FOUNDATIONS OF GLOBAL ECONOMIC

INTERDEPENDENCE:
SPECIALIZATION,
COMPARATIVE ADVANTAGE,
TRADE, AND GLOBALIZATION

Kingsly W.

01. Specialization
Specialization refers to the
concentration of productive
efforts on a limited number of
activities or industries.

Specialization leads to higher

efficiency and productivity
because it allows resources to be
allocated more effectively,
leading to increased output and
02. Comparative Advantage
economic growth.
Comparative advantage is the ability of a
country, individual, or firm to produce goods
or services at a lower opportunity cost than
others.

When each country specializes in

producing goods or services for which it
has a comparative advantage and trades
with others, overall welfare increases as
resources are utilized more efficiently

03. International Trade

International trade refers to the exchange of
goods, services, and capital across
international borders.

Through international trade, countries

can access a wider variety of goods and
services, achieve economies of scale,
enhance competitiveness, and foster 04. Globalization
economic growth. Globalization is the process of
increased interconnection and
integration of economies,
cultures, societies, and
politics across the globe.

Globalization has led to

the expansion of
international trade, the
growth of multinational
corporations, the spread
of information and ideas,
and the emergence of
global supply chains.