International specialisation | International Economics

Explore the concept of international specialisation in this presentation. Learn how countries focus on producing goods and services where they have a comparative advantage, leading to increased efficiency and economic growth.

1. International
specialisation
Economics

2. What is specialisation?
•It involves focusing on a particular good or
service by an individual, firm, region or
country.

3. Specialisation by individual
•An individual concentrates on a specific
occupation/ job, e.g. engineer, doctor,
accountant, etc.
•Improves worker’s skills, increases quantity
and quality of goods or services produced.

4. Specialisation by firms
•A specialist firm would provide a particular
product, e.g. clothing, fast food, paints, etc.

5. Specialisation by region
•A particular area, location or city may focus
on offering a good or service for different
reasons, e.g. favourable climatic conditions
for agriculture, natural endowment, etc.

6. Specialisation by country
•A country focuses on a particular product due to
natural reasons, low-cost advantage or superior
factor endowment (highly skilled labour), etc.
•This is also known as international specialisation.

7. Advantages of international
specialisation
•Increased national output.

8. Advantages of international
specialisation
•Economies of scale lead to cost savings and
lower prices.

9. Advantages of international
specialisation
•Efficiency/ productivity increases.

10. Advantages of international
specialisation
•Access to greater variety of high quality
products across the world.

11. Advantages of international
specialisation
•Increased price competitiveness and trade.

12. Disadvantages of international
specialisation
•A country affected by problem in another
country it relies on for other products, e.g.
exchange rate fluctuations, recession.

13. Disadvantages of international
specialisation
•No variety for citizens who may have to rely
on imports (leads to current account deficit).

14. Disadvantages of international
specialisation
•Loss of jobs and income if there is a problem
with that product, e.g. bad weather for
agricultural products.

15. Disadvantages of international
specialisation
•Country may suffer if other countries come up
with alternative products, e.g. alternative to
fossil fuels.

16. Disadvantages of international
specialisation
•Labour immobility can cause structural
unemployment (as workers can’t easily
change jobs).

17. Disadvantages of international
specialisation
•Low tax revenue as firms incur cost to hire and
train new workers due to high labour turnover
of bored workers.