SPECIALISATION
INTERNATIONAL SPECIALISATION
Produce one good / product ONLY → cannot produce (not enough resources) other
goods → import some goods from other countries
If a country only produces one good, will have to rely on import because we cannot
produce or rely on themself
You as a country decide to produce something. There will be a further impact, which
is that you may not have other things you need and may only realise that it may not
work out. Therefore, import is needed.
International trade is needed.
Advantages and disadvantages of trade at a national level
★ Absolute advantage
You as a country is better or much more efficient at producing something compared
to another country
When one country can produce more efficiently than another either by producing
more of a good or service with the same amount of resources or producing the same
amount of a good or service with fewer resources.
E.g. India has an absolute advantage in operating call centres because of its
abundant and cheap labour force.
EXAMPLE 1:
Rice Car
Indonesia 200 units 1 unit
USA 100 units 5 units
Indonesia has an absolute advantage in the case of rice.
The US has an absolute advantage in the case of cars
International trade can and will happen. Indonesia will be able to focus on producing
rice, while the US will be able to focus on producing cars.
INTERNATIONAL SPECIALISATION
Produce one good / product ONLY → cannot produce (not enough resources) other
goods → import some goods from other countries
If a country only produces one good, will have to rely on import because we cannot
produce or rely on themself
You as a country decide to produce something. There will be a further impact, which
is that you may not have other things you need and may only realise that it may not
work out. Therefore, import is needed.
International trade is needed.
Advantages and disadvantages of trade at a national level
★ Absolute advantage
You as a country is better or much more efficient at producing something compared
to another country
When one country can produce more efficiently than another either by producing
more of a good or service with the same amount of resources or producing the same
amount of a good or service with fewer resources.
E.g. India has an absolute advantage in operating call centres because of its
abundant and cheap labour force.
EXAMPLE 1:
Rice Car
Indonesia 200 units 1 unit
USA 100 units 5 units
Indonesia has an absolute advantage in the case of rice.
The US has an absolute advantage in the case of cars
International trade can and will happen. Indonesia will be able to focus on producing
rice, while the US will be able to focus on producing cars.
