WARM-UP If you’ve ever played a team sport or played in a band, you know that each member plays a specific role and that all those roles must be coordinated for the team or band to function smoothly. Players on teams and musicians in bands specialize, and the group succeeds when these specialists can depend on one another to do their jobs. Nations specialize, too. But why? Think about the causes and effects of specialization. Why do nations produce only some goods and not everything their people need? How do nations deal with scarcity and obtain the goods that they don’t produce?

TRADE RESOURCE DISTRIBUTION AND SPECIALIZATION

STORES IN THE U.S. ARE FULL OF A VAST ARRAY OF APPLIANCES IMPORTED FROM OTHER COUNTRIES. LABOR, ONE OF THE FACTORS OF PRODUCTION, OFTEN DETERMINES WHERE APPLIANCE MAKERS MANUFACTURE THEIR GOODS.

HAVE YOU USED A COMPUTER OR BOUGHT A PAIR OF JEANS LATELY? THE CHANCES ARE GOOD THAT THE COMPUTER AND THE JEANS WERE MADE OUTSIDE THE UNITED STATES. BUT WHY DO AMERICANS BUY SO MANY GOODS FROM OVERSEAS? WOULDN’T IT MAKE A LOT MORE SENSE FOR US TO PRODUCE EVERYTHING WE NEED OURSELVES? THE ANSWER TO THESE QUESTIONS LIES IN TWO ECONOMIC IDEAS YOU ALREADY KNOW ABOUT: FACTORS OF PRODUCTION AND SCARCITY.

NATURAL RESOURCES Natural resources, along with climate and geographic location, help determine what goods and services an economy produces. Natural resources, along with climate and geographic location, help determine what goods and services an economy produces. Fertile soil and a good growing climate allowed the central United States to develop an economy based on agriculture. Fertile soil and a good growing climate allowed the central United States to develop an economy based on agriculture. Southwest Asia, with scarce farmland and water but large reserves of oil and natural gas. Southwest Asia, with scarce farmland and water but large reserves of oil and natural gas.

CHILE HAS MORE THAN A QUARTER OF ALL KNOWN COPPER RESERVES IN THE WORLD AND PRODUCES ALMOST FIVE TIMES AS MUCH COPPER AS THE UNITED STATES.

CAPITAL AND LABOR Human capital differs from labor. Human capital differs from labor. Labor refers to the size of a nation’s workforce. Labor refers to the size of a nation’s workforce. Every job requires human capital. E.x. A surgeon must learn anatomy and how to use a scalpel. Every job requires human capital. E.x. A surgeon must learn anatomy and how to use a scalpel. One way to measure a nation’s human capital is to look at the general educational level of the populace. One way to measure a nation’s human capital is to look at the general educational level of the populace.

UNEQUAL RESOURCE DISTRIBUTION A nation’s ability to exploit, or use, its physical resources is affected by culture and history. A nation’s ability to exploit, or use, its physical resources is affected by culture and history. Prolonged warfare may severely damage a nation’s farms, forests, and transportation systems. Prolonged warfare may severely damage a nation’s farms, forests, and transportation systems. In colonial America, a labor shortage led to the establishment of slavery. In colonial America, a labor shortage led to the establishment of slavery. What resource would a culture that bans education of women waste? What resource would a culture that bans education of women waste?

SPECIALIZATION AND TRADE Unequal distribution of resources creates a need for specialization (when individuals, businesses, or nations produce only certain goods and services). Unequal distribution of resources creates a need for specialization (when individuals, businesses, or nations produce only certain goods and services). In the United States, we grow wheat, corn, and other crops for which we have suitable soil and climate conditions. However, we cannot grow large quantities of coffee or bananas. In the United States, we grow wheat, corn, and other crops for which we have suitable soil and climate conditions. However, we cannot grow large quantities of coffee or bananas. An export is a good or service sent to another country for sale. An export is a good or service sent to another country for sale.export An import is a good or service brought in from another country for sale. An import is a good or service brought in from another country for sale.import

BARBADOS HAS LONG SPECIALIZED IN SUGARCANE AS ITS MAIN AGRICULTURAL PRODUCT, THOUGH TOURISM HAS RECENTLY BECOME THE ISLAND NATION’S CHIEF SOURCE OF REVENUE.

COSTA RICA HAS BEEN EXPORTING COFFEE SINCE THE EARLY 1800S. IT IS THE COUNTRY’S OLDEST AGRICULTURAL PRODUCT

IMPORTS AND EXPORTS Costa Rica specializes in growing and exporting coffee. The nation uses the money earned from selling coffee to import goods that it does not produce. Costa Rica specializes in growing and exporting coffee. The nation uses the money earned from selling coffee to import goods that it does not produce. In some cases, more than 70 percent of a nation’s export trade depends upon a single resource. Examples include Kuwait (petroleum and natural gas), Guinea-Bissau (cashews), and the Marshall Islands (fish). In some cases, more than 70 percent of a nation’s export trade depends upon a single resource. Examples include Kuwait (petroleum and natural gas), Guinea-Bissau (cashews), and the Marshall Islands (fish).

TICKET-OUT The scarcity of resources and resulting need for choice forces societies to? Why is this beneficial? The scarcity of resources and resulting need for choice forces societies to? Why is this beneficial? Do you think the United States would be better off if we were self-efficient for all goods and services? Or is specialization more effective? Explain your answer and support your opinion. Do you think the United States would be better off if we were self-efficient for all goods and services? Or is specialization more effective? Explain your answer and support your opinion.