Knowra Economic diversification Economic diversification Economic diversification is the expansion of an economy into a wider range of industries and income sources, reducing reliance on a narrow set of activities.
Structural change : A long-term shift in the relative importance of sectors, occupations, and forms of production in an economy. Diversification takes shape as labor and investment move into new sectors.
Dutch disease : A decline in other tradable sectors following a resource boom that raises costs or the real exchange rate. Resource booms can make diversification harder by weakening other export industries.
Economic specialization : The concentration of production, employment, or trade in a limited set of economic activities. Specialization concentrates activity where diversification spreads it across sectors.
Commodity price volatility : Fluctuations in the prices of primary commodities such as oil, metals, and agricultural products. Dependence on a narrow commodity base exposes public revenue and output to these fluctuations.
Economic complexity : A measure of the variety and sophistication of products an economy can produce and export. It links diversification to the capabilities needed to make varied, complex goods.
Resource curse : The tendency for resource-rich economies to experience weaker long-run development outcomes than their endowments might predict. It describes why resource wealth does not automatically produce a diversified economy.
Import substitution industrialization : A development strategy that promotes domestic production of goods previously imported. It can broaden industry, but focuses on replacing imports rather than diversification itself.
Employment diversification : The spread of jobs across a wider range of occupations, industries, and employers. A broader employment base can reduce workers' exposure to downturns in one industry.
Industrial policy : Government action intended to shape the development of particular industries or productive capabilities. Governments use it to encourage industries that broaden the production base.
Economic diversification in the Gulf Cooperation Council : Policies by Gulf Cooperation Council states to reduce reliance on hydrocarbons and expand other economic activities. Hydrocarbon dependence makes diversification a central policy challenge across the region.
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