Economic diversification for sustainable development in. Diversification of the economy and broadbased economic development are critical for the longterm sustainable development in resourcerich developing countries rrdcs for two reasons. At independence in 1960, the main sources of its revenue were agriculture and solid minerals. Diversify meaning in the cambridge english dictionary. Developing countries as a whole have been remarkably successful in diversifying their economies and their export structures.
Qatar, a traditional monarchy, is diversifying its oildependent economy by becoming host to one of the largest u. Three of the four case study countries suffered from this phenomenon over the last. The most prominent change has been the shift towards industry. The level of risk that an investment portfolio is exposed to can be managed through diversification. India acquires its major share of production revenues from the rural agricultural sector of the economy.
Its based on manufacturing, agriculture, trade, etc. Diversification is a strategy that mixes a wide variety of investments within a portfolio. Elizabeth davis, nm economic development department. The concept of economic diversification in the context of response measures technical paper by the secretariat summary this technical paper is part of the technical materials prepared in response to the mandate from the conference of the parties cop to. Understanding it within the nigerian context part 1. Jun 06, 2016 fundamentally, the 2030 plan involves diversifying the economy away from oil and towards a wide array of other productive activities e. Learn how to maximize your return without increasing substantial risk in your portfolio. When jobs and revenues are concentrated in just a few types of businesses, a states economic stability becomes sensitive to volatile business cycles.
The regions then derived their revenue from the resources within their regions. Economic diversification guidance note trade and competitiveness global practice draft, april 3, 2017. Oct 01, 2017 nigeria today operates a mono commodity economy with total dependence on petroleum resources. Diversification definition, the act or process of diversifying. When they economy is doing well, banks lend more and create more money. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. First, the high level of export concentration makes these economies vulnerable to commodity price fluctuations figure 4. What is the definition of economic diversification. Its a mantra mothers everywhere have been telling their children for generations. The first paper in this series examines the role of community colleges in preparing the workforce for economic diversification, looking at the topics of soft skills development, workforce development.
In a world where the probability that a region will enter a new economic activity increases with the presence of related activities, one of the main challenges of regional economic development is. On the one hand theories of growth and structural transformation suggest that a diversifying economy is a growing economy that will create new jobs and avert downward pressure on rural wages5. The country is greatly endowed with many natural resources across different states within the federation. Economic diversification falls into two major types. Lack of economic diversification is associated with increased economic vulnerability such that external shocks can undermine the development process. Ceela mcelveny and gary tonjes, albuquerque economic development. Advantages and disadvantages of diversification in agriculture environmental sciences essay. A community with a diversified economy is better equipped to withstand periods of change if one sector of the economy declines rapidly others can compensate to provide jobs and tax revenue. It is also possible to enhance investment returns by diversifying your holdings.
Apr 29, 2016 how can wyoming diversify its economy. The importance of a diversified economy dont put all your eggs in one basket. Strategies for economic diversification in the resourcerich. Economic diversification is a process of broadening the range of economic activities both in the production and distribution of goods and services. The predominant way of thinking about it is what is known as economic complexity, which is the idea that countries should not be dependent upon a small number of products. Aug 15, 2019 diversification is a technique that reduces risk by allocating investments among various financial instruments.
The way man attempts to get a living differs in major respects from time to time and from place. Portfolio holdings can be diversified across asset classes and within classes, and also geographicallyby. A country that has a good diversified economy is less susceptible to market forces. Diversification of an economy means that if one business falls and breaks, the effect on the overall economy within the region will be minimized. Economic diversification in resource rich countries. Module 2 economy its meaning and types about economy 26 notes 4. It also has the fifthlargest proven natural gas reserves and is considered an energy superpower. A diversified economy is one that is based on more than one thing. In finance, diversification is the process of allocating capital in a way that reduces the exposure to any one particular asset or risk. Where are the familiar words we ordinarily associate with economics. Guyana this year is aiming to expand output in the traditional industries of sugar, rice, mining and manufacturing, while diversifying the national economy. Case studies in economic diversification economy, but the cases primarily lay out the elements of each countys economic diversification efforts. Diversifying the economy via sector workforce development i, the undersigned, do hereby certify that i have express authority to sign this proposal on my behalf or on behalf of the abovedescribed entity, organization, or governmental entity. This means the money supply automatically moves up and down based on how the economy is doing, which can be a big problem for governments who want to control the economy by playing with the money supply.
Research questions employing an empirical and comparative approach, this paper will analyse the economic diversification programmes undertaken in the gcc countries. One of the eternal challenges of economic development is how to identify the economic activities that a country, city, or region should target. Diversification is a technique that reduces risk by allocating investments among various financial instruments. Economic diversification is vital to longterm economic growth. Economics, scarcity, and choice a good definition of economics, which stresses the difference between economics and other social sciences, is the following. Diversifying the nigerian economy, pathway to achieving. There is a need to find placebased approaches for diversifying the. Fast growth in export revenues from resource extraction is invariably accompanied by exchange rate appreciation pressures, or the socalled dutch disease, that reduces competitiveness of other traded sectors of the economy figure 4. Traditionally, it has been applied as a strategy to encourage positive economic growth and development. Economic diversification for sustainable development in nigeria. The issue of economic diversification should be viewed from the perspective of sustainable development to ensure longterm stability of the economy. It shares linkage with virtually all the sectors of the economy with proven multiplier effect on the economy. Brown, an economy is a system by which people get living. Advantages and disadvantages of diversification in.
