FISCAL POLICY

Group 2

FISCAL POLICY
- is the manipulation

of
government spending and
imposition of taxes.

2 TYPES OF FICAL POLICY

Expansionary Fiscal policy- this is commonly known

as pump priming the economy characterized by a
decrease in tax rate and increase in government
spending to spur growth and employment.

Contractionary Fiscal Policy- causes an increase in

taxes and decrease in government spending to combat
inflationary pressures in the economy.

ECONOMIC PLANNING
AND DEVELOPMENT
A. Economic Planning

A centralized national planning

The responsibility for Economic Planning
Important concepts in development planning:

Economic Planning
Economic Plan

2 MAJOR PARTS OF DEVELOPMENT

PLANNING IN MIXED ECONOMIES
a)

Deliberate spending by the government of domestic

savings and foreign finance for public investment, and
the use of limited resources to implement projects and
programs that will contribute to the economic growth.

b)

Government regulations regarding the economy meant

to control private investments to ensure compatibility
between the private businesses and the objectives of
the government for the general public.

CHARACTERISTICS OF THE
PLANNING PROCESS
A.
B.
C.

D.
E.
F.

They consist of ideas, regulations and objectives.

The processes to achieve the government objectives are
enumerated step by step.
A centralized order and compatible principles and
policies are included as an effective strategy in
achieving the economic target.
They include all aspects of the economy.
They use the formal economic models.
They use time frames such as medium-term plan and
annual plan.

REASON WHY DEVELOPMENT

PLANNING IS IMPORTANT TO
DEVELOPING NATIONS

MARKET FAILURE

The market developing countries is not perfect and is full of factors and unexpected instances that
may affect the flow of economic elements.

RESOURCE MOBILIZATION and ALLOCATION

Developing countries must use its limited financial resources and human resources
sparingly and wisely. Public sector projects need to be selected meticulously so limited
resources do not go to waste.

ATTITUDINAL and PSYCHOLOGICAL IMPACT

Developmental plans outline the government objectives that will satisfy the needs and
requirements of its citizenry.

FOREIGN AID

Having a detailed plan that specifies the priority public works is an important condition for
the country to obtain foreign grants and assistance

B. DEVELOPMENT
1. Etymology and definition
Economic development is the upward
movement of society towards the direction
of modernization ideals.
Development as a multidimensional process
involving the reorganization and
reorientation of entire economic and social
system.

2. Development Economics

As a process development is long term, multidimensional,

rational process.
Common characteristics of developing nation.

a. low levels of living

b. low level of productivity
c. high rates of population growth and dependency burdens.
d. high and rising levels of unemployment and under
employment
e. significant dependence on agricultural production and primary
product
f. dominance, dependence and vulnerability in international
relations

3. MEASURES OF DEVELOPMENT

Most popular indicator of economic

development is per capita gross national
income (GNI) or per capita Gross domestic
product (GDP)
Other indicators of development

A. Physical Quality of Life Index (PQLI)

B.Human Development Index
C.Capabiliy Poverty Measure (CPM)
D.Economic Freedom Index

4. LEADING THEORIES OF
ECONOMIC DEVELOPMENT
A. Growth Stage Theories
It represent an effort to systematize the
process of economic growth within a
framework of a sequence of stages
applicable across national and cultural
boundaries.
19th century German growth stage literature
has two major traditions

1. FRIEDRICH LIST AND THE

GERMAN HISTORICAL SCHOOL

List based his growth stage classification on

shifts on occupational distribution. According to
list the five stages of growth are the ff. :

Savage
Pastoral
Agriculture
Agricultural manufacturing
Agricultural manufacturing commercial

2. KARL MARX AND THE

MARXIST.

Marxs criteria of stage classification include type of

technology used, system of property rights, and
ideology behind the technology. Stages of growth are
the following:

Primitive communist
Chattel/ancient slavery
Stages of empire
Medieval feudalism
Industrial capitalism
Imperialism
Pure communism-socialism

WALT WHITMAN ROSTOWS

He wrote his famous book The Stages of Economic

Growth; a Non-communist Manifesto(1960),
represents the modern growth stage theory.

According to Rostow, all the developing countries have

linear progress from the transitional economies to modern
economies. The following stages are:

Traditional stages

Precondition to take off

Take off into self-sustaining growth

Drive to maturity

Age of high mass consumption.

END OF REPORT.