In development strategy, what does diversification mean?

In development strategy, what does diversification mean?

• A. Increasing dependence on a single export sector.
• B. Reducing reliance on a single sector by developing multiple industries to spread risk and promote sustainable growth.
• C. Cutting government spending across all sectors.
• D. Focusing exclusively on agriculture.

Answer: (B)

Diversification in development strategy means expanding the economy beyond relying on one industry or export so the country isn’t overly exposed to shocks in a single sector. By developing multiple industries, a country can spread risk, stabilize growth, create more jobs, and foster innovation and investment. This approach reduces vulnerability to price swings or downturns in any one area and supports long-term, sustainable development. The described idea—reducing reliance on a single sector by building several industries to spread risk and promote sustainable growth—best captures diversification. Increasing dependence on a single export sector would do the opposite, while cutting government spending across all sectors describes austerity, and focusing exclusively on agriculture is a form of specialization rather than diversification (even if agriculture could be one part of a wider mix).

Diversification in development strategy means expanding the economy beyond relying on one industry or export so the country isn’t overly exposed to shocks in a single sector. By developing multiple industries, a country can spread risk, stabilize growth, create more jobs, and foster innovation and investment. This approach reduces vulnerability to price swings or downturns in any one area and supports long-term, sustainable development. The described idea—reducing reliance on a single sector by building several industries to spread risk and promote sustainable growth—best captures diversification. Increasing dependence on a single export sector would do the opposite, while cutting government spending across all sectors describes austerity, and focusing exclusively on agriculture is a form of specialization rather than diversification (even if agriculture could be one part of a wider mix).