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# Colonial Economic Specialization

## Definition

The concentration of economic activity in areas where colonies have natural advantages, including agricultural production, raw material extraction, and specific manufacturing activities. Specialization increases efficiency and allows colonies to trade for other needed goods.

## Source Chapter

Book IV, Chapter 7

## Context

Smith advocates economic specialization as the most efficient development path for colonies, arguing that their natural advantages in agriculture and resource extraction should guide their economic focus. He contends that monopoly policies that force artificial diversification reduce overall efficiency.

## Economic Domain

Production

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