Specialization refers to concentration of a country’s productive resources on a particular commodity. There are five levels of specialization.
1. Specialization by Industry
Industries specialize on a particular product.
Examples; Oil industry, Clothing industry, Chemicals industry.
2. Specialization by Firms
Firms specialize on a particular product or its components.
Examples; Spinning, Weaving, Dyeing, Fabric printing.
3. Specialization by Workers (Division of labour)
Workers specialize on a particular task or job.
4. Specialization by Regions
Regions specialize on a particular product.
Examples; Footwear in Leicester, Cotton in Lancashire, Insurance in
5. International Specialization
Countries specialize on a particular product.
Brazil for Coffee,
France for Perfumes, New Zealand for Milk products, for Electronics. Japan
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
1. It makes specialist workers quicker
2. It increase efficiency of labour
3. It gives workers a suitable job
4. It makes workers perfect
5. It leads to an increased pay for labours
6. It leads to better quality goods
7. It saves time and tools
8. It makes production more cheaper
9. It brings an enormous increase in output
10. It saves money invested on training
11. It leads to full utilization of tools and machinery
12. It makes invention possible
Disadvantages of Division of Labour
1. It leads to monotony
2. It restricts mobility of labour
3. It leads to loss of pride and responsibility
4. It leads to loss of craftsmanship and skills
5. It leads to factory evils like long hours of work
6. It increases risk of unemployment due to automation
7. It brings the problems of interdependence
8. It eliminates flexibility
9. It increases cost of training
10. It leads to lower quality goods due to boredom and mass production
Limitations to Division of Labour
1. Technical Problem
Some capital equipment can not be divided into individual operations.
2. Size of the Market
Division of labour is limited by the size of the market. It can only be applied where there is a mass demand for the product.
3. Scarcity of Capital
Division of labour requires a heavy expenditure on capital investment. Hence, Poor firms or countries can not apply division of labour.
There must be a suitable transport system to distribute the goods from the place of production to the place of consumption.
5. Barter Economy
Division of Labour can not be used in the Barter Economy where goods are exchanged for goods.
Automation refers to intensive use of machinery in the production process. It helps to produce more goods at lower cost leading to lower consumer price. On the other hand, it requires fewer labours and often leads to unemployment.
Mass Production refers to making components or products in comparatively large quantities using specialized machines on a continuous basis.