Sectoral Diversification Research Articles

Does diversification drive tourism demand? A structural change perspective: Evidence from a casino tourism destination

AbstractStructural change in the tourism industry is a potential driving force for tourism demand. Using sectoral‐level data of capital formation, employment, and value‐added as diversification measures, a positive relationship is found to exist between sectoral diversification and tourism demand in Macao. Heterogeneous effects on market origins of varying saturation levels show that sectoral diversification is a potential strategy for attracting visitors from more distant and less saturated origin markets. In order to build up a long‐lasting resilience to external shocks, development policy should focus on cultivating market incentives for private sector stakeholders to participate in the diversification process.

Sources of financing for increasing the competitiveness of the food Industry in Azerbaijan

The state policy of the government of Azerbaijan is aimed at the sectoral diversification of the economy of the country, in which the food industry occupies a significant place. Since for a long time there has been a raw materials-based model of the economy in Azerbaijan, investment funds have not been not directed to increase the competitiveness of the food industry in order to operate successfully in the global market. The main aim of the research is to investigate the opportunity of using various sources of financing, which are required to improve the Azerbaijani food industry competitivity. The methods of summary and grouping, analysis, synthesis, induction, deduction, were used in order to reach the goal. It was shown that the food industry in the state could be improved by increasing the climate investment and the share of outside and joint financing sources. During the research conducted it was determined that over the past 15 years, the government of Azerbaijan has implemented more than 70 national and industry specific programs. The work separately points out the State Programs I and II on the economic and social development of the regions, which were introduced in the period from 2004 to 2013. For increasing the food sector competitivity in Azerbaijan, additional financial resources, which reached $65 billion in 2012, were attracted in the country; loans to strengthen the competitiveness of the food industry increased by 9.7 times in the period between 2006 and 2021, and the investment volume will exceed $3 billion in the result. The positive impact of the measures, which were taken, was reflected in the creation of additional 1.2 million jobs in the food industry in the Republic of Azerbaijan. The study results showed that internal sources were the largest share in the financing of the food industry in the country, while the due attention was not paid to the development of international cooperation aimed at increasing external and joint sources of financing. The practical significance of the results of the study presented in this article lies in its providing of the basis for subsequent areas of study of the topic under consideration, as well as for the development of state programs on the improving of the food sector in Azerbaijan

Loan and financing diversification and bank stability in dual-banking systems

Our investigation of 46 conventional and 22 Islamic banks from the Gulf Cooperation Council (GCC) countries during 2008–2021 reveals that sectoral diversification effects on stability are nonlinear and different for the two bank types. While Islamic banks’ stability is worsened only by moderate levels of diversification, conventional banks’ stability is enhanced by high levels and impaired by low levels of diversification. Furthermore, diversification acted as a stabilizer during the global financial crisis but exacerbated the adverse effects of the Covid-19 pandemic. Although regulators usually call for bank diversification, our results imply that it can be a double-edged sword.

Innovation-based diversification strategies and the survival of emerging economy village-owned enterprises (VOEs) in the COVID-19 recession

PurposeThe global recession caused by the COVID-19 pandemic has led to the closure of thousands of village-owned enterprises (VOEs), which are community-managed enterprises that operate in the hostile rural areas in emerging economies. Thus, considering that a Schumpeterian view of economic downturn sees recessions as times where old products/services decline while new products/services emerge, this paper aims to explore the specific innovation-based diversification strategies that matter for the survival of emerging economy VOEs in recession periods to develop new theoretical insights.Design/methodology/approachThe study is based on multiple-case studies of 13 leading VOEs operating in the rural areas of Java Island in Indonesia, an emerging economy. The data was analysed using within-case and cross-case analyses.FindingsOverall, a number of major novel findings have emerged from the analysis, based on which the authors developed several new propositions. First, from the perspectives of both new product and new service diversification, “unrelated diversification” is the primary resilience strategy that seems to be associated with the survival of VOEs in the COVID-19 recession, over and above “related diversification”. Second, from an industrial sector diversification perspective, the most dominant resilient strategy for surviving the recession is “unrelated diversification into tertiary sectors (service sector)”, over and above diversification into the primary sector (agriculture, fisheries and mining) and secondary sector (manufacturing and construction).Originality/valueThe authors contribute to the literature on entrepreneurship in emerging economies by identifying the resilience diversification strategies that matter for the survival of VOEs in recession.

