Economic development and diaspora
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Economic Development and Diaspora. Almost 3 percent of the global population, totaling a round 200 million people worldwide, are immigrants.

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Economic development and diaspora
Economic Development and Diaspora

  • Almost 3 percent of the global population, totaling around 200 million people worldwide, are immigrants.

  • The Global Commission of International Migration (GCIM) reports that migrants add $240 billion annually to the economies of their home countries, while spending more than $2 trillion in their host nation.

Economic development and diaspora1
Economic Development and Diaspora

  • Diasporicworkers in the new global economy are unique in that they contribute not only to their personal livelihood, or even to that of their nuclear and extended families

  • BUT more expansively to their hometowns (its infrastructure and public services: roads, bridges, supplies of drinking water, schools, textbooks) and even the modernization or "development" of their native countries, especially developing countries.

Economic development and diaspora2
Economic Development and Diaspora

  • Diasporic remittances do not only directly benefit relatives and friends at home, but also stimulate local national economies through increased consumption and spending.

  • These remittances also flow toward infrastructural development projects: helping to build roads, staff local schools, and generously contribute to other hometownprojects.

Economic development and diaspora3
Economic Development and Diaspora

  • Developing countries have become financially dependent upon diasporic remittances sent home by overseas migrant workers annually that national or global efforts to reduce international economic migration may have severe consequences for the economic sustainability of those countries.

Economic development and diaspora4
Economic Development and Diaspora


  • In countries sending highly skilled, well-trained, or professionally educated workers (like nurses, physicians, engineers, physicists, professors, and so on), the loss of human capital and potential tax revenues may actually exceed the diasporic remittances sent back home, even though migrant professionals with higher salaries tend to remit at higher rates.

Economic development and diaspora5
Economic Development and Diaspora

  • In most of the current cases, we observe that the policies and behavior of homeland governments are evolving to include more of the contribution of the diasporic workers to the homeland economies.

  • E.g.: Sri Lankan government

Economic development and diaspora6
Economic Development and Diaspora

  • The government created the Sri Lankan Bureau of Foreign Employment to promote the country's main resource namely its highly industrial and literate people

  • From a national development perspective, the active exportation of labor:

    -eased unemployment problems,

    -resulted in monetary capital inflows to compensate for human capital outflows

    - the diasporic workers' remittances contributed to the national income an decreased foreign exchange needs at a time when military expenditures and government borrowing were increasing

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Economic Development and Diaspora

  • Overseas Chinese

  • Changes in the homeland policy, Deng Xiaoping , reversed the Maoist policy of autarchy and economic isolation as of the 80s.

  • A large portion of investments originated from the Chinese diasporain Hong Kong, Taiwan, and Southeast Asia, including Chinese multinational firms in Singapore, Malaysia, and Indonesia.

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Economic Development and Diaspora

  • Chinese diaspora capitalized on their familiarity with Chinese culture and their language skills to circumvent legal and bureaucratic obstacles to business operations.

  • Chinese cultural norms, including fluency in Mandarin

  • Beyond their extended families, their business methods function through informal networks of trust avoiding as much as possible involvement with legal procedures, government ,bureaucratic and judicial institutions

Economic development and diaspora9
Economic Development and Diaspora

  • Many of these diasporic Chinese motivated by sentimental, non-economic incentives

  • A desire to help the communities at home; at the burial places of their ancestors.

  • They also hold expectation that as China once again becomes a power to be reckoned with and gains in international prestige, its successes will reflect favorably on China‘s diaspora populations abroad.

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Economic Development and Diaspora

  • Irish Catholics

  • From 1820 to 1920, millions of men and women emigrated from Ireland. About 5 million came to the United States, two-thirds of them Catholic.

  • Among the persons of lrish descent in the United States about half were Protestant. They became a component of the American Anglo-Protestant mainstream. Irish Catholics, on the other hand, became a distinctive ethnic and religious minority

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Economic Development and Diaspora

  • They comprised of predominantly poor, uneducated, unskilled peasants. The men mostly worked in construction sites, railways, mines, and factories, performing much of the heavy, unskilled labor for the expanding US economy.