Clovis freire1 1 united nations, division for sustainable development, 405 e. Apr 10, 2018 one of the eternal challenges of economic development is how to identify the economic activities that a country, city, or region should target. Economic diversification in resource rich countries alan gelb1 i introduction. Jun 26, 2016 economic diversification can mean different things depending on the context.
Standards essential to diversifying economy the tribune. Diversify definition, to make diverse, as in form or character. Sep 26, 2014 there is a plethora of options available in diversifying the economy. Vibrant economies usually generate a large share of their gdp in the manufacturing and service sectors. We gave our audience five minutes to write down their thoughts on what kind of businesses they would like to see or see more of in wyoming. Agriculture agriculture is one of the key sectors that provide unrivalled opportunities for nigerias accelerated growth.
In 2012, the american economic associations committee on the status of minority groups in the economics profession became an official sponsor div. The rationale behind this technique contends that a portfolio constructed of different. Economic diversification can mean different things depending on the context. This process of diversification has taken many forms. The economy of saudi arabia is one of the top twenty economies in the world.
Economic diversification is a key element of economic development in which a country moves to a less concentrated production and trade structure. Viewed from this angle, it has the capacity to fundamentally strengthen an economys adaptive capacity and safeguards its longterm. The combining of resources creates new competitive strengths and capabilities bcg, 2006. In vertical diversification, the farm manager handles raw products after harvest by processing, packaging, transporting, or even. A diversified investment portfolio is one that deploys its funds in different financial securities and a range of asset classes. Thats the question we posed to attendees at our recent live event in laramie.
Diversification of an economy means that if one business falls and breaks, the. Chapter 4diversifying our economy new mexico first. It is good advice that bears relevance not only on the farm, but in the community at large as well. In the context of climate change adaptation, it takes on a new relevance as a. What are the advantages of economic diversification. If asset prices do not change in perfect synchrony, a diversified portfolio will have less variance than the weighted average variance of its. It does not necessarily entail increase in output but it enhances stabilisation of economies by diversifying their economic base. Explaining the pattern of diversification in the global economy and its implications for fostering diversification in poorer countries. Diversificationthe spreading of ones talents over more than one farming enterprisemay be accomplished horizontally or vertically. Pdf in this work, the researchers examine and attempt an answer to the big question. Diversification is a risk management technique that mixes a wide variety of investments within a portfolio.
The most evident advantage of doing so would be to increase the resilience of an economy. May 12, 2016 a diversified economy creates a sustainable cycle of economic activity where businesses continually feed off of one another and grow larger as the economy grows. Jun 12, 2019 diversify thirdperson singular simple present diversifies, present participle diversifying, simple past and past participle diversified transitive to make diverse or various in form or quality. A common path towards diversification is to reduce risk or volatility by investing in a variety of assets. Public private partnership ppp as an anchor for diversifying the nigerian economy lagos container terminals concession as a case study 9 lagos is the commercial hub of the nation with 90% of the containerised cargo going through the lagos ports. Pittsburgh has launched a multitude of programs to diversify the regions economy away from heavy industry into high technology. The issue of economic diversification should be viewed from. Economic diversification is generally defined as the process in which the economy becomes more diverse in terms of goods and services it produces. The model is used to study strategies to foster diversification in poorer countries, which could help to better target action in the implementation of internationally. If, for example, demand suddenly drops or if a cheaper alternative becomes available, the economy of that country can easily manage the negative effects. Economic diversification and resiliency volatility and rapid change have defined the global economy in the 21st century. Oct 30, 2017 standards that verify quality goods and services are essential if the bahamas is to properly compete with global rivals in rulesbased trading regimes, a cabinet minister said. Export diversification refers to deliberate policies intended to change the shares of.
Strategies for economic diversification in the resource. Concept of economic diversification in context of response. Mar 04, 2018 economic diversification refers to the expansion of economic activity into different sectors, often through government directives. In 2012, the american economic associations committee on the status of minority groups in the economics profession became an official sponsor. A diversified economy is one in which employment and revenue streams come from multiple industries. When the economy slumps, banks lend less and create less money. Diversification as a corporate strategy and its effect on.
As more and more businesses open their doors, it leads to the growth of supporting industries. This study traces the definition of diversification, area expansion problems, immediate needs, and its future prospects. Diversify definition is to make diverse or composed of unlike elements. Chapter 4 diversifying our economy chapter advisors.
Strategies for economic diversification in the resourcerich countries. One of the primary benefits of diversification is that a diversified economy helps support multiple businesses within it. It is dependent on oil as the country has the secondlargest proven petroleum reserves, and the country is the largest exporter of petroleum in the world. 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. Diversify definition of diversify by merriamwebster. Agriculture is the predominant economic line of work of the rural communities in india, and plays a vital role in the socioeconomic development of these communities. Collins and montgomery 2008 believe that related diversification involves building shareholder value by capturing cross business strategic fits. Horizontal diversification means the production of more than one item for sale. Economic diversification refers to the expansion of economic activity into different sectors, often through government directives. When the economy heavily depends on income originated in the agriculture and mining sectors, sustaining longterm economic growth is challenging becauseof volatility in.
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