Organization
and
Management
Module 4, Lesson 2
Lesson 2: Phases of
Economic
Development and its
Impact to Business
Environment
Let us Recall!
Part I. Enumeration
Directions: Enumerate the three common forms of business
organizations and the
two classifications of partners.
The three common forms of business organizations
1.
2.
3.
Two classifications of partners
4.
5.
Part II. Modified True or False
Direction: Write True if the statement is correct while encircle
the word or phrase that made the sentence False or wrong and
write the correct word on the space
provided.
6. A sole proprietor has the full control on the business assets,
liabilities, and losses.
7. Partnership and corporation are both considered as juridical
entities.
8. Lifespan of a corporation can last up to 50 years and is
renewable.
9. Monetary contribution is mandatory to become a business
partner in a partnership type of a business.
10. As to formation, partnership is the easiest among the forms
of business organizations.
Picture Analysis
Directions: Using your analytical ability, identify the phases of economic
development depicted on the illustrations inside the box. Write your
answer on the space provided.
The Phases of Economic Development
Pre-conditions for take-off Age of mass consumption
Take off
Drive to maturity Traditional society
What is Economic
Development
•Improvement of people’s standard of living
•Creation of jobs and business opportunities
•Supports income and national tax base
•Attracts both local and foreign investors
Walt Whitman Rostow (W.W. Rostow) was an economist in the Lyndon B. Jonson
administration from 1966-1969 who came up with the five (5) stages of economic
development.
1. Traditional Society.
• Based on subsistence farming
• Little trade or technology
• Very limited productivity
• Mostly rural and agricultural
2. Pre-conditions for take-off.
• Agriculture becomes mechanized
• Surplus output is traded
• Savings and investments start
• Need for external support (e.g.,
OFW remittances or foreign aid)
3. Take-off.
• Manufacturing gains importance
• Dual economy appears (modern vs traditional)
• Political and social reforms begin
• Savings grow to 15% of GDP
4. Drive to maturity.
• Industries diversify
• Technology spreads across
regions
• Focus on innovation and
productivity
• Real income increases per
person
5. Age of mass
consumption.
• People have extra income for
non-essentials
• Focus shifts to services and
consumer goods
• Expansion of middle class
• Businesses target mass
markets
Impact of Economic
Development on Business
• Determines market demand and spending power
• Influences infrastructure, labor, and technology
• Affects investor confidence and global trade
• Shifts business focus (from agriculture to services)
Summary
• Economic development impacts business success
• Rostow’s model shows how countries grow
• Businesses must adapt to each phase of development
True or False
1. There are 5 phases of economic development such
as traditional society, pre-conditions for take-off, lay-
off, drive to maturity, and age of mass consumption.
2. Age of mass consumption is the fifth phase of
economic development.
3. At take-off phase, manufacturing industry assumes
greater importance and the number of industries
becomes bigger.
4. At take-off phase, social institutions were only
developed.
5. Growth has spread to different parts of the
country as the state of technology became more
developed towards making better use of
innovation to bring about increases in real per
capita income at the stage of drive to maturity.
6. The age of mass promotion significantly
increased consumers’expenditures.
7. There was a shifting towards tertiary sector
activity and the growth is sustained by the
expansion of a upper class of consumers.
8. There is often a dual economy apparent with
rising productivity and wealth in manufacturing
and other industries contrasted with stubbornly
low productivity and real incomes in urban
agriculture during the take-off phase.
9. At Pre-conditions for take-off phase, agriculture
becomes more mechanized but less output is
traded.
10. Savings and investment grow although they
are still small percentage of national income
(GDP) during the pre-conditions for take-off phase.
11. Traditional Society is an agricultural economy
of mainly
subsistence farming, little of which is traded.
12. Agriculture assumes lesser importance in
relative terms although the majority of people
may remain employed in the farming sector.
13. At pre-conditions for take-off phase, some
external funding is required- for example in the
form of overseas aid or perhaps remittance
incomes from migrant workers living overseas.
14. Take-off is the third phase of economic
development.
15. Walt Whitman Rostow (W.W. Rostow) was an
economist who came up with the four (4) stages
of economic development.
