Download 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 Diaspora
• Diasporic workers 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 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 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 Diaspora
• HOWEVER ;
• 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 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 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
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 diaspora in Hong Kong, Taiwan,
and Southeast Asia, including Chinese
multinational firms in Singapore, Malaysia,
and Indonesia.
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 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.
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
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.
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.
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.
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.
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 Ireland
but the Irish American diaspora can claim little
credit in this.
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 diaspora rallied 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
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.
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.
Economic Development and Diaspora
• The second variable is the capability of the
members of entire diaspora to invest in
homeland.
• Members of a labor diaspora are 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.
Economic Development and Diaspora
• The third variable is the diaspora's inclination 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.
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
Economic Development and Diaspora
• Labor diasporas consist 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.
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 lowskilled 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.
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 ethniccontrolled economy appears whenever
members of ethnic groups find jobs through
ethnic networks in the general economy.
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).
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.
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.
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 coethnic workers: employers and employees are
then bound together by trust, which makes
business more efficient.
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.
Economic Development and Diaspora
• Ethnic economies’ basic premise is that
people who suffer from discrimination and
exclusion are the most likely to turn to selfemployment.
• 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.
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.
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."
Economic Development and Diaspora
• But there are also positive aspects of ethnic
economies as reflected on diaspora’s lives
-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
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 than they would
have in the mainstream economy.
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.