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.
Why might a country choose to diversify?
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.
Why do we need trade diversification to promote trade write any four reasons?
Diversification helps countries to hedge against adverse terms of trade shocks by stabilizing export revenues . It enables them to direct positive terms of trade shocks into growth, knowledge spillovers and increasing returns to scale.
Why is it important to have a diversified economy?
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. ... A diversified economy opens the doors for providing the goods and services a growing community needs.
What makes a diversified economy?
Economic diversification. 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 might a country choose to devalue its currency?
One reason a country may devalue its currency is to combat a trade imbalance . Devaluation reduces the cost of a country’s exports, rendering them more competitive in the global market, which, in turn, increases the cost of imports.
What term describes the economy of a country which produces a wide variety of goods and services?
An economy of scope means that the production of one good reduces the cost of producing another related good. Economies of scope occur when producing a wider variety of goods or services in tandem is more cost effective for a firm than producing less of a variety, or producing each good independently.
What is the benefit of trade diversification?
Benefits of Trade Diversification
It helps to import varieties of goods from foreign countries . It helps to earn more foreign currency by exporting goods to other countries. It may decrease the price by increasing competition for quality products. Consumers can buy foreign goods and products in their local areas.
What are the benefits of trade diversification show in list?
- Minimizes the risk of loss to your overall portfolio.
- Exposes you to more opportunities for return.
- Safeguards you against adverse market cycles.
- Reduces volatility.
What is diversification of trade and its advantages?
Three key advantages of diversification include: Minimising risk of loss – if one investment performs poorly over a certain period, other investments may perform better over that same period, reducing the potential losses of your investment portfolio from concentrating all your capital under one type of investment.
What are some of the benefits of having a more diverse economy?
A diverse workforce can capture a greater share of the consumer market . By bringing together individuals from different backgrounds and experiences, businesses can more effectively market to consumers from different racial and ethnic backgrounds, women, and consumers who are gay or transgender.
How does diversity impact the economy?
The study also indicated that a diverse workforce would lead to different skills and mindsets , increased understanding and knowledge, which in turn lead to business, technological and cultural innovation. ... Overall, there are many benefits to cultural diversity.
How does economic diversity impact on life?
The social impact of diversity in Australia has produced net economic benefits in helping to offset population aging , contributing to higher GDP levels, and improving labor productivity.
Which country has the best economy in Africa 2020?
- 1 | NIGERIA – THE RICHEST COUNTRY IN AFRICA (GDP: $446.543 Billion) ...
- 2 | SOUTH AFRICA (GDP: $358.839 Billion) ...
- 3 | EGYPT (GDP: $302.256 Billion) ...
- 4 | ALGERIA (GDP: $172.781 Billion) ...
- 5 | MOROCCO (GDP: $119,04 Billion) ...
- 6 | KENYA (GDP: $99,246 Billion)
What are the two types of diversification strategies?
- Concentric diversification. Concentric diversification involves adding similar products or services to the existing business. ...
- Horizontal diversification. Horizontal diversification involves providing new and unrelated products or services to existing consumers. ...
- Conglomerate diversification.
What is a highly diversified economy?
Economic diversity or economic diversification refers to variations in the economic status or the use of a broad range of economic activities in a region or country. ... Research shows that more diversified economies are associated with higher levels of gross domestic product .
