Economic Diversification
Economic diversification is the process by which a country or region expands its range of economic activities to reduce reliance on a single source of income or industry. By developing different sectors—such as agriculture, manufacturing, and services—diversification helps stabilize the economy, mitigate risks from market fluctuations, and foster sustainable growth. For example, a country dependent on oil revenues might invest in technology or tourism to create new jobs and income streams. This reduces vulnerability to downturns in any one sector and promotes overall economic resilience.
Additional Insights
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Economic diversification is the strategy of broadening the range of activities, products, or services within an economy to reduce reliance on a single source of income or industry. This approach helps to stabilize the economy by mitigating risks associated with economic downturns or sector-specific shocks. For example, a country that primarily relies on oil can invest in technology, agriculture, and tourism. By diversifying, economies can foster resilience, create jobs, and promote sustainable growth, ultimately leading to greater stability and prosperity for communities.