Economic diversification is inextricably linked with economic development and poverty reduction and is also widely seen as a positive trade objective in sustaining economic growth, a local think tank has said.
The Policy Monitoring Research Center noted that economic diversification traditionally, has been applied as a strategy to encourage positive economic growth and development.
“Empirical evidence shows that greater diversification is correlated with more rapid growth of per capita income,” Bernadette Zulu, the think tank’s executive director, said on Thursday.
According to Zulu, economic diversification makes countries less vulnerable to adverse terms of trade shocks by stabilizing export revenues.
It also fosters knowledge spillovers and increases returns to scale, which in turn creates learning opportunities that lead to new forms of comparative advantage, she added.
Zambia has for a long time been pursuing economic diversification and copper mining has been the major foreign exchange earner for the country with notable fluctuating trends over the years.
Both the need to diversify away from copper, as well as the growth of other sectors such as agriculture and manufacturing, have been emphasized by a number of economic development experts.
The Zambian government has been undertaking economic diversification to reduce the country’s reliance on copper exports and exploit other sectors of Zambia’s rich natural resource base by promoting agriculture, tourism, gemstone mining and power generation as well as investments in solar energy. Enditem