SPECIALISATION

Specialisation is occurs when an economic agent chooses to concentrate on
producing a particular good or service and then trade with others in order to
survive.


Nations can specialise, e.g.:
•  Saudi Arabia – oil.
•  South Africa – mining.
•  Columbia – coffee.

Regional specialisation can also occur, e.g.:
•  London – finance.
•  Torquay – tourism.
•  Cheddar - cheese

Firms specialise in certain goods or services, e.g.:
•  NatWest – banking.
•  Ford – cars.
•  Woolworths – retailing.

Specialisation by individuals is called the division of Labour. Adam Smith
described the effects of the division of labour on pin workers in 1776. He
stated that one worker might be able to make 20 pins a day, but if division of
labour occurred and 10 workers each specialised in a different task he
estimated they could make 48,000 pins.
This increase in labour productivity occurs for a number of reasons:

•  Specialisation allows workers to gain skills in a narrow range of tasks.
This means workers are far more productive then if they were a jack of
all trades.
•  It makes it cost effective to provide workers with specialist tools, e.g., it
wouldn't make sense to give every farm worker a tractor, but it's
possible to provide a group of workers a tractor they can share.
•  Time is saved as workers don't constantly have to change tasks, e.g.
moving from one workstation to another.
•  Workers are able to specialise in tasks they are best suited to.
The division of labour does have limitations. Jobs that are very narrow can
become tedious and boring. Workers will do everything possible to avoid
work, e.g. calling in sick, long break, frequent visits to the toilet. This will result
in a drop in productivity as output per worker falls.
The size of the market might limit the degree of specialisation. A chemist or
post office might open in a small village, but finds that he has to sell other
products in order to survive.

Over specialisation has disadvantages. African countries are often dependant
on only one crop. If the price falls or crop fails, it can be a disaster for the
economy and workforce.
The north of England has suffered greatly due it's dependence on heavy
manufacturing. Shipyard, steel and textile workers paid a heavy price for
specialisation when demand for their skills fell.