CHAPTER ONE: THE PHILIPINE ECONOMY

The national economy is composed of business enterprises, households and the

government. These are the major sectors of the economy. The strength or weakness of
one sector affects the other sectors because of their interdependence.

Basically, we have a market economy or free enterprise economy.

Unfortunately, our economy has not improved much in terms of the interests of the
masses, because of our colonial and primitive agricultural economy.

A deeper analysis of the economies of rich countries reveals that most of them
are not endowed with abundant natural resources. Japan is a very good example. The
country imports 90 percent of raw materials for its industries. Yet Japan has excelled in
trade and industry.

In economic development, the bottom line is the quality of the people of a given
country. Knowledge, skills and values are the main determinants of economic growth.

BUSINESS DEVELOPMENT

1. The introduction to Barter System

* The Code of Hammurabi promulgated around 2,000 B.C. and had provisions
governing commercial transactions.

2. 9th century – Arab traders.

3. 12th century – Chinese traders.

4. 18th century – The Galleon Trade between Manila and Mexico

These trade shaped the pattern of specialization of the three people in the
colonial economy:

a. Filipinos - Tillers of soil.

b. Spaniards – Governors
c. Chinese – Distributors, Capitalists and Entrepreneurs.

5. 1909 – American Regime

* Payne-Aldrich Act in 1909

*Bell Trade Act of 1946

*Filipino First Policy – President Carlos Garcia (1958)

*World Bank and the International Monetary Fund.

FUNDAMENTAL ECONOMIC PROBLEMS

All countries have economic problems. The unfair distribution of productive

resources and population explosion have created more economic problems. In less
developed countries like the Philippines, the price of labor is very low. Salaries are not
sufficient to satisfy the basic human needs.

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 The biggest economic problem of our country is unemployment. Those who are
willing and able to work cannot find jobs. Unemployment creates social problems such
as housing, health and sanitation, prostitution, robbery and other related crimes. The
grim faces of poverty are all around us.

THE ENTREPRENEURIAL ECONOMY

A free enterprise or market economy is an entrepreneurial economy. This is an

economy dominated by entrepreneurs. Such individuals are risk takers. One of the main
thrusts of the national government is the creation of the spirit of entrepreneurship
among the poor. The government extends financial and technical assistance to small
scale industries, especially micro-business enterprises.

FORTUNE FAVORS THE ENTREPRENEURS

Not a few giant businesses came from micro-businesses. They create jobs for
people and they help the government through tax payments. On the other hand,
employees get only low salaries, and they are not the boss. Employees do not become
rich. It is in business where there is money and economic fortune.