FACTORS INFLUENCING DIVISION OF LABOUR
MARKET SIZE-If the market is large enough to absorb all produced goods and services, the division of labour will be big and opposite.
FIRM SIZE-If the firm is small the number of workers in various processes will be few and division of labour as well will be limited and vice versa.
THE LEVEL OF TECHNOLOGY-If there is high technology in production, automatically there is high division of labor and opposite.
SIZE OF LABOUR FORCE AND AVAILABLE CAPITAL-If there is big number of workers and enough capital for intensive investment, the division of labor is carried at maximum and vice versa.
FORMS OF DIVISION OF LABOUR/SPECIALIZATION
The division of labor may take any of the following forms;
1) TRADE OR PROFESSION DIVISION–In this type people concentrate on a particular trade or profession e.g. trade as fishing, farming etc or profession e.g. teaching, nursing, accounting etc.
2) SEX DIVISION-People perform their duties according to sex e.g. most nurses, Barmaids, housemaids are women and such workers as soldiers, fishermen, electricians are men.
3) REGIONAL DIVISION-Regions of a particular country specialize in production of a particular commodity e.g. such regions as Mbeya, Kilimanjaro and Kagera in the production of coffee and banana.
4) TERRITORIAL DIVISION-The countries do specialize in production of commodities e.g. Tanzania and the rest of African countries specialize in production of agricultural products and European countries in capital goods.
5) PROCESS/COMPLEX DIVISION-A total labour process is divided into a number of stages to be performed by different workers e.g. distinguished workers in spinning, weaving, dyeing in the textile factory.
6) AGE DIVISION-Work is divided according to age e.g. the young persons perform light duties and old ones heavy duties.
SPECIALISATION AND EXCHANGE
EXCHANGE DEFINED
EXCHANGE is a system whereby individuals and countries depend on each other for the supply of goods and services.
NATURE OF EXCHANGE
-Human wants are unlimited.
-Human wants are satisfied by goods and services which have utility or satisfying power.
-The individuals cannot satisfy all their wants because the resources at their disposal are limited.
-Therefore human wants or needs can be satisfied by exchange of goods.
-Different individuals or countries specialize in the production of different goods and services.
-They exchange goods in order to satisfy their wants.
-Therefore exchange is the result of specialization and they are interdependent.
-Exchange is the subject matter of commerce.
SIGNIFICANCE OF EXCHANGE
-It enables the individuals and countries to get maximum satisfaction out of limited resource.
– Through maximum satisfaction of needs and wants, the living standard of consumers is improved.
FORMS OF EXCHANGE
There are two forms of exchange:
-Barter system, and
-Exchange by money.
BARTER SYTEM OR COUNTER TRADE
Barter system is the exchange of goods for goods.
-For example a person exchanges maize for cloth.
-Barter system was prevailing when money was not invented.
-This system is not common these days.
-Barter transactions are transactions of goods for goods.
MERITS OF BARTER SYSTEM
Barter system has the following advantages:
- i) It preserves scarce foreign exchange.
- ii) It enables exchange to take place without looking for foreign exchange.
iii) It widens the market of commodities.
- iv) It encourages trade among less developed countries, which experience shortage of goods.
- v) The effect of price fluctuations is avoided since bargaining is in terms of physical quantities.
- vi) It employs many people who are involved in handling physical commodities (imports and exports).
DEMERITS OF BARTER SYSTEM
Most demerits of barter system arise out of the fact that the commodities exchange do not posses the qualities of money and the exchange system misses the functions of money.
The following are demerits of barter system:
-There is no generally acceptable means of settling debts and obligations.
-There is no medium of exchange and every transaction must involve a double coincidence of wants where the seller must first look for someone who was in need of his or her commodity and at the same time has the commodity which he or she (the seller) wants. This is time consuming.
-There is no unit of account to affect or carry out business transactions.
-There is no measure of value to reflect the relative qualities and quantities of commodities to be exchanged.
-There is no convenient store of wealth since most commodities are bulky perishable.
-There is no standard of deferred payments or means to facilitate payment of debts and transactions to some future time. Commodities over time change in terms of age, value and quality.
-There is nothing to facilitate specialization to take place since there is no generally acceptable way of paying wages, rent and interest.
-There is problem of transporting the bulky commodities to use in exchange.
-Most commodities are not divisible to smaller denominations to make transactions possible.
-It reduces the inflow of foreign exchange.