Two Main Problems associated with Specialization on a national level.

 

A country gains Comparative Advantage in producing a particular good or service by producing it at a lower cost than other countries. A country will then proceed to specialize in producing those goods and services that it has a comparative advantage in. Specialization has its advantages and its disadvantages. Recently, many countries are shifting from old industries in which they have lost comparative advantage to new ones. When a country changes from one industry to another the obvious disadvantages are:

  • Loss of Jobs

              AND

  • Idle Resources such as machinery, human skill that cannot be used in the other industry

Before a shift can be made from one industry to another , countries have to put facilities in place to deal with the negative aspects of the change.

Jamaica is a case in point. Jamaica used to specialize in agricultural produce such as sugar cane, banana etc. As a result, there are many small farmers in Jamaica. However, due to lack of technology, investment and other factors Jamaica has lost its comparative advantage in farming and is now shifting to other goods and services. This has left many small farmers without a market for their produce.

Countries have to realize that specialization and a Global market require the best in technology, knowledge and expertise to gain that comparative advantage.

 

Author: Shauna Lowe

 

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