By Dr. Saman Shali
- Part 2
Economic diversity refers to the numerous industries, sectors, and economic activities that exist within the economy of a region or country. It measures the range and depth of economic possibilities and activities available in the region. Economic diversity is a good thing for a country's economy. It can increase economic stability, resilience, and general wellness. It represents various economic sectors, businesses, and increased income levels. Here are some of the most important critical aspects of economic diversity:
1. Stability: A varied economy is more likely to be stable and robust in economic downturns. Diverse economies provide more reliable income sources for people and the government. When one business or sector encounters difficulties, other industries or sectors can help to mitigate the impact. For example, suppose an area strongly relies on a particular industry, such as oil (87% of Iraqi income is dependent on oil). In that case, a downturn might result in widespread job losses and economic hardship. A varied economy, on the other hand, is less subject to such shocks.
2. Range of Industries: Economic diversity implies that an economy is not heavily dependent on a single industry or sector. Instead, it has a mix of industries such as manufacturing, agriculture, tourism, technology, finance, healthcare, and more. This diversity reduces the vulnerability of an economy to downturns in a specific sector.
3. Resilience to Global Trends: Economic diversity can make a region more resilient to global economic trends in a globalized world. Suppose a region is heavily dependent on a single export or market. In that case, it can be highly vulnerable to fluctuations in that market, which can lead to economic recession in the country, as we saw in the Kurdistan region when oil exports stopped.
4. Innovation and Resilience: Economic diversity frequently supports innovation and adaptability. Different industries can learn from one another and share ideas and technologies, resulting in total economic resilience and competitiveness. This competitiveness can lead to new inventions and breakthroughs in the economy.
5. Investment Attraction: Economically diverse regions or countries are often more attractive to investors. Investors are more ready to invest in places where they see a variety of prospects and less risk associated with a reliance on a single industry.
6. Job Opportunities: Economic variety generates diverse job opportunities for the population. Varied businesses and sectors demand varied skill sets, educational backgrounds, and experience. Therefore, a diverse economy can create employment opportunities for people with varying backgrounds and skills. To increase job opportunities, universities and technical institutes can play an essential role in feeding the market needs with the skills needed today.
7. Regional Development: Economic diversity can promote more balanced regional development. It encourages investments and economic activities in various geographic areas, reducing the concentration of wealth and opportunities in specific regions. These unfair opportunities in specific areas will increase people's dissatisfaction in other geographical parts of the region and reduce competition between the region's cities to develop the region's economies.
8. Income Distribution: Economic diversity can lead to a more balanced income distribution. In regions with diverse economies, there may be a broader range of income levels, which can reduce income inequality, especially in one region.
9. Quality of Life: A diverse economy can help residents have a better quality of life. It may support various services and amenities, including healthcare, education, and cultural and entertainment possibilities.
10. Tax Break: The government can give tax breaks to local and international investors to encourage them to stimulate the diverse economy, not just invest in one or two sectors, which can fluctuate and destroy the economy.
In conclusion, regions or countries with diverse industries such as manufacturing, agriculture, technology, finance, healthcare, tourism, and others can demonstrate economic variety. These industries can complement one another and contribute to a more balanced and sustainable economic environment. However, developing and maintaining economic diversity can be difficult because it necessitates appropriate policies, infrastructure, and investments to support diverse economic activities. Economic variety can be achieved if the regional government safeguards investors against corruption as a grantee for their investments, enabling the government to prosper.
Look at Part 1 of the series article:
https://www.mirs.co/details.aspx?jimare=217
Saman Shali has a Ph.D. in Science (1981) from the University of Sussex. Dr. Shali worked as an Assistant Researcher and Assistant Professor at the University of Sussex, King Saud University, and Pennsylvania State University. He is also a senior fellow at the Mediterranean Institute for Regional Studies.