  • They encountered hostility, sometimes violent, plus social contempt and economic and social discrimination and exclusion that persisted until the end of World War II.

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Economic Development and Diaspora

  • They remitted funds to their families and following with sympathy for the struggle in their homeland for home rule and independence from the colonial establishment.

  • A minority attempted to participate actively in the struggle, sending money and arms to the Irish Republican Army.

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Economic Development and Diaspora

  • When the homeland achieved independence their interest in Irish politics gradually waned

  • Their main effort, aside from the struggle to support their families, focused on earning the credentials that would gain them entry into the US middle class and on achieving respect and acceptance for their community and its institutions.

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Economic Development and Diaspora

  • World War 2 was the watershed in the United States that swept away discrimination against unpopular European minorities, Irish, Italian and Jewish.

  • This enabled large numbers of Irish Catholics gradually to enter the ranks of corporate management. Succeeding decades witnessed the emergence of Irish Catholics with the necessary wealth.

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Economic Development and Diaspora

  • In the mid-1980s, Irish government initiated a new strategy for economic development and modernization. It would attempt to attract foreign direct investment .

  • Foreign investment capital poured into Irelandbut the Irish American diaspora can claim little credit in this.

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Economic Development and Diaspora

  • Armenian Diaspora

  • During the seventy-year Soviet occupation of their homeland, the diaspora was split into highly organized, contending political factions based in large part on their attitudes toward the Soviet regime.

  • After the independence diasporarallied support for the homeland through remittances .

  • Annually these remittances estimated to form 30 percent of GNP. Many households benefiting directly from remittances estimated to count for 80 percent, most spent on consumption but some invested in home improvements education and small businesses

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Economic Development and Diaspora

  • Individuals such as Armenian American billionaire financier Kirk Kerkorian. From 2001 to 2009, he devoted over $150 million which the largest component spent on road construction and repair, a critical infrastructural need for a landlocked country .

  • Also through the lobbying efforts, US is giving significant amount of foreign aid to Armenia.

  • In 2004 the USAID gave the largest amount of development aid to Armenia.

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Economic Development and Diaspora

  • Esman argues that three variable factors affect diaspora's ability and inclination to contribute to the economic development of their ancestral homeland.

  • The first is the investment climate in the country of origin.

  • If the homeland government welcomes foreign direct investment, protects private property, enforces contracts, permits the remittance of profits and give incentives for members of the diaspora to commit funds to the economic development of their former homeland.

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Economic Development and Diaspora

  • The second variable is the capability of the members of entire diaspora to invest in homeland.

  • Members of a labor diasporaare unlikely for several generations to have the wealth that would enable them to invest their surpluses abroad.

  • They might dutifully remit funds to help relatives and contribute to charitable, religious, and cultural institutions, but these are likely to be used primarily for consumption.

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Economic Development and Diaspora

  • The third variable is the diaspora'sinclination to invest in homeland.

  • They may have no interest in helping a former homeland where they were oppressed and treated as second-class persons.

  • Members of a diaspora may be so firmly integrated into their host country that they no longer identify with their ancestral land of origin and thus have lost the will to provide assistance.

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Economic Development and Diaspora

  • The growth of diasporic businesses in host countries, such as North America and Western Europe and the role of ethnicity in contemporary economic life is an important phenomenon to be explored.

  • It is possible to make another classification here as

    -Labor diasporas

    -Entrepreneurial diasporas

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Economic Development and Diaspora

  • Labor diasporasconsist mainly of unskilled individuals with little formal education and no business experience. Like North Africans in France, Turks in Germany, and Mexicans in the United States, they join the lower ranks of the employment hierarchy in their host country.

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Economic Development and Diaspora

  • Entrepreneurial diasporas, by contrast, include substantial numbers of people with business experience and skills. They are on the lookout for opportunities to start their own businesses in their adopted country.

