Specialisation by Country (Cambridge (CIE) IGCSE Economics): Revision Note

The basis for specialisation by country

• Specialisation occurs on several different levels

  • On an individual level where a worker specialises in a particular task

  • On a business level, e.g. one firm may only specialise in manufacturing drill bits for concrete work

  • On a regional level e.g. Silicon Valley has specialised in the tech industry

  • On a national level as countries seek to trade e.g. Bangladesh specialises in textiles and exports them to the world 

Factors that allow a country to specialise?

1. Superior resource availability

• If the quality of the resource is relatively better than other nations, the country will be able to charge higher prices for it

• Alternatively, if a country has a higher quantity of the resource then it may be able to lower prices and drive competitors out of business by specialising in its extraction and sale

2. Cheaper production methods

• If the country has lower costs of production, then it is very likely that they will be able to lower selling prices and gain a lead in international market share

• Some countries are able to produce cheaply using machinery or technological innovation, whilst others do so by providing a large labour force, which can perform manual tasks very cheaply

Advantages and disadvantages of national specialisation

• Specialisation delivers incredible opportunities to countries, but it also has disadvantages that need to be recognised and protected against