Chapter 20.2

Question 1

What is diversification?

Answer 1

Diversification is an economic growth and development strategy that involves countries broadening their supply of goods and services in export markets. It helps to overcome the problems of over-specialization and create new employment opportunities.

Question 2

What are the benefits of diversification?

Answer 2

-Help developing countries to reduce their vulnerability to falling prices in primary sector output and declining terms of trade
-It can also help developing countries to reduce their vulnerability to external supply-side shocks such as extreme weather conditions or natural disasters
-Sensible strategy for a smaller or land-locked economy so that the country is not overly dependent on a single source income from primary sector output.

Question 3

What are the disadvantages of diversification?

Answer 3

-There is a relatively high risk of failure as developing countries lack expertise
-Higher costs are incurred due to a broader range of products being manufactured.

Question 4

What is a social enterprise?

Answer 4

An organization that focuses on meeting specific social objectives, rather than primarily aiming to earn a profit for its owners. Instead, a social enterprise aims to maximize improvements in social and environmental well-being

Question 5

What are the different types of social enterprises?

Answer 5

For-profit and not for-profit

Question 6

What is the goal of not-for-profit organizations?

Answer 6

Their primary objective is to achieve their social goals, not to maximize profits

Question 7

What is the goal of for-profit organizations?

Answer 7

Profits are put back into the enterprise rather than received as profit income by the owners