6.1 - International Specialisation

Question 1

What are the four levels of specialisation?

Answer 1

• Individual level
• Business level
• Regional level
• National level

Question 2

Individual level specialisation

Answer 2

Where a worker specialises in a particular task

Question 3

Business level specialisation

Answer 3

A firm specialises in a specific industry

Question 4

Regional level specialisation

Answer 4

A whole area (e.g. Silicon valley) specialises in an industry

Question 5

National level specialisation

Answer 5

As countries seek to trade they specialise in certain products to export

Question 6

Two main factors which allow a country to specialise

Answer 6

1. Superior resource availability
2. Cheaper production methods

Question 7

Superior resource availability as a factor of specialisation

Answer 7

• quality of the resource is relatively better than other nations: country will be able to charge higher prices
• alternatively, if a country has a higher quantity of the resource: able to lower prices & drive competitors out of business by specialising in its extraction & sale

Question 8

Cheaper production methods as a factor of specialisation

Answer 8

• lower costs of production: likely that they will be able to lower selling prices & gain a lead in the international market share
• some are able to produce cheaply using machinery or technological innovation
  * others do so by providing large labour force which can perform manual tasks very cheaply

Question 9

Advantages of national specialisation (name 3)

Answer 9

• greater competition increases productivity -› lower cost -› greater international competition
• increased exports -› economic growth -› higher income and better standard of living
• income from exports can be used to purchase imports -› increases variety of goods
• global efficiency in the use of scarce resources improves
• more economies of scale through specialisation -› lowers production costs

Question 10

Disadvantages of specialisation (name 3)

Answer 10

• some industries are unable to compete globally (lack of demand etc.) and will go out of business
• firms in whole industries may close -› structural unemployment
• may create over-dependency on countries’ resource -› may cause scarcity if conflict arises
• increased resource depletion
• MNCs can dictate prices and output and wield their power to influence the goverment -› gain access to material through corruption
• infant industries find it harder to compete due to global competition
• over-specialisation in developing countries as they lack the finance to develop a diversified product base -› specialise in commodity products -› GDP very dependent on commodity prices