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Money and Wealth

What Active Diasporas Can Do For The Country And The Other Way Around

Radu Magdin

The Role of a Diaspora: As a former member of the Romanian diaspora, the 5th largest diaspora in the world in absolute terms and the largest in percentage terms in the OECD, I can wholeheartedly say that a country’s diaspora is one of the most overlooked means of support to a country’s development.

For many countries, large and small, diasporas are at the hub of economic and cultural life. With first-generation migrants numbering about 215 million globally (40% over 1990 figures) and about 250 million working outside their country of birth, it is difficult to overestimate the centrality of diasporas: internationally connected, a diaspora can often be the main conduit of technological transfers; inherently entrepreneurial, a diaspora can both start and fuel the rise of export-oriented domestic businesses; multi-lingual and multi-cultural, diasporas often both bring home countries’ culture on the international stage as well as export their country of residence’s back home.

This places a country’s diaspora not as the afterthought it often comes across in policy papers but closer to the beating heart of a country, however far away it may very well be.

What Diasporas Can Do For Their Home Countries

Quite often a diaspora is central to nation-building itself. In cases such as Israel’s this is literal, not only are infrastructure bonds marketed at diasporas, but it stands as a country composed of a former diaspora.

Furthermore, diasporas are an important source of income and foreign currency. Tajikistan’s diaspora contributes, through personal remittances alone, to about 34% of GDP, while Nepal’s and Kyrgyzstan’s account for over 25% of GDP. Globally, about USD 515 billion was being transferred by diasporas around the world as late as 2018 and this figure is rising, to an estimated USD 800 billion by 2022 and a projected USD 815 billion this year.

Alternatively, sometimes those funds are indirect. Studies on Canada’s experience with immigration show a correlation between immigration and changes in trade: a 10% increase in immigration from a country is linked with a 1% increase in exports to it and a 3% increase in imports.

Soft power is also an element. In cases such as Ireland, it suffices to say that Ireland’s 70 million strong diaspora has made Irish culture almost commonplace globally and infused U.S. culture with it, so much so that it is seen as having an impact in the UK – Ireland diplomatic disputes. The same, arguably, holds for many others, such as Israel’s diaspora or the Indian diaspora.

The Indian Example

Indeed, India’s 22 to 25 million strong diaspora is one of the most exceptional, showing the full potential of what an effective, mobilized diaspora can achieve.

The Indian diaspora contributes about USD 80 billion directly and significantly more indirectly, with money sent back by the Indian diaspora covering about 43% of India’s trade deficit in 2018. While Silicon Valley CEOs are the most well-known, it is also notable that 8% of U.S. founders of technology companies are Indian even though only 1.3% of the U.S. population is. Furthermore, by some estimates, almost a third of India’s external debt is matched by bank depositors from non-resident Indians. Meanwhile, the promotion of Indian culture abroad has fuelled a rise in tourism, which now accounts for 9% of GDP.

These numbers show the impact of a diaspora can have on a country and India stands as a case study.

What Their Home Countries Can Do For Their Diasporas

Making good use of their diasporas is something different countries do very differently. In some cases, such as Iran, bitter divisions linger. In others, such as Romania, diasporas are less engaged in terms of perceived mobilization (with the exception perhaps of Presidential voting days), even if projects such as repatriot.ro stand out. A new model of active participation and mobilization, after the initial one based on remittances, which dominated the last two decades, is needed. This new model is needed both in countries in search of their next country plan, and in the ones affected by crisis and in need to return to a stability path, like the case of Lebanon, a country with a huge and influential diaspora.

In many cases, more can be done to get inspired globally from the examples of Israel and India. For starters, it is important to acknowledge that a country’s diaspora is often its most important ambassador and, by consequence, provide the support needed to fulfil that role successfully. Secondly, a country’s diaspora can often act as the most innovative, entrepreneurial sector of an economy, even if at a distance. Understanding it as such and providing the international linkages and support needed for business start-ups can help fructify thousands if not tens of thousands of potential opportunities for growth and trade.

Takeaway

A country’s diaspora is often treated as a net loss for the country in question: “brain – and hands – drain”. This should not be the case, as the diaspora has the potential to be an economic engine as well as a wellspring of soft power for the country. Regaining brains & co does not have to be a physical operation. A country’s global citizens can be part of its team, while working abroad.  As the Indian example shows, the diaspora can be central to a country’s growth, diplomacy, and innovation – it is up to governments to realize its potential and court this human capital still emotionally linked to home.


Written by Radu Magdin.
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CEOWORLD magazine - Latest - Money and Wealth - What Active Diasporas Can Do For The Country And The Other Way Around
Radu Magdin
Radu Magdin is a global analyst and consultant, former prime ministerial advisor in Romania and Moldova. He writes on global leadership and communications. He is, since 2012, Chief Executive Officer of Smartlink Communications, where he advises people and organisations on how to best manage crisis and reputations, and is a well know analyst at home and abroad, having being widely quoted as an expert by global media. Radu Magdin is an opinion columnist for the CEOWORLD magazine. Follow him on Twitter or connect on LinkedIn.