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Land

Batanes has a combination of natural resources. The province is supplied with pasturelands and rich marine resources, but not supplied with minerals, forests and rich farmlands. The lack of natural resources combined with the province's geographic location has been the reason why economic development has been less diversified and complex in Batanes.

Humankind's first requirement is food. Before an area can support populations necessary for industrial and service production, it must be able to feed them. Batanes has been unable to do this because of its harsh weather, poor farmlands and inefficient agricultural industry.

Nevertheless, Batanes is one of the Philippines' leading producers of beef cattle and garlic, most specially prior to the global economy. The province is also rich in aquatic resources, and although remotely located, Batanes has good sea and air transportation linking it with markets to other provinces.

But natural resources are not wealth. They become wealth only when human activity turns them into the goods and services we need and want. A potential market remain just that unless we actively sell our products in it. For these two reasons human activity is the most important single element in the economic process.

Labour

Human activity in the economic process is carried out by the labour force. This is a broad economic term which covers everyone who sells his time and skill. The farm worker, the manager, the teacher, the labourer, the government worker, the engineer, the computer programmer, the accountant, the lawyer -- even the economist, is important to the economic process.

Relative to its supply of natural resources, Batanes has adequate supply of skilled labour. Nevertheless, to maintain the supply of skilled labour, authorities must continue to improve the level of skill and education of the present and future labour force. This need is becoming increasingly apparent because technology has become the most important factor influencing economic growth. With technological change increasing at a faster and faster rate it is possible to increase real wealth more and more quickly. However, modern equipment is useful only in the hands of skilled operators. It should be emphasized: no machine is better than the person who operates it.

Everyone who sells her/his time and skill is contributing a factor of production, labour, to the economic process. This is part of the reason why, for our economic well-being, we all depend on one another. Since the quality of labour is of prime importance, great emphasis is being placed on education.

With the increasing rate of technological change which we depend on for a fast-growing wealth, specific skills can soon become obsolete. Persons entering the work force today should be prepared to retrain three or even four times. A good general education is the best preparation for this. It is the ability to recognize and define a problem and know how to go about seeking solutions, that will best equip people for retraining.

Technological change is causing a rising demand for skill. Demand for unskilled labour is falling and will continue to fall at an increasing rate. It is also worth remembering that the lowest paid group in the country is that which has the least education.

People with sufficient training and education to command skilled jobs receive better incomes and in addition find challenge and satisfaction in their work. They develop new confidence in themselves and, looking at the world with new eyes, find their interests expanding. They tend to discover that their own country (and the world) is full of interesting places to visit, books to read, music to hear, people with many different viewpoints to meet. They also find that they have extra income to pursue their interests and they have more to contribute as individuals to the solution of social problems and the development of a civilized society.

Because we all depend on one another for our economic well-being, it is important to understand the parts each of us plays in the economic process. Knowing the probable effects of our actions will help us in making personal economic decisions. When we understand how the economic process works, it will be easier to form an opinion on economic policy and to make decisions as a voter and a taxpayer. When most people are making constructive economic decisions, it is more likely that the economy will expand smoothly and rapidly. When this happens, everyone is better off.

Producing wealth may not be the most important thing a nation does, but unless it does produce wealth, it cannot afford to do much else. Society needs wealth if it is to make social and cultural progress. The individual needs a certain amount of wealth before she/he is free to develop herself/himself as a human being. But wealth of itself will not provide these things. The individual must find out for herself/himself who and what she/he is and what kind of a society will best suit her/his needs. In the best sense of the words, these are tasks for educated persons.

Capital

In verbal shorthand and in accounting terminology capital is often spoken about as though it were money. This is possible because money is a convenient way of representing, storing and exchanging value. But you cannot produce anything with a peso bill any more than you can eat a peso bill. In real terms, capital is plant, equipment and machinery, including human capital.

A society builds up its stock by saving. Saving is the difference between how much we can produce now and how much of that production we decide to consume or use up now.

To produce, we depend on the amount of capital stock we already have and the amount of new capital investment we can make. With each addition of new capital investment we accumulate or build up a larger and larger capital stock, and as the stock becomes larger our ability to produce increases.

If we invested only our small amount of national saving this would have two effects: the flow of new capital investment would be smaller and the rate at which we could accumulate capital stock would be correspondingly smaller. As a result, the rate at which we could increase our wealth would be slower. Philippine/Ivatan living standards would suffer and there would probably be less money to spare for social and cultural development. We might also find that larger numbers of the Philippine/Ivatan skilled work force would be attracted by higher living standards in other countries or provinces. This would further slow down Philippine/Ivatan economic development. It is against this background that problems connected with foreign investment in the Philippines must be considered. See Batanes and Prices.