What does export diversification aim to accomplish?

Export diversification aims to expand the range of products or markets that a company or country engages in. This strategy is primarily focused on reducing risk associated with dependency on a limited set of products, markets, or customers. When a business diversifies its exports, it can mitigate the effects of adverse market fluctuations, economic downturns, or changes in consumer preferences in any one market or product line.

For instance, if a company relies heavily on exporting a single product to a single country, any change in demand or trade policy can severely impact its revenue. By diversifying, the company spreads its risk across different products and markets, making it more resilient against these shocks. This approach not only strengthens the company’s position in the global marketplace but can also lead to new opportunities for growth and expansion.

In contrast, the other options convey strategies that are contrary to the goal of export diversification. Relying on a single market increases vulnerability, while reducing overall industry competition can stifle innovation. Limiting exposure to foreign markets does not align with the goals of diversifying exports, as it does not allow for the benefits derived from engaging with multiple international markets.