Analysis of Export Diversification and Impact of Globalisation on Income Inequality: Evidence from Asian Countries

ABSTRACT Due to the importance of product and geographical diversification of exports, the gravity equation was used to predict export diversification for 19 Asian countries from 2004 to 2017 and the System Generalised Method of Moments was used to analyse the dynamic impact of globalisation at the disaggregated level of the diversification of sectoral exports and the goods specialisation on income inequalities. The results show that sectoral diversification of exports is the driving force of inequality. Furthermore, increased diversification of exports in the highly-income countries of Asia increases inequality and has little impact on low-income countries in Asia.

Division of labor, specialization and diversity in the ancient Roman cities: A quantitative approach to Latin epigraphy.

Recent empirical studies on the division of labor in modern cities indicate a complex web of relationships between sectoral specialization of cities and their productivity on one hand and sectoral diversification and resilience on the other. Emerging scholarly consensus suggests that ancient urbanism has more in common with modern urban development than previously thought. We explore whether modern trends in urban division of labor apply to the cities of the Western Roman Empire from the first century BCE to the fourth century CE. We analyze occupational data extracted from a large body of Latin epigraphic evidence by computer-assisted text-mining, subsequently mapped onto a dataset of ancient Roman cities. We detect a higher frequency of occupation terms on inscriptions from cities led by Rome than from rural areas and identify an accumulation of tertiary sector occupations in large cities. The temporal dimension of epigraphic data allows us to study aspects of the division of labor diachronically and to detect trends in the data in a four centuries-long period of Roman imperial history. Our analyses reveal an overall decrease in the frequency of occupational terms between the first half and second half of the third century CE; the maximum frequency of occupational terms shifts over time from large cities to medium and small towns, and finally, rural areas. Our results regarding the specialization and diversity of cities and their respective impact on productivity and resilience remain inconclusive, possibly as a result of the socio-economic bias of Latin inscriptions and insufficient representativeness of the data. Yet, we believe that our formalized approach to the research problem opens up new avenues for research, both in respect to the economic history of the Roman Empire and to the current trends in the science of cities.

Repayment performance of joint‐liability microcredits: Metropolitan evidence on social capital and group names

AbstractThis study empirically tests the predictions of four primary theories applicable to joint‐liability microcredit programs’ repayment performance using an administrative data in a metropolitan setting. We introduce a new variable, group names, as a proxy for social capital to capture cooperation, solidarity, and drive for success, which shows a significant positive impact of 9.9% on repayment performance. Precise calculations of residential distance between group members show a deterioration of repayment performance by 1.1% with a 15‐min increase in minimum walking distance. The results also show that joint liability, sectoral diversification, type of sector that the borrowers facilitate, the ratio of new members in a group, characteristics of loan officers, loan amount, interest rate, income‐loan amount coverage ratio, the existence of senior members, average education, and diversity in income streams significantly affect repayment performance.

