International specialisation

What is one benefit of international specialisation?

May/June 2015

What is one benefit of international specialisation?

May/June 2015

There are worries that chocolate prices could climb sharply over the next few years. This is being driven by growing demand for chocolate, especially in emerging countries, together with supply difficulties in the countries that grow cocoa beans. Cocoa beans, which are the key ingredient in chocolate, are produced mainly on the west coast of Africa by small farms that rely on labour-intensive methods. In 2012 Côte d’Ivoire (Ivory Coast) supplied 37% of the world’s output of cocoa beans, with Indonesia next at 13%. Côte d’Ivoire is increasingly recognised for providing high quality cocoa beans. Focusing on the product that the country’s resources suit best has raised output there. Gross Domestic Product per head increased to US$1240 in 2013. However, some farmers and farm workers still live on less than US$2 a day. In Indonesia, the income of most cocoa farmers and farm workers rose as the country’s average income increased between 2013 and 2014. Their purchasing power was nevertheless reduced by the consumer prices index rising from 108.0 in 2013 to 115.2 in 2014. Although healthcare in Indonesia is improving, with more doctors per head, the government is trying to improve education standards. Problems facing cocoa bean producers include an ageing labour force, and the industry has difficulty attracting younger farmers and farm workers. The industry also repeatedly suffers from pests and diseases, including black pod disease. Meanwhile, people in Asia, particularly China, are eating more chocolate and drinking more chocolate drinks. People in the United States of America and the European Union are also consuming more chocolate, although growing concerns about the health effects of eating large amounts are starting to affect demand. For many people, though, chocolate is addictive. Chocolate producers aim to exploit this by widening the difference between revenue and costs. Most chocolate producers are from developed countries and most are public limited companies trying to satisfy their shareholders. These producers use their market power to keep the price paid for cocoa beans fairly low while the price charged to consumers who buy their chocolate is kept relatively high.

May/June 2016

Which factors could promote international specialisation among countries?

May/June 2017

Botswana stands as the world’s biggest diamond producer. In 2015, diamonds made up one third of the nation’s Gross Domestic Product (GDP) of US$18 billion and 80% of its exports. At present, most of the country’s earnings come from mining and selling rough (uncut) diamonds. From a 1.5 carat rough diamond, it earns only US$700. After that, the diamond is cut, polished and finished, usually in another country. India leads the market for cutting and polishing diamonds. In India, the cost of cutting and polishing diamonds is only a quarter of the cost in Botswana. The worldwide average cost of finishing a 1.5 carat diamond is US$8000. The diamond is then sold to the customer with a 25% profit margin. Botswana is seeking to build industries linked to diamond mining, including cutting, polishing and jewellery production such as diamond rings. Fig. 1 illustrates how the global market for diamond rings changed in 2015. The Botswanan Government has also urged the world’s largest diamond company to establish itself in Gaborone, the capital of Botswana. Some government ministers, though, worry that Botswana relies too heavily on diamonds. They point out that diamonds exist in limited supply and encourage the government to promote diversification. Alongside diamonds, the country also has several other advantages. These include good infrastructure, a developed education system and free hospital treatment.

May/June 2017

The table presents the rice yield for four countries. Country and rice yield (kilos per hectare): Japan 64, China 53, Bangladesh 20, Thailand 20. What conclusion may be drawn from this information?

May/June 2018

Which is the most likely disadvantage of international specialisation?

May/June 2019

What is one disadvantage of greater international specialisation?

May/June 2021

Study the source material carefully before you answer Question 1. Source material: Chilean cherries Content removed because of copyright restrictions. Relying on only a few products can be hazardous for a country. Content removed because of copyright restrictions. However, there is evidence of market failure and of inequality in the way resources are allocated.

May/June 2021

What is one benefit to a firm of specialisation at a national level?

May/June 2024

What factor will raise the degree of specialisation in an economy?

May/June 2025

Which factor is most likely to promote international specialisation?

Oct/Nov 2015

What is most likely to promote international specialisation?

Oct/Nov 2015

What factors encourage international specialisation?

Oct/Nov 2016

What causes international specialisation?

Oct/Nov 2016

Which policy would promote a higher level of international specialisation?

Oct/Nov 2017

Which is the most suitable example of specialisation?

Oct/Nov 2017

The Gulf countries, several of which are highly specialised, bring in a large share of the food eaten by their people. For instance, the United Arab Emirates imports $83\%$ of all the food that it consumes. The Gulf countries are attempting to cut their dependence on imported food.

Oct/Nov 2017

In 2016, a worldwide peanut shortage pushed up their price. China, which has long been a net exporter of peanuts, was close to becoming a net importer. South Africa, an exporter of premium, high-cost peanuts used in chocolate confectionery, suffered the worst drought on record. In that same year, a larger number of South African farmers applied for bank loans.

Oct/Nov 2018

Which factor is most likely to reduce an economy’s incentive to specialise internationally and trade?

Oct/Nov 2020

A country concentrates on the production of steel, toys and textiles. What is one disadvantage of specialisation for the country’s workers?

Oct/Nov 2021

Malaysia and Indonesia focus on producing palm oil. What is one disadvantage of specialisation?

Oct/Nov 2021

What factors might promote international specialisation among countries?

Oct/Nov 2024

What factors promote international specialisation?

Oct/Nov 2024

What is one benefit of international specialisation?

Oct/Nov 2025

What is one probable advantage of greater national specialisation?

Oct/Nov 2025