Specialization refers to concentration of productive resources on a particular commodity. There are five levels of specialization.
Specialization by Industry
Industries specialize on a particular product.
Examples; Oil industry, Clothing industry, Chemicals industry.
Specialization by Firms
Firms specialize on a particular product or its components.
Examples; Spinning, Weaving, Dyeing, Fabric printing.
Specialization by Workers (Division of labour)
Workers specialize on a particular task or job.
Specialization by Regions
Regions specialize on a particular product.
Examples; Footwear in Leicester, Cotton in Lancashire, Insurance in London, Boat Building in Sunderland.
Countries specialize on a particular product.
Examples; Brazil for Coffee, France for Perfumes, New Zealand for Milk products, Japan for Electronics.
Division of Labour
Division of Labour refers to the break up of production process into small tasks to be done by a different worker.
The principle of Division of Labour was introduced by Adam Smith, the father of Economics. He suggested that without any help one worker could produce only ten pins in one day. However, in a pin factory where each worker performs only one task, ten workers applying division of labour principle, could produce a daily total of 48,000 pins. Output per person (productivity) rose from 10 to 4800 when the division of labour principle was used.
Advantages of Division of Labour
- It makes specialist workers quicker
- It increase efficiency of labour
- It gives workers a suitable job
- It makes workers perfect
- It leads to an increased pay for labours
- It leads to better quality goods
- It saves time and tools
- It makes production more cheaper
- It brings an enormous increase in output
- It saves money invested on training
- It leads to full utilization of tools and machinery
- It makes invention possible
Disadvantages of Division of Labour
- It leads to monotony
- It restricts mobility of labour
- It leads to loss of pride and responsibility
- It leads to loss of craftsmanship and skills
- It leads to factory evils like long hours of work
- It increases risk of unemployment due to automation
- It brings the problems of interdependence
- It eliminates flexibility
- It increases cost of training
- It leads to lower quality goods due to boredom and mass production