НАСЛІДКИ ПОВНОМАСШТАБНОЇ ВОЄННОЇ АГРЕСІЇ РФ ДЛЯ УКРАЇНСЬКОЇ ПРОМИСЛОВОСТІ

Розглянуто висновки міжнародних організацій, консалтингових агентств, науково-дослідних центрів, вітчизняних і зарубіжних учених щодо впливу війни на економічний розвиток України. Оцінено масштаби руйнувань і втрати промислового сектору внаслідок російської воєнної агресії з огляду на його критично важливу роль у забезпеченні обороноздатності України, відновлення та зростання її економіки. Авторський підхід до оцінювання наслідків російської воєнної агресії для української промисловості, на відміну від існуючих напрацювань, ураховує галузеві та регіональні аспекти трансформацій і пропонує засади для обґрунтування векторів повоєнного відновлення економіки України з метою зниження ризиків ураження промислових об’єктів і забезпечення цілісності та функціональності вітчизняного промислового комплексу в умовах тривалих воєнних загроз. Показано, що в більшості регіонів країни застаріла промислова структура підвищила рівень безпекових загроз для української економіки в умовах війни нового покоління: гібридної, безконтактної, далекобійної, спрямованої на осередкові ураження промислових та інфраструктурних об’єктів. Повоєнне відновлення промисловості має відбуватися на засадах територіально-галузевої диверсифікації, інноваційному розвитку ВПК і забезпеченні його наукової основи, формуванні нової системи логістики міжнародної торгівлі. Економічні перспективи відновлення України характеризуються невизначеністю, і на них багато в чому впливатиме подальший перебіг воєнного конфлікту, що триває. Водночас успіх країни у воєнному протистоянні визначається не тільки військовою та фінансовою допомогою, а значною мірою і стійкістю економічного фундаменту економіки – її промислового сектору. Отже, забезпечення нормального функціонування промисловості вимагає як невідкладних дій з відновлення виробничих процесів шляхом релокації з небезпечних зон, налагодження нових логістичних ланцюгів тощо, так і формування стратегічних цілей відбудови і визначення галузевих векторів відновлення.

Economic Analysis of Innovation Development Processes in Agriculture of the Republic of Uzbekistan

The article provides econometric analysis of agricultural production efficiency in the Republic of Uzbekistan. As methodology for identifying the impact of land, labour resources and capital on the net output of agriculture Kobba - Douglas production function was used. The results of analyzing parameters of the production function let the authors make a conclusion about the necessity to work out a new concept of innovation development and a new model of efficient running of agriculture and its development on the basis of innovative technologies and agrarian sector diversification. The plotted econometric model is statistically reliable and it can show the state of the net output of Uzbekistan agriculture. Kobba – Douglas production function by the net output of Uzbekistan agriculture and factors affecting it, as well as all its parameters checked by Fisher criterion, Student t-criterion and Darbin – Watson DW-criterion showed that the function by parameters meet all the requirements, which testifies to the possibility to use the model (multiplying model in the form of variables’ product) for the current analysis and future forecast of the net output of the Republic agriculture. On the basis of system econometric analysis the forecast parameters of the net output up to 2025 were identified that were found by raising efficiency of innovative processes in agriculture.

Pandemic transformations in migrant spaces: Migrant entrepreneurship between super-digitalization and the new precarity.

The Covid‐19 pandemic has brought about new patterns in labour market activities, including greater frequency, intensity and sectoral diversification of technology‐mediated online work (super‐digitalization). The development of online professional activities, accelerated by the pandemic, has a profound influence on migrant entrepreneurship in many dimensions. While the phenomenon also concerns the native population and is not limited to foreigners, in the case of migrant entrepreneurs it has additional unique meanings and consequences, resulting from a greater significance of mobility for migrants and its restriction during the pandemic. The analysis discusses new phenomena, such as the emergence of pandemic digital nomads and the development of migrant business ventures characterized by a de‐ethnicized approach to customers. The theoretical framework for this analysis is the concept of super‐digitalization of professional activities as a privilege. Digitalization is not available to everyone, but it affects everyone; it also has consequences for offline migrant entrepreneurs by creating and enhancing new mechanisms of exclusion. The article emphasizes the difference between super‐digitalization and digitalization, which result in different outcomes for migrant entrepreneurs. The analysis is based on in‐depth interviews with 53 Polish migrant entrepreneurs in the United Kingdom.

