Sectoral Diversification Research Articles

Analysis of Key Events to Economic Growth in Thailand's History

In recent decades, Thailand has made a lot of efforts to achieve a rapid economy increase, and completed the transition from agricultural production to industrialization. Thailands economic journey has seen significant reforms, challenges, and changes, closely intertwined with global economic changes and domestic policies. This article examines Thailand's economic trajectory from the 1960s to the present day, focusing on pivotal events such as the economic reforms of the 1960s, the Asian financial crisis in 1997, and the growth of the tourism sector since the 1980s. By examining these key historical moments, it aims to uncover the fundamental principles and trends that have influenced Thailand's economic development trajectory. Through an analysis of their impacts on economic growth, this study identifies lessons gleaned from both successes and setbacks. It highlights the significance of adaptive economic policies, resilience in the face of external shocks, and the role of sectoral diversification in fostering sustainable growth.

Breaking path dependency? Factors to enhance capacity for rural local governments in Newfoundland and Labrador, Canada

ABSTRACT Path dependency, often coinciding with the downloading of various responsibilities with reduced funding from higher levels of governments during the neoliberal era, has led to capacity challenges for rural local governments to pursue sector diversification activities. Despite these challenges, research has indicated that, through entrepreneurial efforts, breaking path dependency is possible. Drawing from Staples Theory, Evolutionary Economic Geography, New Public Management, and New Localism as well as primary data from key informant interviews, this paper identifies five factors that influence the capacity of rural local governments to break path dependency. In doing so, it identifies a relationship between New Localism and local governments, and its potential as a bridge for rural economic development. These findings are important, as they contribute to the limited but growing literature related to New Localism and its potential applications for rural local governments in Canada to facilitate economic development.

Export diversification dimensions and performance: Analysis and industrial policy insights from Italian territories over Covid-19 shocks

Export diversification has been long discussed as a strategy to shield from external shocks and stabilize export levels. At the same time, it can proxy for the presence of specific productive and geoeconomic capabilities. This paper considers geographical and sectoral diversification of industrial exports proposing HHI-based indexes that consider different levels of aggregation. Specifically, we explore how these metrics are associated with each other, and how this association is moderated by different levels of export intensity and stability. Overall, they both explain well variations in export intensity over the COVID-19 asymmetric shocks. Further, exposure toward EU markets shows a positive association with stability. These findings and the heterogeneity lens used are then interpreted stressing the relevance of place-based policies in guiding export diversification strategies in the face of global economic challenges.

The Effect of Sectoral Diversification on Return and Risk in Portfolio Management: An Application in Borsa Istanbul

This paper investigates sectoral diversification within Borsa Istanbul, aiming to elucidate its impact on portfolio risk and return dynamics. Spanning the timeframe from 2020 to 2022, the study meticulously analyzes stocks from pivotal sectors, including banking, energy, and iron and steel. Employing a robust methodology, the research harnesses Monte Carlo simulations to generate many hypothetical portfolios, subsequently evaluating them on the Efficient Frontier to identify optimal risk-return trade-offs. Key performance metrics, such as the Sharpe Ratio, Sortino Ratio, and Maximum Drawdown, further enrich the analysis, providing a granular view of portfolio behaviors. The significance of this study lies in its bridging of theoretical constructs of diversification with the tangible realities of an emerging market like Borsa Istanbul. Our main findings underscore the potential benefits of sectoral diversification while highlighting the complexities inherent in portfolio construction. The insights gleaned offer valuable guidance for investors, emphasizing the delicate balance between risk mitigation and return optimization in a diversified portfolio.

Impact of Foreign Direct Investment (FDI) on Economic Growth: A Study of Brazil

Purpose: The aim of the study was to investigate the impact of foreign direct investment (FDI) on economic growth: a study of Brazil
 Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.
 Findings: The study on Foreign Direct Investment (FDI) and economic growth in Brazil found a positive relationship between FDI inflows and GDP growth. FDI contributes to capital accumulation, technology transfer, and sectoral diversification, enhancing competitiveness. However, the impact varies across regions and industries, with disparities in spillover effects. Targeted policies are needed to maximize FDI benefits and promote inclusive growth, addressing regional disparities and socio-economic inequalities.
 Unique Contribution to Theory, Practice and Policy: Dependency theory, modernization theory & institutional theory may be used to anchor future studies on the impact of foreign direct investment (FDI) on economic growth: a study of Brazil. The study should provide practical recommendations for firms and corporate boards to enhance their corporate governance practices based on empirical findings. The study should inform policymakers and regulatory authorities about the implications of corporate governance regulations on firm performance and market competitiveness.

