Reasons for National Specialisation (Cambridge (CIE) IGCSE Economics)

Greater competition may increase productivity. Higher  productivity lowers cost / unit for firms, which makes their goods more competitive internationally (exports)

International trade is beneficial for the firms that can compete globally.

However, some industries will be unable to compete and will go out of business

Increased exports can result in economic growth for the nation

Many firms in an entire industry may close leading to structural unemployment 

Economic growth usually leads to higher income and a better standard of living

Specialisation may create over-dependency on other countries' resources.

This may cause problems if conflict arises (For example,

Europe's reliance on Russian natural gas during the Ukraine crisis)

Income gained from exports can be used to purchase other goods from around the world (imports).

This increases the variety of goods available in a country

Specialisation using a country's own resources will lead to resource depletion over time.

Specialisation will increase the rate of resource depletion

Global efficiency in the use of scarce resources improves as resources are extracted by nations who have the competitive advantage

As multinational firms grow in size and increase market power, they can dictate prices and output in many regions.

They are also able to wield their power to influence governments and gain access to raw materials through bribery and corruption 

With an increase in specialisation and output, it is possible to generate significant economies of scale which further lower production costs

Start-up firms in developing countries (infant industries) find it harder to compete due to global competition - the ones that survive often have government support.

Global monopolies also exert large amounts of pressure on developing countries 

Over-specialisation in developing economies often occurs as they lack the finance to develop a diversified product base and end up over-specialising in commodity products.

This makes the country's GDP very dependent on the commodity prices