1.1.5 Specialisation and the Division of Labour

Question 1

What is specialisation?

Answer 1

The concentration of production on a narrow range of goods or services
- Allows for efficient production
- Needs to be mutually beneficial trade to get goods from other countries/ export your goods

Specialisation can occur:
- Within businesses and organisations
- In a country (e.g. Bangladesh is a major producer and exporter of textiles)
- In a region (e.g. Oxford is the site of a Mini plant)- this can lead to the benefits of agglomeration

Question 2

What are the advantages of specialisation?

Answer 2

• Higher output hence more trade hence more growth
• Wider range of goods and services (surplus can be traded with other economies)
• Greater allocative efficiency (allows you to overcome issues of scarcity- can produce goods at a lower opportunity cost)
• Higher productivity through better use of workers (lowers the cost of production which can be passed onto the consumer by lower prices)
• Improvements in quality
• Trade means overall prosperity increases

Question 3

What are the disadvantages of specialisation?

Answer 3

• Finite resources (companies/ countries that are very specialised and require certain inputs e.g. oil could be affected if that resource is depleted)
• Changes in fashion/ tastes
• De-industrialisation (high rates of unemployment in other industries)
• National interdependence (need mutually beneficial trade for this to work)

Question 4

What is low economic complexity?

Answer 4

Economy is highly specialised and there is low diversification
e.g. economy of Malawi where over 90% of exports of goods are agriculture/ mining & extractive products hence Malawi has high primary dependence and low economic complexity

Question 5

What is division of labour?

Answer 5

Breaking down the production process into separate tasks upon specialisation
-Occurs when workers specialise on very specific tasks
- the work is divided up into smaller parts and each worker is responsible for a very small part of production

Question 6

What are the advantages of division of labour?

Answer 6

• Each worker specialises in task for such that worker is best suited
• The worker only has to be trained in one task
• Less time is wasted as a worker no longer has to move from one task to another
• In manufacturing, this approach allows production line methods to be employed and allows an increased use in machinery. In turn, this helps to increase productivity and reduce average production costs which increases profitability hence can increase wages
• For consumers, this results in lower prices, higher quantity, higher quality and more choice

Question 7

What are the disadvantages of division of labour?

Answer 7

• It is limited by the size of the market e.g. you wouldn’t mass produce Porsches
• Doesn’t work for niche products
• For anything custom made, large scale specialisation is not likely to be possible
• Mass production can mean that products lack character
• Some products can’t be mass produced e.g. travel
• **Monotonous jobs **
  Low morale and boredom can lead to more mistakes and a lack of quality which can affect customer loyalty
• Workers have a narrow skill set which could be difficult if they lose their job (not employer’s concern) but could also make it difficult for employers to recover from absences as will have to employ more people which increases cots (high absenteeism is likely if the job is monotonous) - this can also be affected by high worker turnover
• Firms are vulnerable to asymmetric shocks (external shock that impacts economy) e.g. if demand changes quickly away from product, firm will find it difficult to switch to producing something else

Question 8

Adam Smith and the Division of Labour

Answer 8

• Wrote the The Wealth of Nations (1776) and is seen as the founding father of modern economics
• Owned a pin factory
• Discovered that 10 workers could individually produce 20 pins each day hence 200 pins in total per day however by separating production into 18 stages, each worker could become more specialised hence output would increase to 48,000 per day (240 x more productive)

Question 9

What is an asymmetric shock?

Answer 9

External shock that impacts the economy e.g. collapse of currency or extreme weather event. It is unexpected and can’t be controlled.