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Abstract
Economic diversity has been promoted as a means to achieve
the goals of stability and growth. However, the link between diversity,
diversification and economic performance depends on the differences,
both conceptually and empirically, between diversity and
diversification. Unfortunately, the literature contains varying definitions
of diversity and diversification. I propose two key points in defining
diversity. First, it is a static concept. Second, it examines the
size, the presence of multiple specializations, and the linkages present
among industries within a region’s economy. A brief review of
diversity measures is used to discuss measuring diversity relative to
some standard, as an explanatory variable in examining growth and
stability, and other issues. No one diversity measure is critique free;
care should be taken when using a diversity measure as the only factor
in a policy designed to change the structure of a region’s economy,
given the goals of growth and stability.