Specialisation is where individuals, firms and regions produce only one type of good/service
Specialisation increases productivity because if all energy is focused on one part of the production process or one good or service then this is done more efficiantly.
Individuals specialise when they choose particular subjects to study, or are trained to take part in only one part of the production process and they can produce more goods in a given period of time. While productivity is increased the disadvantages can include boredom, the cost of training, and the increased cost of employing better trained workers.
Firms specialise when they only produce one type of good or service. Because only one type of good is being produced productivity increases and cost of production falls. However if a rival company overseas can produce these goods more efficiantly and cheaper, or if the industry collapses there is nothing to fall back on.
Countries and regions can specialise- e.g. the UK specialises in finance. Regions can specialise when they have a particular resource e.g. steel in Sheffield used to be the industry. However if this industry collapses once again there is nothing to fall back on and unemployment can happen.
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