Self-Check
Traditional Society is a 1.)______________ of mainly
subsistence 2.)_________________ , little of which is
traded. In 3.) ______________, agriculture becomes
more mechanized and more output is traded.
4)_____________ and 5.)________________ grow
although they are still small percentage of
national income (GDP). Some external funding is
required- for example in the form of overseas aid
or perhaps remittance incomes from migrant
workers living overseas.
For take-off, 6.)_______________ assumes greater
importance,
although the number of industries remains
7.)____________.Political and 8.)___________________
start to develop- external finance may still be
required. Savings and investment grow, perhaps
to 15% of GDP. There is often a 9.)
_______________________ apparent with rising
productivity and wealth in manufacturing and
other industries contrasted with stubbornly low
productivity and 10.__________________ in rural
agriculture.
Moreover, in the phase of drive to maturity,
industry becomes 11.)__________________ . Growth
should spread to different parts of the country as
the state of technology improves- the economy
moves from being dependent on factor inputs for
growth towards making 12.)_________________ to
bring about increases in real per capita income.
However, output levels grow at the of
13.)_________________ , and enabled to increase
14.)___________________ . There is a shift
towards15.)_____________ activity and the growth is
sustained by the expansion of a middle class of
consumers.
Choose the letter of the best answer. Write the letter of your answer on
a separate
sheet of paper.
1. A group of individuals who form a business
enterprise for the purpose of mutual benefit is called
what?
a) Partners c.) Incorporators
b) Proprietors d.) Stockholder
2. Which of the following pertains to the owners of a
stock corporation whose names are reflected in the
certificate of stock?
a) Sole proprietor c.) Member
b) Partner d.) Stockholder
3. This is a collective term for individuals who
are vested with the right to manage and conduct
the business of a non-stock corporation.
a) Board of Trustees c.) Board of Directors
b) Incorporators d.) Proprietors
4. A business organization formed by at least 5
but not exceeding to 15 incorporators, and is
considered a “legal person” in the context of
the law.
a) Sole Proprietorship c.) Corporation
b) Partnership d.) Cooperative
5. A form of business organization in which the owner
owns all the assets and personally shoulders all
liabilities or losses.
a) Sole Proprietorship c.) Corporation
b) Partnership d.) Cooperative
6. Which business organization enjoys advantages such
as greater ability to attract capital, transferable
ownership, continuity of life, and limited liability?
a) Sole proprietorship c.) Corporation
b) Partnership d.) Cooperative
7. Which of the following government agencies is tasked
to formulate, institutionalize, and administer fiscal
and tax policies?
a) Bureau of Customs
b) Securities and Exchange Commission
c.) Department of Finance
d.) Bureau of Internal Revenue
8. Which of the following gives more importance on
generating profits by creating business to exploit
market and business opportunities?
a) Business development c.) Environmental development
b) Economic development d.) Industrial development
9. Which of the following statements describes economic
development?
a) It focuses on markets c.) It creates business
b) It attracts business d.) It originates in private
sectors
10. Which of the following is/are role/s of business in
the economy?
a) Supplies goods c.) Provides services
b) Meets the demands of the consumers d.) All of the
choices
11. Over the years, Palawan has significantly increased
its production level in agriculture and tourism
industries which resulted to an economic shift
characterized by being independent on factor inputs,
use of technological innovation, and increases in real
per capita income. In what phase of economic
development does the province of Palawan belong?
a) Take-off c.) Age of mass consumption
b) Pre-conditions for take-off d.) Drive to maturity
12. In this phase of economic development, the
activities shift to the tertiary sector and economic
growth are supported by middle class consumers.
a) Pre-conditions for take-off c.) Take-off
b) Age of mass consumption d.) Drive to maturity
13. In this phase of economic development, agriculture
becomes more mechanized and more output is traded.
Savings and investment grow although they are still
small percentage of national income (GDP).
a) Pre-conditions for take-off c.) Take-off
b) Age of mass consumption d.) Drive to maturity
14. Which of the following is not among the five stages
of economic development as mentioned by Economist
Rostow?
a) Traditional society c.) Drive to maturity
b) Age of mass consumption d.) Lay-off
15. This business environment is driven by local
conditions and market characteristics.
a) Both local and international business environment
b) International business environment
c) Local business environment
d) None of the choices
THANK YOU !!!