International Specialisation Flashcards
Define specialisation at an international level
countries concentrating on producing products they are best at making + in high demand
How does a country determine what it is best at producing
quantity and quality of resources
Advantages of International Specialisation for consumers (3)
Lower prices - more productive + economies of scale –> lower costs
High quality - specialisation results in repetition + getting better at producing product which increases quality
Better living standards - specialised countries can trade with others –> consumers can enjoy more variety of goods
Negatives of International Specialisation for consumers (3)
Monopoly - one country can gain control of global market of product, may abuse power to limit suppply + increase price
lack of quality control - firms from abroad may have different safety rules which could endanger consumers
Potential supply side shocks - over-reliance on single supplier could cause products to be unavailable due to certain events
Positives of International Specialisation for producers (3)
Economies of scale/Lower costs - can produce product at larger scale + increased productivity will lower costs
Cheaper raw materials - may lower price of firm’s supplier (buying in bulk)
Trade - engages exchange of ideas + technology
Negatives of International Specialisation for producers (2)
Dependent on other country’s demand - fall in demand abroad could result in unemployment + less output
Dependent on other country’s supply - fall in supply abroad could lower output
Positives of International Specialisation for economy (2)
Increases GDP - more efficient + less costs = more output
Trade - will have surplus amount of good it can use to trade to get goods it could never make
Low inflation - low costs of production
no idle resources - all put into specialised good
Negatives of International Specialisation for economy (2)
over-reliance on other country’s demand
over-reliance on other country’s supply
Define absolute advantage
being able to produce a good using fewer resources than other countries
Define comparative advantage
can produce at a low opportunity cost
How does comparative advantage change (2)
changing costs
changing quantity + quality of resources
Define international trade/external trade
exchange of good/services between countries
Advantages of International trade (3)
may be able to reach a wider market
may be able to take greater advantage of economies of scale
competition - may become more efficient
Disadvantages of International trade (6)
greater transport costs
buyers + sellers may speak different languages
differences in culture - some countries may not appreciate good being sold
trade restrictions can increase costs of firms
competition - firms may struggle to survive
foreign currencies - value will change over time