A cross-country analysis on diversification, Sukuk investment, and the performance of Islamic banking systems under the COVID-19 pandemic

This study investigates the relationship between diversification and Islamic banking systems' performance under the impact of the COVID-19 turmoil using a sample of 24 countries from 2013Q4 and 2020Q4. The findings indicate that the performance of Islamic banking systems is positively associated with sectoral diversification of Shari'ah-compliant financing and income diversification. Although this study confirms a negative impact of the COVID-19 shock, income diversification is found to mitigate the adverse effect of this health crisis on the performance of the Islamic banking systems. In which, Sukuk investment is considered an essential channel for pursuing this diversification strategy. Therefore, this research has important implications for policymakers, managers, and academics.

Farm diversification efforts, (open) innovation networks and performance: what is the connection?

PurposeBased on farm diversification's conventional and unconventional nature, the study intends to discriminate different profiles of farm diversification businesses. Furthermore, this study analyses the links between farm diversification efforts, (open) innovation networks as well as the environmental performance (EP) and financial performance (FP) of farms.Design/methodology/approachA questionnaire was administered through personal interviews with 160 fresh fruit farmers in an inland Portuguese region. Linear regression, latent class analysis (LCA) and multinomial logistic regression were used.FindingsThere are significant differences between the levels of diversification, performance and participation in (open) innovation networks of the three classes of farmers discriminated. Different types of diversification efforts and (open) innovation networks influence EP and FP, while FP and R&D projects are associated with the likelihood of being part of a farm diversification class. Moreover, this study shows that innovation networks, promoted by specialized agricultural advisors and R&D projects, are important forms of open innovation in the agricultural sector.Research limitations/implicationsThe study contributes to understanding the agricultural sector's diversification efforts and (open) innovation networks and their association with EP and FP. The conventional or unconventional nature of farm diversification was self-reported.Practical implicationsEuropean and local institutions are advised to develop more R&D programs directed to farmers, including environmental and financial issues, besides comprising agricultural and non-agricultural diversification.Originality/valueThis study provides new insights to understand the association between diversification efforts, (open) innovation networks and agricultural businesses' performance.

ОСНОВНІ ЕКОНОМІЧНІ ЗАКОНОМІРНОСТІ ЗЕЛЕНИХ ТРАНСФОРМАЦІЙ СВІТОВОГО ВИРОБНИЦТВА

The article emphasizes that at today's stage of economic globalization, the fundamental qualitative renovation of the technological base of public production occurs, its efficiency and competitiveness are increasing, as well as a "greening" of the world production complex and global sales chains is dynamically developing. These trends have their own internal drivers and patterns of ensuring transformational changes, which are the purpose and content of this article. The article proposes the key regularities of modern transformational changes in world production that reflect their ecological imperative and systemic nature from the point of view of building a global green ecosystem. The peculiarities of sectoral diversification of the global production complex are characterized as one of the patterns of green transformations in global production. The presence of another global regularity, which proves the systemic nature of green transformational changes in world production – its digitization – has been substantiated in the article. It has been proved that in the complex characteristics of the key patterns of the development of the systemic green transformation of global production, a special place is occupied by the intellectualization of production management and organization systems based on the computerization of existing management systems. A characteristic of the regularity of networking as such, which finds its material embodiment in deep structural transformations of current organizational structures of global business, has been given. The author emphasizes that another objective regularity of its systemic green transformations is closely related to the global trend of networking of world production – there is horizontal structuring and deconcentration of production processes. It has been proved that among the objective regularities of the systemic green transformation in global production, the trend towards its dematerialization also deserves special attention. The author calls decarbonization with a deep structural crisis of the traditional energy sector the next economic regularity that testifies to the systemic nature of modern processes of green transformation in global production.

