1. Downsides of Specialisation and Trade
Y13 Economics – last part of Specialisation notes relating to Comparative Advantage

2. Advantages of specialisation and trade
The advantages of specialisation and trade include: • lower prices and more choice for consumers • larger markets and economies of scale for firms • higher economic growth and living standards (based on the law of comparative advantage).

3. Disadvantages of Specialisation and Trade
Deficit on current account if a country’s goods and services are uncompetitive OR fall in global demand for product
=↑ unemployment
And if currency weakened,
=↑ domestic inflation for imported goods

4. Disadvantages of Specialisation and Trade
Dumping by foreign firms, i.e. selling at below average cost = ↑ unemployment

5. Disadvantages of Specialisation and Trade
Sensitivity to tariffs, quotas or other forms of protection

6. Disadvantages of Specialisation and Trade
↑ economic integration = Unbalanced development of CA industries
=↑ exposure to external shocks

7. Disadvantages of Specialisation and Trade
Global monopolies as global (transnational) companies become larger

8. Disadvantages of Specialisation and Trade
Monopsony power of MNCs in LDCs = ↓ prices for raw materials

9. Disadvantages of Specialisation and Trade
Low levels of start-up in LDCs (EoS of existing firms)

10. Disadvantages of Specialisation and Trade
Wars and natural disasters may have a catastrophic effect on world trade. Hence countries often make a strategic choice about essential goods and services