How does specialization encourage trade between countries

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Develop and improve products. List of Partners vendors. Specialization , along with the complementary concept of the division of labor, occurs when the innate inequalities of human productive output are intensified along different skills. An individual becomes economically specialized when he focuses his productive efforts on an increasingly narrow range of tasks.

The most obvious economic impact of specialization can be seen in the tendency for individuals to choose different vocations that are more in line with their interests, skills, opportunities, and education. Adam Smith , who is often referred to as the father of economics, believed that specialization and the division of labor were the most important causes of economic progress. Total output is increased when one worker specializes in one type of activity and trades with other specialized workers, said Smith.

He pointed out that specialization could occur at the individual level, along different firms or even countries. Economic actors that specialize in a task become more proficient at it.

It's the same reason why professional athletes practice before a game or why children write their letters over and over again in preschool; repetition and muscle memory increase productivity. Rather than having every actor practice at producing all different kinds of goods or services, human beings naturally tend to specialize in narrow fields and then trade with one another.

This creates a division of labor. Even if someone were naturally better at producing every kind of good or service than everyone else — what economists call an " absolute advantage " in trade — it still makes sense to specialize in just one area and trade with those who are less productive. How has the distribution of oil affected the development of Southwest Asia?

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Chapter 1 Slide 2. Students should be seated. Why is it necessary to exchange currencies in order for nations to trade? Explain why international trade requires a system for. Similar presentations. Upload Log in. My presentations Profile Feedback Log out. Log in. Auth with social network: Registration Forgot your password? Download presentation. Cancel Download. Presentation is loading. Please wait. Copy to clipboard.

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If Nigeria passed a law that taxed all imports from South Africa, this would be known as A a tariff. Turn and Talk. Identify the phenomena and why it occurs.