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What is 'Economic Growth'

Economic growth is an increase in the capacity of an economy to produce goods and services,
compared from one period of time to another. It can be measured in nominal or real terms, the
latter of which is adjusted for inflation. Traditionally, aggregate economic growth is measured in
terms of gross national product (GNP) or gross domestic product (GDP), although alternative
metrics are sometimes used.

Economic growth is defined as an increase in a country's ability to produce goods and services, in
other words, increase of per capita gross domestic Product (GDP) or other measure of aggregate
income. Economic Growth is the optimum utilisation and development of under-utilised resources
of developed countries and brings significant changes in the economy. This growth is associated
with a steady, general and gradual increase in the rate of savings, output and investment in the
economy. Several economists have come to the conlclusion that productivity gains, ie increases in
efficiency was a major factor in China's immensely fast economic growth. Economic reforms which
included the decentralization of economic production, led to substantial growth in Chinese
household savings.

BREAKING DOWN 'Economic Growth'


In simplest terms, economic growth refers to an increase in aggregate productivity. Often, but not
necessarily, aggregate gains in productivity correlate with increased average marginal productivity.
This means the average laborer in a given economy becomes, on average, more productive. It is also
possible to achieve aggregate economic growth without an increased average marginal productivity
through extra immigration or higher birth rates.

Example of Economic Growth

For example, let's say that a special berry grows naturally only in the country of Utopia. Natives to
Utopia have used this berry for many years, but recently, a wealthy German traveler discovered the
berry and brought samples back to Germany. His German friends also loved the berry, so the
traveler funded a large berry exporting business in Utopia. The new berry exporting business hired
hundreds of Utopians to farm, harvest, wash, box and ship the berries to grocers in Germany.

In one calendar year, the berry exporting business added over one million dollars to Utopia's GDP
because that's the total value of the goods and services produced by the new berry exporting
business. Since Utopia's GDP increased, this means that Utopia experienced economic growth.

In the United States, our periods of large economic growth are mostly associated with new
technology. The Industrial Revolution and the development of the Internet are two examples. When
new developments bring an increase in output capacity, economic growth usually follows.

Measured in Dollars, Not Goods and Services


A growing or more productive economy can make more goods and provide more services than
before. However, some goods and services are considered more valuable than others. For example,
a smartphone is considered more valuable than a pair of socks or a glass of water. Growth has to be
measured in the value of goods and services, not only the quantity.

Another problem is not all individuals place the same value on the same goods and services. A
heater is more valuable to a resident of Alaska, while an air conditioner is more valuable to a
resident of Florida. Some people value steak more than fish, and vice versa. Because value is
subjective, measuring for all individuals is very tricky.

The best approximation is to use the current market value; in the United States, this is measured in
terms of U.S. dollars. Since a higher total produced market value is considered more valuable,
higher economic growth is positively associated with an increased quality of life or standard of
living.

Causes of Economic Growth


There are only a few ways to generate economic growth. The first is a discovery of new or better
economic resources. An example of this is the discovery of gasoline fuel; prior to the discovery of
the energy-generating power of gasoline, the economic value of petroleum was relatively low.
Gasoline became a "better" and more productive economic resource after this discovery.

Another way to generate economic growth is to grow the labor force. All else equal, more workers
generate more economic goods and services. During the 19th century, a portion of the robust U.S.
economic growth was due to a high influx of cheap, productive immigrant labor.

A third way to generate economic growth is to create superior technology or other capital goods.
The rate of technical growth and capital growth is highly dependent on the rate of savings and
investment, since savings and investment are necessary to engage in research and development.

The last method is increased specialization. This means laborers become more skilled at their
crafts, raising their productivity through trial and error or simply more practice. Savings,
investment and specialization are the most consistent and easily controlled methods.