  • Like Jews in the United States and Chinese in South East Asia, they may find it necessary to begin in low-skilled occupations, but through education or enterprise, members of the first and of the second generation soon emerge as professionals and businesspeople, some becoming very wealthy.

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Economic Development and Diaspora

  • Another similar classification:

  • "ethnic ownership economy": this is the classic form of an ethnic economy, in which immigrants own firms in the private sector.

  • "ethnic-controlled economy": An ethnic-controlled economy appears whenever members of ethnic groups find jobs through ethnic networks in the general economy.

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Economic Development and Diaspora

  • For immigrants there are two classes of resources:

  • -Class resources

  • -Ethnic resources

  • Class resources are universal in the sense that they are not specific to culture or ethnicity. They can be divided in four kinds of capital: financial (wealth, money), human (education, work experience), cultural (tastes, behaviors, knowledge), and social (networks).

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Economic Development and Diaspora

  • Many immigrant groups have almost no class resources at all but manage to enter entrepreneurship.

  • e.g.: Italians who arrived with almost nothing at the turn of the century now belong to the middle class.

  • Resources can be called "ethnic" if they depend on group membership. Ethnic resources become most apparent when members of a ethnic community collaborate regardless of their class position within the group.

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Economic Development and Diaspora

  • Being a member of a group can constitute a business advantage or opportunity in several ways.

  • Group members have particular needs that can support business activities based on supplying them with imports from the homeland-food and entertainment, communication and travel services to the homeland.

  • Ethnic entrepreneurs start by relying on such protected markets.

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Economic Development and Diaspora

  • Since banks are reluctant to deal with them, ethnic businessmen often turn to co-ethnics to borrow money.

  • Ethnic entrepreneurs can also rely on co-ethnic workers: employers and employees are then bound together by trust, which makes business more efficient.

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Economic Development and Diaspora

  • Families are absolutely crucial to most ethnic businessmen.

  • Entrepreneurial families are often described as collective actors in which individuals do not follow selfish behaviors but adhere to the familial strategy.

  • Women in particular playa key role, functioning simultaneously as employees, children, too, are often expected to contribute.

  • Transnational business practices rely on family networks.

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Economic Development and Diaspora

  • Ethnic economies’ basic premise is that people who suffer from discrimination and exclusion are the most likely to turn to self-employment.

  • Groups that have little human, social, or cultural capital are resource-disadvantaged and are unlikely to develop an ethnic economy because they lack the needed class resources in their new host countries.

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Economic Development and Diaspora

  • Negative aspects of ethnic economies can be seen as conflicts between different ethnicities over scarce resources in the host country.

  • E.g.: Black-Korean conflicts in 1992 in Los Angeles area mobs deliberately burned and destroyed several hundred Korean owned shops.

  • The job-capturing carried out by certain ethnic groups can be detrimental of others chances as such.

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Economic Development and Diaspora

  • Another negative aspect can be the working and living conditions that are very often characterized by long working hours, low earnings, and frequent bankruptcies in an ultra-competitive environment.

  • Also ethnic employers' family members and employees frequently seem to be exploited in what is misleadingly described as ethnic "solidarity."

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Economic Development and Diaspora

  • But there are also positive aspects of ethnic economies as reflected on diaspora’slives

    -Empower the diasporic workers and some could climb up the ladders easier

    --Ethnic economies may challenge the questionable values of a capitalist society in which people rely only on themselves: trust and solidarity, group cohesion

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Economic Development and Diaspora

  • Ethnic enterprises would employ from their ethnic group thus creating an enclave in which newcomers were not penalized for their outsider status and give the new immigrants better upward opportunities thanthey would have in the mainstream economy.

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Economic Development and Diaspora

  • Relying on ethnicity can be seen as a transitional phase leading to better opportunities in the future in the mainstream economy.

  • Indeed, working in the ethnic economy may, prevent or delay immigrant workers' acquisition of the skills they need to step into the mainstream labor market.