Lesson 1.
3
Economics as an applied science
Applied economics is the application of economic theory and quantitative
tools (econometrics and statistics) to analyze specific economic problems and
other inquiries (positive economics) with the end of providing solutions and
new directions (normative economics). As one of the two sets of fields of
economics (the other being the core), it is typically characterized by the
application of the core, referring to economic theory and econometrics, as a
foundation to deal with practical issues in fields that include demographic
economics, labor economics, business economics, agricultural economics,
development economics, education economics, health economics, monetary
economics, economic history, and many others.
Economics as an applied science
John Neville Keynes is attributed to be the first to use the phrase “applied
economics” to designate the application of economic theory to the
interpretation and explanation of particular economic phenomena.
We can improve human welfare among Filipinos through the investigation and
analysis of economic problems in the real world. Applying economic theory in
our lives means trying to address actual economic issues and doing something
about it. The concept of scarcity and choice should encourage us as
individuals to help in our own way to provide solutions to the country's
economic problems.
Applied Economics in Relation to
Philippine Economic Problems
A solid understanding of economic principles and how they are applied in real-life
situations can serve as significant tools in helping address the country's economic
problem. For example, understanding the existence of scarcity can help an
economics student analyze how to maximize the use of available resources in
overcoming scarcity. Knowledge of economic theories such as the law of supply
and demand can help in analyzing why prices are high and what the government
can do to help bring down prices.
Economic Growth
The Philippine economy grew significantly during President Benigno
Aquino's administration, with a growth rate of the country's GDP of 6.8% in
2012 improving to 7.2% in 2013. However, the rate at which the economy
grew slowed down to 5.7% in May 2014.
Even as our growth rates went up at a slower pace, we were better off than in
previous years because these rates were higher than those in the preceding.
Likewise, we fared better than our ASEAN neighbors such as Malaysia,
Thailand, and Indonesia. (CIA World Factbook, 2013).
The Philippine economy also grew by 6.8% in the first quarter of 2018,
following a revision of the expected rate of 6.5% in the previous quarter.
ECONOMIC GROWTH
Even with global and local uncertainties, the Philippines was projected to grow at
6.4% in 2019 and 6.5% in 2020 and 2021. These estimates were based on a
projection made in the Philippines Economic Update (PEU) released by the World
Bank (April 2019). In actuality, the Philippine GDP increased by 35.9% in 2019,
which was lower than the projected rate of the Philippine Statistics Authority's
(PSA) released data. Despite this admirable growth, many are still poor and
excluded from economic progress (non- inclusive growth). Millions of Filipinos
claim they are still living in hunger below the poverty level. In short, there is no
trickle effect on the lowest income groups, who continue to be excluded from the
benefits of the growth of the economy. Forecasts for growth rates in 2020 seem far
fetched, considering the negative impact of the spread of COVID-19 in the country
and worldwide.
POVERTY
poverty
Another significant socioeconomic problem in the country is poverty. The
poverty incidences of the population, as reported by the National Statistics
Coordination Board, registered at 26.4% in 2006, 26.5% in 2009, and 25.2%
in 2012. However, the proportion of Filipino families living below the
poverty line fell to 16.1% from January to June 2018 from 22.2% during the
same period in 2015.
Unemployment and
Underemployment
Unemployment and
Underemployment
Unemployment is still a main problem of the Philippine economy, despite
improvements reported by the National Statistics Office (NSO).
According to the PSA(Philippine Statistics Authority) , the unemployment rate in
the Philippines dropped to 5.1% in the June quarter of 2019 from 5.5% a year ago.
Among the regions, the National Capital Region (NCR) (6.4% ), Autonomous
Region in Muslim Mindanao (ARMM) (6.3 % ), and Southern Tagalog Mainland
(CALABARZON) (6.1%) have the highest unemployment rates. Among the
unemployed persons in January 2019, 64.4% were males, while 35.6% are females.
Population
Growth
Population Growth
The booming population growth in the Philippines is another basic economic problem that
can be connected to the issue of scarcity. When the population becomes too big, economic
resources may no longer be enough to support the growing population. The current
population of the Philippines is relatively young at 109.12 million, growing by 1.72%
annually from 2010 to 2015 (PSA). A booming and young population is a reason for the
shortage of classrooms in public schools. This could also be why government hospitals are
crowded with sick people and women giving birth beyond the number of hospital beds to
accommodate them. The population issue will be further discussed in Chapter 2.
End of chapter 1
