When we hear the phrase diversification of portfolio, we often want to associate this phrase to investments; meaning a combination of stocks, bonds, and money market accounts acquired both in domestic and international markets. Diversification reduces risk and results in a better return. However, this concept should also be applied to countries who have comparative advantages in producing goods and services. Venezuela has relied heavily on it oil-producing capabilities and has not really diversified into other areas which would bring it much needed foreign reserves. Now that the price of crude oil on the worlds market is falling, Venezuela is now suffering its effects. This should be a wake up call for Dominica that it should not put all of its eggs in one basket cause should that basket fall, it is likely to lose all of the eggs. Dominica has once relied heavily on agriculture, particular on the production of bananas as it main foreign reserve earner; now that the industry is no more, and the tourism industry is still struggling to survive, the country is in dying need of diversifying its portfolio.
Posted on: Wed, 21 Jan 2015 17:45:18 +0000
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