Economic Development

Now let's take a look at economic development. A country's economic development is usually
indicated by an increase in citizens' quality of life. 'Quality of life' is often measured using
the Human Development Index, which is an economic model that considers intrinsic personal
factors not considered in economic growth, such as literacy rates, life expectancy and poverty rates.

Economic development, on the other hand is an increase in the economic standard of living of a
countrys population with constant growth from a stagnant state to a higher level of equilbrium. It
implies changes in income, saving and investment along with accelerating changes in socio-
economic structure of a country. Economic Development is concerned with whole changes in the
economy and brings both qualitative and quantitative changes and mainly refers to the problem of
developing countries. It relates to the utilisation and development of unused resources in
underdevloped countries. After the mid-1980s India began opening up its market slowly through
economic liberalization and this policy played a huge impact on the economic development of India.
The Indian economic development got a boost through its economic reform in 1991 and again
through its renewal in the 2000s. Since then, the whole scenario of economic development of India
has changed dramatically.

While economic growth often leads to economic development, it's important to note that a
country's GDP doesn't include intrinsic development factors, such as leisure time, environmental
quality or freedom from oppression. Using the Human Development Index, factors like literacy
rates and life expectancy generally imply a higher per capita income and therefore indicate
economic development.
Economic development often is categorized into the following three major areas:

1. Governments working on big economic objectives such as creating jobs or growing an


economy. These initiatives can be accomplished through written laws, industries'
regulations, and tax incentives or collections.
2. Programs that provide infrastructure and services such as bigger highways, community
parks, new school programs and facilities, public libraries or swimming pools, new
hospitals, and crime prevention initiatives.
3. Job creation and business retention through workforce development programs to help
people get the needed skills and education they need. This also includes small business
development programs that are geared to help entrepreneurs get financing or network with
other small businesses.

How do we know if economic development is working? There are hundreds of ways to measure
things for the hundreds of different economic development objectives that communities may
have. We can measure many of the above things through improvements in average income of
families, local unemployment rates, standardized testing and literacy results in children, leisure
time and changes in life expectancy, or hospital stays.

Example of Economic Development

For example, before the berry exporting business, most Utopians lived in small villages many miles
from one another. Few Utopians had access to schools, fresh water or healthcare. Utopian men
worked long hours attempting to farm land that was naturally unsuitable for most crops, just to
feed their immediate families.

After the berry exporting business, many Utopians found work through the new industry. Newly
employed villagers relocated closer to the business, giving them better access to schools, healthcare
and fresh water produced for the plant and surrounding areas. Most Utopian men were able to
trade labor-intensive hours in the fields for easier eight-hour shifts. Besides earning a salary, the
new work enabled them more leisure time and contributed to longer life spans. Thus, Utopia
experienced economic development through economic growth.
Economic Growth in Our Municipality

Santa Barbara, officially the Municipality of Santa Barbara, is a 1st class municipality in
the province of Pangasinan, Philippines.

