What is meant by economic diversification?

Economic diversification can be defined as the shift toward a more varied structure of domestic production and trade with a view to increasing productivity, creating jobs and providing the base for sustained poverty-reducing growth.

What is economic diversification PDF?

Economic diversification is the process of shifting an economy away from a single income source toward multiple sources from a growing range of sectors and markets. Traditionally, it has been applied as a strategy to encourage positive economic growth and development.

Why does economic diversification occur?

Diversification helps to manage volatility and provide a more stable path for equitable growth and development. Successful diversification is all the more important now in the wake of slowing global growth and the imperative in many developing countries to increase the number and quality of jobs.

What is an example of economic diversity?

For example, a region that relies predominantly on only oil production is not economically diverse, while another that sports a vibrant manufacturing and personal services sector in addition to oil is said to be more economically diverse.

What is Brunei main source of revenue?

The economy of Brunei, a small and wealthy country, is a mixture of foreign and domestic entrepreneurship, government regulation and welfare measures, and village traditions. It is almost entirely supported by exports of crude oil and natural gas, with revenues from the petroleum sector accounting for over half of GDP.

What do we know about economic diversification in oil producing countries?

For example, oil exporters might find it easier to diversify if they have larger domestic markets, which allow local firms to expand, and provide them with learning-by-doing opportunities that allow them to become competitive in world markets.

Why is diversification important?

When you diversify your investments, you reduce the amount of risk you’re exposed to in order to maximize your returns. Although there are certain risks you can’t avoid, such as systemic risks, you can hedge against unsystematic risks like business or financial risks.