Spatial Modelling Analysis for Potential Expansion of Cipanas City Candidate Area as Autonomous City

The establishment of new autonomous city is considered a significant decision and the proposal has been under review in Cipanas for several years. Therefore, this research aimed to address the proposal by conducting spatial modelling analysis for potential expansion of Cipanas as autonomous city, using Geographic Information System (GIS) method. The physical and social factors were analysed, using spatial overlay analysis to determine potential development area. SWOT analysis was also performed for qualitative insights into strengths, weaknesses, opportunities, and threats of the prospective Cipanas area. The results showed that Cipanas had significant potential to become autonomous city, with a particular focus on agriculture and tourism due to the varied topography and predominant natural land use. Through overlay analysis, areas in Pacet, Cipanas, and a small part of Cugenang Sub-districts were identified as potential development zones for the capital city. In general, Cipanas area was found suitable for the development of a major city with an agropolitan concept. Certain areas were considered more appropriate with urban characteristics compared to other areas based on specific criteria. Based on the results, recommendations include infrastructure improvements, economic sector diversification, tourism promotion, and disaster risk reduction activities. GIS spatial analysis facilitated the accurate identification of potential areas, aiding in mapping and pinpointing optimal areas for the establishment of new autonomous city.

Can industrial structure optimization and industrial structure transition both lead to carbon lock-in mitigation? The case of China.

The optimization and transition of the industrial structure help improve the quality of the economy, moving it toward low-carbon development. By using the Instrumental Variable Generalized Method of Moments model and a city-level dataset covering the period 2006-2019, this paper explores the carbon lock-in mitigation effects of industrial structure optimization and industrial structure transition, respectively. The heterogeneity and the synthetic industrial structure adjustment effect are detected, and the potential impact mechanism is also explored. Some findings have been generated. (1) Both industrial structure optimization and industrial structure transition realize carbon lock-in eradication. (2) Industrial structure optimization and transition are more effective in inhibiting carbon lock-in in cities with a higher level of economic background. (3) By generating an interaction term of industrial structure optimization and transition and examining the impact of the interaction term on carbon lock-in, this paper detects that industrial structure optimization and transition have a synthetic impact on carbon lock-in, showing a "1 + 1 > 2" effect. (4) Industrial structure optimization and transition both affect carbon lock-in by improving technological innovation level, which is the impact mechanism. Some policy implications, such as sectoral diversification and promoting research and development, are put forward for better industrial structure development and carbon unlocking.

Economic Transformation Towards Economic Stability In Bali Province: Literature Review Analysis

Tourism has long played an important role in development in Indonesia, especially in Bali Province. Tourism, with its multiplier effect, can and is capable of accelerating economic growth and job creation. However, due to the Covid-19 pandemic, Indonesia's macro conditions have worsened. As a province that makes the tourism sector its leading sector, this pandemic has had a drastic impact on Bali Province. The central government and the regional government of Bali Province must jointly make efforts to restore the economy as well as economic transformation. In this way, Bali's economy will grow more resilient to shocks because it is based on local resources with high added value with economic diversification so that it does not depend on the tourism sector alone. This research uses Chenery's theory as a grand theory which explains an approach to analyzing economic transformation by considering sector diversification which can provide a basis for effective and efficient planning policies. This research uses a literature review method. By looking at the various impacts experienced after the pandemic, the issue of making one sector the main sector needs to be taken into consideration. Paying high attention to the tourism sector over the last few years has had a slight impact on making Bali's economy the second lowest in Indonesia. Based on this phenomenon, the assumption began to emerge that the agricultural sector was a "temporary safe place" which became the second choice, although in the end, when Bali's tourism conditions improved, the average worker decided to return. This assumption that the tourism sector is a conservation sector needs to be improved by providing more understanding that agriculture is also able to support tourism in Bali Province.

Do non-interest income activities matter for banking sector efficiency? A net interest margin perspective

This paper explores the effects of non‐interest income (NII) generating activities on banking sector efficiency in 152 countries from 1996 to 2017. Contrary to previous studies that examine the effects of diversification on banking performance at the micro‐level, this study seeks to provide new insights about the effects of diversification at the aggregate level on bank efficiency. This aspect offers a chance to capture the whole banking sector and provides a broader understanding of the effects of banking sector diversification. Our baseline results reveal that engaging in NII activities is positively associated with banking sector efficiency. Using the dynamic threshold regression method, we do not find a tipping point beyond which the benefits of NII activities have an adverse impact on banking sector efficiency. These results are insensitive to different groups of countries. Our findings generally suggest that banking liberalization contributes to the efficiency of the banking sector. In this sense, the findings of this study support banking sector diversification policies implemented in many countries since the 1980s and 1990s.

