products.
*Industrial economy is capable of generating more jobs
and incomes for its people than an agricultural
economy
*Wealth and income are fairly distributed.
*Their people are the most important resources for the
growth of their economy and society
*
*Some countries can isolate themselves from the rest of the
world. And they can survive because they are rich in natural
resources. However, the pace of modernizing their national
economy and improving further the-standard of living of
their own peoples would likely be very slow.
*A country which depends only on its domestic market has
limited opportunity for economic growth.
*No country can produce all the goods and services to satisfy
its people. The geography of a country determines the
products it can raise in any single country. For this reason/
there is indeed a need for exchange of goods and services
among countries

Chapter 18
*
*
According to:
*H. Bowen - It is the obligations of businessmen to pursue their
policies to make those decisions, or to follow those lines of
actions which are desirable In terms of the objectives and values
of society.
*K. Davis - An individual who thinks of the interests of the whole
system and contributes his resources to the development and
growth of such system is performing his social responsibility
*P. Ducker - The first responsibility to society is to operate at a
profit. The business is the wealth-creating and wealth-producing
organ of society.
*
*Economic model - Based on the traditional concept
of business.
*Socio-economic model - Businessmen have their
social responsibility to their stockholders,
employees, customers, suppliers, and to the general
public.
*Classical model - An enterprise is socially
responsible if it emphasizes the efficient use of its
productive resources in the creation of goods and
services that society needs at a price consumers are
willing to pay.
*
*Business can not and should not ignore social
problems because it is part of society.
*Business has resources, like financial, technical
and managerial, that are required for solving
social problems.
*Business can earn more profits in the long run
by helping eliminate or reduce social problems.
*Business can expect less government
intervention if it performs its social
responsibility.
*
*Business managers are primarily responsible to
stockholders. Thus, their job is to earn profit
for their investors.
*The resources of the firm time, money and
talent should be used to maximize profit, not
to solve the problems of society.
*The effects of social problems on society is
very general. Business should not be expected
to solve such problems.
*4. Social problems are the responsibility of
government officials. They were elected
basically to solve social problems.
*
*The price of economic growth is the destruction of
the environment through land, water and air
pollution. Such pollution has adversely affected the
lives of human beings and animals as well as those
of the plant kingdom.
*The seas of the world are filled with 20 billion tons
of garbage - including soda cans, radioactive waste,
exotic chemicals heavy metals and human waste.
The red tides are also linked to water pollution.
*Air pollution is equally very destructive, The
depletion of the ozone layer is caused by air
pollution.

*
Reasons for foreign Aid
*National interests - These include political,
economic, military and other benefits for the
donor countries.
*Humanitarian, moral and ethical considerations -
These are done in case of sudden calamities like
wars, floods, typhoons or earthquakes.
*Maintenance of viable global system - Conditions
have greatly changed all over the world
*
*The main competing donors are the United States
and the Soviet Union. They give aids precisely to
win more allies on their sides as well as for
economic benefits.
*Not a few foreign aids have gone to welfare and
prestige projects instead of developmental and
productive projects.
*nationalist leaders of the poor countries have
accused the rich countries of using their aid
programs as a cover for their economic
exploitations and political and military interests.
*
*The less developed countries have very little or
no chance at all to win their fight against
absolute poverty, disease and squalor. Their
economic future does not only depend on
themselves but also on the economic policies of
the rich countries towards the poor countries.
The many years of exploitations by the rich
countries in the form of economic imperialism,
loans, wrong technologies and miseducation
made the poor countries even poorer.
*
Main sources of wealth of the rich countries:
*Unfair tariffs for the poor countries;
*Exorbitant interest on capital and excessive profit
on investment;
*Low prices of raw materials manipulated by
cartels, monopolies, and unfair trade practices;
*Virtual monopoly on ocean and air transport;
*Control international monetary system;
*Supply most of the investment capital; and
*Use their political and military powers to maintain
the status quo.
*
*What the poor countries prefer are fair
international trade practices and sufficient foreign
loans with reasonable interest rates and without
strings attached. Many of the poor countries have
been frustrated with the foreign aid programs. Such
programs lack substance and sincerity according to
them. The donor countries get more benefits than
the beneficiaries themselves like the promotion of
its own economic, political and military interests.
So the U.S. has been challenged to be more sincere
in helping the poor countries.
*
*The best way to help the poor is to help
themselves. This does not only apply to
individuals but also to countries. Abraham Lincoln
said: You do not help people if you do the things
which they themselves can do.