Friday, October 22, 2010

MPI Report: Mobilizing Diaspora Entrepreneurship for Development

Diasporas are in a unique position to have a positive effect on the economy of their countries of origin - the key is for those countries to seize the opportunities. In the fifth report in the series, the Migration Policy Institute's Migrants, Migration, and Development Program shares more on the role of diasporas in the development of their home countries, and the policy implications for international development agencies such as the US Agency for International Development (USAID). This newest report, Mobilizing Diaspora Entrepreneurship for Development, discusses diasporas' role in promoting economic growth through entrepreneurship in their countries of origin. The study, by MPI's Kathleen Newland and Hiroyuki Tanaka, documents how diaspora entrepreneurs often are motivated to contribute to job creation and economic growth in their native lands. But, despite the potential to attract diaspora investors and entrepreneurs, many developing countries have met only limited success.

The key findings, which include policy options, point to the potential for a symbiotic relationship:

Diaspora entrepreneurship creates businesses and jobs, and spurs innovation.

Diaspora investors create economic, social, and political capital through global networks.

Diaspora entrepreneurs tap into social capital through their comparative advantages in cultural and linguistic understanding.

ecause of this, governments must then foster entrepreneurship among members of diasporas, supporting and promoting policies and programs that aid such growth. At the same time, a distinction must be made between necessity entrepreneurship (those who have no effect on economic development) and opportunity entrepreneurship (those who impart a positive economic impact by specializing or taking advantage of market openings in high-demand and rapidly growing sectors of the economy).

The study can be found at www.migrationpolicy.org/pubs/diasporas-entrepreneurship.pdf and www.microlinks.org/diaspora. The sixth and final report in this series, which examines the role of diasporas in advocacy and diplomacy, will be published in early November, and shortly after that, we will release a book that brings together the series with some additional overarching analysis.

In the last two months, MPI released the first four studies in the series, undertaken in cooperation with USAID's Diaspora Networks Alliance (DNA). The first documented the role of diasporas as portfolio investors in their countries of origin; a second study described the various ways that diasporas spend time volunteering in their ancestral countries; a third looked at the philanthropic donations of diasporas; and our most recent discussed diasporas' role in promoting trade and tourism back home.

The series is available on MPI's Web site at www.migrationpolicy.org/research/migration_development.php and on USAID's diaspora website at www.microlinks.org/diaspora.

KJ

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