Territorial resilience on the aftermaths of COVID‐19 crisis—An exploratory analysis on the role of innovation

This study examines the impact of different regional determinants on heterogeneous territorial resilience to the COVID‐19 crisis, highlighting the role of innovation, particularly the engagement of research and innovation (R&I) entities in networks with businesses. Two ordinary least squares (OLS) models were separately estimated for the resistance and the recovery phases, complemented by a multinomial logistic model, applied to test for a nonlinear relationship between R&I networks and territorial resilience. The results are robust concerning the positive influence on municipalities' resistance and recovery of having R&I entities collaborating in innovation consortia. Education, stability, and sectoral diversification of the local labor market are also essential for regions to be able to resist to the crisis but seem not important for recovery. Finally, international trade openness and pre‐crisis labor performance penalizes both resistance and recovery from downturns.

Empirical Analysis of Stock Markets That Are More Prone To Losses: A Standard Coverage Test Approach

Stock market losses have been a recurring phenomenon in financial markets with far reaching implications for investors as it directly impacts the value of their portfolios and potentially jeopardizing retirement savings leading to a loss of income. Identifying stock markets that may realise less returns on investments has been critical area for portfolio managers and active market participants. Therefore, the aim of this study was to empirically investigate financial markets that are prone to losses in order to safeguard and protect investments. A standard coverage test analysis was applied in five selected markets for a sample period from June 7, 2018 to June 7, 2023. This coverage test was used to identify stock markets that breached their generalised indicators and expected losses. The findings revealed that stock market losses are significantly higher in the CAC 40 and Nikkei 225. This was evident in the significant risk violations from their expected levels. By implication, investors willing to invest in the CAC 40 and Nikkei 225 are advised to use sector diversification strategies, stop-loss orders and long term investment strategy to mitigate some of these losses.

Navigating Pakistan's Economic Crossroads: The Ultimate Panacea for Its Existential Crisis

Pakistan faces a critical juncture in its economic trajectory, grappling with multifaceted challenges that threaten its stability and growth. This paper presents a holistic solution to the economic problem of the country, offering a multifaceted strategy encompassing macroeconomic stability, human investment capital, institutional reforms, social safety nets, and sectoral diversification. Addressing the root causes of structural weaknesses, fiscal imbalances, and external debt burden, this solution emphasizes the imperative of governance transparency and enhancement, and fostering a domestic environment conducive to investment and growth. Collaboration among diverse stakeholders is pivotal for executing this strategy, aiming to revitalize the economy of Pakistan and ensure sustained prosperity while prioritizing the well-being of its populace.

Avoiding the Dutch Disease in tourism-led economies: reconciling tourism development and sectoral diversification

Although tourism has produced long-term growth and progress, the economic consequences of this economic specialisation, which is summarised by the paradoxical effect known as the Dutch Disease, alongside the worst financial performance in tourism-led economies as a result of the COVID-19 pandemic, indicate the need for diversification in such economies. Previous research has overwhelmingly shown that tourism development results in decreases in traditional exports, overdevelopment of services and marginalises the weight of industry in the economy. Using a theoretical dynamic general equilibrium model, this article demonstrates that the Dutch Disease can be avoided in tourism-led economies, precisely owing to tourism specialisation, and non-tourism development is possible. More importantly, non-tourism development can be achieved by simultaneously enhancing the quality of tourism-based activities to increase international competitiveness.

Exploiting Growth Opportunities: The Role of Internal Labour Markets

Abstract We explore how business groups use internal labour markets (ILMs) in response to changing economic conditions. We show that following the exit of a large industry competitor, group-affiliated firms expand, and gain market share by increasing their reliance on the ILM to ensure swift hiring, especially of technical managers and skilled blue collar workers. The ability to take advantage of this shock to growth opportunities is greater in firms with closer access to their affiliates’ human capital, as geographical proximity facilitates employee relocations across units. Overall, our findings point to the ILM as a prominent mechanism making affiliation with a business group valuable at times of change. For the ILM to perform its role in the face of industry shocks, group sectoral diversification must be combined with geographical proximity between affiliates.

Contract Farming and Food Insecurity in an Open Competitive Economy: Growth, Distribution, and Government Policy

The paper explores the emergence and consequence of contract farming as a new subsector of agriculture in a small open developing economy, applying the theory of finite change in a general equilibrium framework. In this paper, we analyze the entry of a cash crop-producing foreign contract farming (CF) subsector within the agricultural sector of a country. Entry requires a cash crop price that is substantially above the price of the food crop already being produced within the country. CF (a) increases GDP and hence aggregate economic welfare; (b) may make income distribution more skewed; (c) reduces domestic production of food and hence, (d) increases food import and hence food insecurity. Thus, CF might imply a trade-off between inequality and growth. We employ a variant of the 3 × 3 mixed specific factor-Heckscher Ohlin general equilibrium model of production and trade where introduction of a new policy may lead to the emergence of a new sector resulting in finite changes where we show the possibilities of sectoral diversification with combinations of contract farming vis-à-vis traditional agriculture under some plausible conditions. Our results seem to be consistent when compared to some empirically robust conclusions found in the literature and some secondary data available on the FAO website. We also argue that the food insecurity problem gets aggravated as more and more countries engage in contract farming. Policy simulations identify critical parameters confirming the dominance of distribution over the growth effect in terms of a social welfare function. Simulations imply that there could be a food insecurity problem, as rises in GDP could result in increasing inequality so that government—to preserve social welfare—could restrict the extent of contract farming if non-food-producing sectors expand, causing terms-of-trade deterioration of food-importing nations.