FORECAST OF THE MAIN PARAMETERS OF THE DEVELOPMENT OF FOREIGN TRADE IN THE STAVROPOL REGION

Subject. Foreign trade is the most developed form of international economic relations and plays an important role in the socio-economic development of the state and regions. This article analyzes the key parameters of the development of foreign trade in the Stavropol Territory, substantiates the directions of development of foreign trade in the region, and makes a forecast of its development. Methodology. Trend analysis was used in the process of studying trends and forecasting the development of foreign trade. Results. In the current situation, the development of foreign economic activity in the region requires an increase in export potential, as well as its sectoral diversification. It is established that the preservation of the prevailing trends in the development of foreign trade activities of the region will lead to a slight expansion of exports with a drop in import volumes. This indicates the need for prompt intervention in this process on the basis of modernization of the export structure and expansion of its volumes. Conclusions. An increase in the number of export-oriented enterprises, the number of contracts concluded with foreign partners, and the expansion of the geography of foreign economic activity will have a positive impact on the development of the region's foreign trade. However, the implementation of these measures requires support from the state.

Changing Scenario of Crop Diversification in Nepal: Delineating the Role of Trade Openness, Urbanization and Rural Infrastructure

Crop diversification in the farming sectors has been accepted to be a wise strategy for augmenting the farmers’ income level as well as for mitigating the challenges for climatic change worldwide. Considering the importance of crop diversification both from the view points of farmers and environmental aspects, this paper using the secondary data tries to find out the pattern of growth of area, production, and yield of the major crops in Nepal, and at the same time, it makes an attempt to examine the crop pattern changes in Nepal along with its determining factors including both demand and supply-side factors. The growth analysis reveals that for most of the crops the second sub-period of 1986 – 2007 was the best in terms of the growth of production as compared to the other two-subperiods (1961 – 1985 and 2008 – 2017). The crop pattern of Nepal over the years shows that though the food grain crops still dominate the crop mix of the economy, there is clear evidence of necessary intercrop substitution where the traditional food grain crops are being replaced by commercial cash crops. Tea has come up with a big way in Nepal commercial cash crop production. Also, the crop diversification indices measured by the Herfindahl index and Shannon index, show a rising trend in diversification pattern during the nineties. Urbanization, better infrastructural supports in terms of better technology, irrigation coverage has been found to provide a significant positive impact on the diversification process. However, the trade openness is not found to be beneficial for Nepal’s agricultural sector diversification process as does the policy reforms in the post-political reforms.

Export development in New Zealand: Kiwifruit and seafood 1975–1985

AbstractThis paper discusses export development in New Zealand in the 1970s and 1980s with reference to the long‐running literature about the sustainability of natural resource‐based growth, export diversification, and the role of state regulation and encouragement. Since 1970 New Zealand's export commodity mix has diversified. Pastoral exports, once dominant, are complemented by seafood, wine, fruit, vegetables, forest products and a range of manufactured goods. Diversification of export markets and commodities was a priority for policymakers from the mid‐1950s, and more so from the mid‐1970s. Export incentives were a chosen instrument. Seafood and kiwifruit were among the most significant examples of primary sector diversification. The paper finds that the circumstances of each industry required different government policies, and that entrepreneurship and innovation were significant alongside government policy.

Volatility and vulnerability in Mexican fisheries and aquaculture: Enhancing resilience via public policy