Economy

Although a large part of Sta. Barbara is fast getting urbanized, the main economic activity remains
farming. Rice remains its main crop with 6,662 hectares or close to all its total tillable lands devoted to
rice farming. The second most important crop is mango of which the town is famous as the home of age-
old Philippine mango seedling nurseries, a veritable home industry in town.
Rice and mango are the only crops that are raised in all its 29 barangays. The third most important crop
are a variety of vegetables followed by corn. Legumes and root crops are grown in small quantities.
Their livestock include cattle, carabao, hogs, goats and dogs. They likewise raise native chickens for their
food and some poultry farms commercially produce chicken layers and broilers.
Out of the farm produce, Sta. Barbara has developed its own food processing industry that includes the
making of rice cakes like latik and suman, nata-de coco making, and pickles from different fruits.
It likewise has a highly developed clay tiles and pottery industry coupled with non-farm based
processing industries like candle and soap making and the making of hollow blocks for construction. The
town has one industrial plant, the Ginebra San Miguel gin manufacturing plant in Tebag West barangay
along the national highway towards Dagupan.
The town’s business and trading center in and around the public market features a variety of wholesale
and retail and other services establishments from farm inputs to construction materials. The market
serves as the place where its people buy their needs and sell their produce. Transportation between the
commercial center and the many barangays is served by a large fleet of individually owned tricycles.
Sta. Barbara’s close proximity to Urdaneta City, has, however, constrained the growth of its trading
sector.
Sta. Barbara is populated mainly by Pangasinans with a sprinkling of other ethnic groups led by
the Ilocanos.
It is largely a suburban community with much of its population densely concentrated in 29 barangays.
By the year 2008, the town’s population was projected to have reached 86,269, with a growth rate of
3.75 percent per year for the past seven years, faster than the national average.
More than half of the families or roughly 60 percent are farmers who till the northern part of the rich
Agno Valley. Average family income as of the 2000 national census, was a low P9,662.67 a year. Maybe
because the average farming family does not buy, but produce the bulk of its own food, family
expenditures were lower at P7,545.42. The average Sta. Barbaran family has a disposable income of over
P2,000 a year despite statistical data that had shown that a family In the Ilocos region needed PhP
14,749.00 in income a year to survive.
A high level of self-sufficiency in food is likewise gleaned in the town’s minimal rate of malnutrition of
only .50 percent severely malnourished out of 5.12 percent malnourished -pre-school children. The
public school system is also proud of having an unusually low drop-out rate in the elementary grades
and high school.
Poverty rate in Sta. Barbara is high as average income is even lower than the regional poverty threshold.
But food self-sufficiency has saved its town folks from sliding to the ranks of the very poor.
Suburban Housing

Also owing to its suburban location and easy access to three nearby cities, Urdaneta, San Carlos and
Dagupan, Sta. Barbara has attracted subdivision developers, both for middle-class and low-cost markets.
As of mid-2008, it has attracted to its territory eight different housing projects including subdivisions
developed by the company owned by Senate President Manny Villar and a pilot Gawad Kalinga housing
project for the very poor embarked by the town government and its private sector partners.

Infrastructure

The town has a total of 137.509 linear kilometers of road network classified into national, provincial,
municipal and barangay roads. All the national highways passing through town and those under the
town government have been paved. The 17 kilometers of provincial roads are about three fourths paved
while more than half (67.10%) of 92.5 kilometers of barangay roads otherwise known as farm to market
roads, needed concreting.
Unlike paved roads, electricity has reached all of the town’s 29 barangays with about 80 percent of all
households served. Power rates are much lower than in Metro Manila for both households, commercial
and industrial users.
Two of the biggest landline telephone companies, PLDT and Digitel, plus one wireless company, Smart,
serves the communication needs of the town although units to users ratio as of 2007 was still low at one
phone for every 93 residents.
The local government-run Rural Health Unit and its 10 satellite barangay health centers, plus seven
private medical clinics and one dental clinic serve the basic health needs of Sta. Barbara residents.
Education
Sta. Barbara has an extensive public elementary and high school system. It has a total of 26 elementary
schools supervised by two school districts plus seven public high schools. These are manned by 418
teachers and other school personnel with a student of over 15,000 children in any given year.
Their healthy teacher to pupil ratio averaging one to 34 in the elementary grades and one is to 41 in high
school and their minimal drop-out rates of two percent in the elementary grades and less than four in
every 100 students that enter high school. This was the state of things in Sta. Barbara when the local
leadership changed in mid-2007.
Businesses in Santa Barbara, Pangasinan, Philippines

How to Improve Your Business and Livelihood

The Philippine Livelihood Program: The Philippine government provides several programs to enhance
the livelihood of the Filipino people. The department of Science and Technology through its Technology
Research Center (TRC) regurlarly conducts various types of hands-on and personalized training
programs.

DOST

UPLiFT stands for Urban Program for Livelihood Finance and Training.

DSWD Pro-poor and Livelihood Programs

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