In order to get valuable returns from the investment. The investors priorities differ sectors in investing some invests in share market, land, housing etc. Investors are encouraged to do this by MODERN PORTFOLIO THEORY, as holding several different SHARES and other ASSETS helps to reduce RISK. At the sharp end of business, however, diversification is somewhat out of fashion. Economic studies of diversifying corporate MERGERS have found that these often hurt the shareholders of the acquiring firm; by contrast, diversified FIRMS that have sold off non-core businesses have typically made their shareholders much better off.
A diversified economy is an economy based on a broad spectrum of economic sectors. For example, China is a diversified economy. It is rich in natural resources and it has strong industrial capacities and flourishing online services. On the contrary, Russia and Brazil, although also belong to the BRICS group, are not diversified economies. Russian economy almost rely solely on natural resources and defense industry. Brazil’s major exports are natural resources.