The COVID-19 pandemic has impacted the fisheries and aquaculture sector, and public policies are needed to mitigate it. Nevertheless, the lack of information makes it challenging to generate an adequate response. It is relevant to study the sector's response to past shocks to generate the elements to react to present and future shocks. We present a historical analysis (2006–2014) of the Mexican fisheries and aquaculture sector to detect the most vulnerable and volatile resources concerning their resilience to shocks. For this, we propose a proxy indicator of the β coefficient used in the finance context to calculate the risk premium of an asset. In this case, we measure each resource's variation compared to the whole fishery sector's variation. Several shocks were detected, corresponding to different events (i.e., economic, climatic, disease outbreaks). The most notorious is in 2009, explained by the H1N1 outbreak with the combined effect of the 2008–2009 global financial crisis. A key finding is that fisheries and aquaculture's volatility and vulnerability to economic shocks are highly variable and vary according to the resource and the shock's nature. As such, support measures will likely continue to be broad in their approach. A overarching policy shift that is perhaps necessary to mediate future shocks' impact is to support the fisheries sector's diversification. As well as building the resilience of production, this can also extend to include diversification of the supply chains, markets, and distribution systems. Diversifying the sector holistically could help safeguard against future shocks.

Modelling the economics of sustainable tourism

To date tourism has been synonymous with intense territorial use, which has led to a reconsideration of the relationship between tourism and its location in order to foster more environmentally-friendly development. In this context, the paper provides a novel approach to the analysis of tourism and the environment by developing a theoretical general equilibrium model addressing the integration of the environment in the economic system (i.e. in a circular economy) from a tourism perspective. The model’s innovative aspect is in assuming the use of land not only as an input, but as an output. Specifically, the land is no longer supplied in a fixed quantity to the economy, but society decides between its enjoyment or its rental as a factor of production; thereby achieving a more rational use of this resource. Likewise, its consideration as an output allows us to stress its role as an asset; implying that its preservation also contributes to economic growth. The main findings show that, when the environment is integrated into the economic system, tourism is not a source of ecological depletion, but rather an essential contributor to its preservation. However, this necessary integration does not keep tourism from eroding sectoral diversification and reinforcing import dependence.

Non‐linear internationalization processes in Portugal: Evidence across retail, construction and software development industries

AbstractThe rising number of Portuguese companies with international operations and growing sectoral diversification has been contributing to the recent international expansion of the Portuguese economy. It is important to introduce nuances in these recent developments, as the proportion of international firms and international expansion capabilities are still low. This article presents the results of a research project carried out between 2015 and 2018 focused on studying firm internationalization logics observable in Portugal, in three contributing sectors – retail, construction and information and communications technology (ICT) software development. The results present domestic markets as having a diffluent role, opportunistic client‐ or partner‐following being adopted as dominant expansion logics, and indicate that internationalization processes are valued for their portability and reversibility. Room exists for de‐ and re‐internationalization, resource commitment shifts and non‐linear logics, an expression of managerial attempts to leverage resource constraints and exposure to risk and market uncertainty. Sectoral diversification and the deployment of more flexible organizational modes in internationalizing companies or company groups in Portugal are suggested as relevant and feasible paths to follow, given the different modal forms currently available for most companies to expand.

Synthesis of stable coalitions in the economy based on fundamental criteria of the portfolio theory

Subject. The article outlines basic principles of a mathematical model for formation of stable coalitions in the economy at the interstate level. Objectives. We focus on developing a mathematical model to build such coalitions. Methods. The study employs the portfolio theory, risk-return model, correlation and regression analysis, technical and fundamental analysis. The proposed model rests on fundamental provisions of creating a multicomponent, widely diversified investment portfolio. The model uses the key concepts, like expected profitability, risk level, industry diversification and hedging, in combination with the synthesis of a diversified group of leading commodity indices. Results. We show possibilities of using internal (based on the country’s indices) and external (based on other countries’ indices) correlation analysis, according to data on trends in economic indices, to ensure sectoral diversification within the country and maximize the international level of sectoral diversification, respectively. We performed a fundamental analysis of the condition of economies of the countries included in the coalition, and of the countries, which are considered to be included in the coalition as appropriate. The paper assesses positive and negative factors of joint functioning of the economies of the coalition countries, from the point of view of their geographic location. Conclusions. The model makes it possible to build new optimal coalitions in the economy, to analyze the practicability of further existence of previously formed coalitions, and to update the composition of coalitions, according to trends in the world economy development.