ACTIVITY 3.

1. It is possible for producers in lower middle-income countries to specialize in producing

sugar because sugarcane grows well in these environments. Under the best conditions
for the sugarcanes to be grown, and with the enough natural resources & low labor cost,
producers in lower middle-income countries can specialize in producing. Hence, one can
conclude that factors of production affect a lot. (Land and labor are the two factors that
allow the lower middle-income countries in Africa & in the Caribbean to specialize.)
Furthermore, producers in the UK can specialize in producing sugar because of capital
and enterprise. Capital includes physical resources made by humans such as
machinery, information technology, and electricity & water supplies. These are very
important for continuing the production process and there is enough capital in the UK.
Also, good enterprise is present in the UK. When the lower middle-income countries
produce and export crops (sugarcane) to other countries, the UK can create a new
product out of imported sugarcane by using their human capital and physical resource
(capital).
2. The benefits for the countries will be, first, as sugarcane is an important source of sugar,
they can export it to many other countries and earn a huge profit easily. Secondly, the
production can be activated, especially the labor part. As sugar production requires
manpower, there will be more hire of workers which will lead to the result of activation of
labor. There will be more job opportunities.
However, there are risks as well. One of the risks is the pace of technological change.
The specialist skills and experience that the producers have acquired may become
redundant as the economy develops. And, high production cost may be one of the risks
too. As the cost is high, if the result of cultivation is not good, the amount of profit will
decrease (as it gets affected by lots of variables such as climate). This is a huge risk for
the producers.