Sectoral integration on an emerging stock market: a multi-scale approach

The purpose of this study is to examine the connectedness of industry sectors on the Johannesburg Stock Exchange in a time–frequency domain. We use econophysics-based methods like the wavelet multiple correlation and wavelet scalogram difference to identify the evolution of the connectedness of the sectors over time and at different frequencies. The findings show that the sectors on the Johannesburg Stock Exchange are especially integrated at lower frequencies. Wavelet multiple correlation peaks in response to local and global shocks like the black-swan COVID-19 pandemic in 2020 and the downgrading of South African debt by Fitch in 2013. Though there are opportunities for sectoral diversification on the JSE, this fails when it is most needed, during crisis periods. Investors should therefore consider other asset classes that could serve as a haven in times of crisis. Though extant literature has examined sectoral dependencies on the stock markets of developed and developing countries, to the best of our knowledge, this is the first study to examine this connectedness in a South African context using multiple nonparametric methods that are robust to non-normality, presence of outliers as well as non-stationary data.

ФІНАНСОВІ ІНСТРУМЕНТИ ДЛЯ ЕФЕКТИВНОГО УПРАВЛІННЯ РИЗИКАМИ В УМОВАХ ГЛОБАЛІЗАЦІЇ

The article discusses key financial instruments for effective risk management in the context of globalization. The main focus is on portfolio diversification as a strategy to reduce potential losses and ensure stable income. Also covered are derivatives on commodity markets, including futures, options and swaps, which allow investors to hedge against price fluctuations. Insurance is considered as an additional tool for risk management. The article emphasizes the importance of a deep understanding of the market, analysis of risks and opportunities, as well as the need for a strategic approach to investing in modern conditions of globalization. In the constantly changing global economic landscape, investors face numerous challenges that require flexible and innovative approaches to risk management. Attention is focused on geographic and sectoral diversification as methods of reducing the risk associated with specific regions or sectors of the economy. In addition, the role of education and continuous learning in the process of making investment decisions is considered. It was determined that only a combined approach, which includes various financial instruments and strategies, can provide investors with the necessary protection against risks and help achieve longterm financial success in the conditions of globalization. The relationship between globalization and the growing complexity of financial markets is presented. Globalization means that local events in one country can have global consequences, which in turn affects risk management strategies. The importance of understanding the cultural, social and political characteristics of different regions becomes key to effective investing. There is also a focus on technological innovations that provide investors with new tools and opportunities for market analysis, risk forecasting and portfolio optimization. Artificial intelligence, blockchain and other advanced technologies can become decisive in providing competitive advantages in a globalized world.

Трансформация сельских систем расселения Иркутской области в условиях депопуляции (на примере Чунского районного муниципального образования)

On the example of the Irkutsk region, changes in the system of rural settlement under the influence of the depopulation process are revealed. The period from 2002 to 2021 is considered. Geoinformation mapping shows a pronounced degradation of the rural settlement of most municipal districts of the region outside the Irkutsk agglomeration. The results of the study on the example of one of the municipal districts of the region — Chunsky, revealed that the process of depopulation covers all settlements: urban and rural, different functional and settlement types, with a central and peripheral intra-district geographic location. The main trigger for this process is the economic factor: deagrarianization of rural areas, a decrease in the production functions of rural settlements due to the instability of industrial and agricultural economic entities, their low labor intensity and low power, and the lack of sectoral diversification. The situation is complicated by the regional-peripheral type of geographical location and distance from sales markets. The main links of the settlement system of the area – the centers of settlement, are also subject to transformation, which, in the conditions of a general low population and a reduction in the number of rural settlements, can lead to the loss of the spatial organizing function of the area.

Diversification of Agriculture in India: A Regional Perspective

The topic of the current study is "Diversification of the Agriculture Sector in India: A Regional Perspective" from the years 2006–07 through 2017–18. This is an effort to gauge the rate of agricultural sector diversification in India. To determine the pattern of diversification over time in the key crops state- and region-wise in India's agriculture sector, an attempt has been made to divide the entire nation into four regions and include all major farm crops and states.

Economic sectoral diversification: A case study of the Gauteng provincial region, South Africa

Economic sectoral diversification: A case study of the Gauteng provincial region, South Africa