Question

What happens when a country specializes and how does it lead to interdependence and trade? Provide an example of a country and a product or service where the country has grown because of their decision to embrace specialization.

Answer 1

Specialization in business involves focusing on one product or a limited scope of products so as to become more efficient.

Countries will usually specialise in and export product,it use the maximum resourses of that country.Some countries have specialised features like high standered of living, transportation facility, area for occupation...etc.so these countries specialised in some products,the others are try to import frome there because of the rate of that product is very low comparing with production in their country.

Through this export of product so many impacts will reflect in the economy of that country.Increase GDP,increase Export,Increase foreign currency reserve,Increase infrastructure facilities,decreases unemployment...etc.These factors leads to a country into interdependence and trade efficiency.

for example

1. The Canadian economy which is rich in low cost land is able to exploit this by specializing in agricultural production.

2.The dynamic Asian economies including China has focused their resources in exporting low-cost manufactured goods which take advantage of much lower labour cost. This is now changing as China looks to move from a middle-income country by specializing in industries that use higher levels of knowledge and technology.

3.U.S. companies could make both bicycles and computers more efficiently and at a lower cost than foreign firms, the theory of comparative advantage tells us that the United States should specialize more in the production of the good—in this case, computers—where its efficiency and cost advantage is greatest.