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| Foto: Reuters |
Many countries have
substantial diasporas, but not many are proud of it. After all, people tend not
to leave a country when it is doing well, so the diaspora is often a reminder
of a country’s darker moments.
El Salvador,
Nicaragua, and Cuba, to cite three examples, had more than 10% of their native
population living abroad in 2010. And this figure does not take into account
their descendants. The bulk of this migration happened at a time of civil war
or revolution. In other places, massive outmigration occurred in the context of
political change, as in Europe when communism collapsed.
The relationship
between diasporas and their homelands often encompasses a broad palette of
sentiments, including distrust, resentment, envy, and enmity. Colloquially,
people describe a bout of emigration as a period in which a country “lost” a
certain proportion of its population.
But people who leave a
country have not disappeared. They are alive and socially active. As a result,
they may become an invaluable asset not only to their country of destination
but also, and importantly, to their country of origin.
One important
connection is remittances, which add up to some $500 billion a year worldwide.
The largest recipients are India, Mexico, and the Philippines. For countries
such as Armenia, El Salvador, Haiti, Honduras, Jamaica, Kyrgyzstan, Lesotho,
Moldova, Nepal, and Tajikistan, expatriates remit the equivalent of more than
one-sixth of national income – an amount that often exceeds exports. And this
money can do a lot of good, as the World Bank’s Dilip Ratha has highlighted.
But a diaspora’s
potential economic importance goes well beyond remittances. As the late
historian Philip Curtin documented, from the beginning of urban life, millennia
ago, trade typically involved networks of co-ethnic merchants living among
aliens. Greeks, Phoenicians, trans-Saharan traders, the Hanseatic League, Jews,
Armenians, overseas Chinese, and the Dutch and British East India Companies
organized much of world trade through such networks. Although these alien
traders were sometimes politically powerful in the host countries, they were
often weak and faced discrimination.
The economist Avner
Greif argues that these co-ethnic networks’ durability and resilience
throughout history reflects their ability to enforce contracts at long
distances when the existing institutional framework could not do so reliably.
They could establish trust between exporters and importers because they could
punish opportunistic behaviors. For a tight-knit community, reputational costs
and other forms of social punishment transcend geography: not paying for goods
might mean not being able to marry your children well.
Legal institutions
have since evolved to facilitate impersonal trade. Exporters and importers no
longer need to know one another, because they can write a contract that a court
will enforce.
And yet the impact of
co-ethnic networks may well be as important as ever. As Hillel Rapoport of the
Paris School of Economics and his co-authors have shown, controlling for other
determinants of trade, countries trade more with, and invest more in, the
diasporas’ home countries. In recent work with Dany Bahar, Rapoport has also
shown that countries become good at making the products that their migrants’
home countries are good at making.
I interpret these
results as the consequence of tacit knowledge or knowhow. To do things, you
need to know how, and this knowhow is mostly unconscious. After all, most of us
know how to ride a bicycle, but we are not really aware of what our brain does
to achieve that feat, or how it develops that ability through practice.
This knowhow moves
geographically in the brains of those who possess it and is transferred to
others at work. That is why ethnic cuisines diffuse through diasporas, not
cookbooks. And it may be why economies with more diverse sets of migrants
perform better. Also, return migration is often an important source of new
skills for a country. In ongoing work, Ljubica Nedelkoska of Harvard’s Center
for International Development has found that the wages of Albanians who never
left tend to increase when migrants return home.
Evidence of the
importance of diasporas is everywhere, if you care to look. Franschhoek (French
corner in Afrikaans) is a beautiful valley near Cape Town settled by Huguenots
in the late seventeenth century. That is why, to this day, wines are made
there.
Likewise, Joinville is
a southern Brazilian city settled in the late nineteenth century by relatively
uneducated Germans. Because of the cultural links they and their descendants
have maintained with the mother country for more than 120 years, the city
excels at advanced manufacturing of products that had not been invented when
the migrants came. Morocco is full of French-language call centers that get their
contracts through a cousin in Paris.
East Asian
industrialization exploited the links created by the network of overseas
Chinese. India’s high-tech industries were to a large extent created by
returning migrants and are deeply connected to the diaspora. Israel is an
entire country created by its diaspora, and its thriving high-tech sector, too,
has benefited from sustained ties. By contrast, many Latin American countries
have substantial diasporas abroad, but few equivalent success stories.
A country’s diaspora,
and the diasporas it hosts, can be a huge asset for its development. Diasporas
are not gusanos or worms, as Fidel Castro refers to Cubans abroad. They are a
channel through which not only money, but also much tacit knowledge, can flow,
and they are a potential source of opportunities for trade, investment,
innovation, and professional networks.
But a diaspora can
work its economic magic only if the host country tolerates it and the home
country appreciates it. Governments should have a diaspora strategy that builds
on natural feelings of identity and affection to cultivate this social network
as a powerful source of economic progress.
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This article is
published in collaboration with Project Syndicate. Publication does not imply
endorsement of views by the World Economic Forum.
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Author: Ricardo
Hausmann, a former minister of planning of Venezuela and former Chief Economist
of the Inter-American Development Bank, is Professor of the Practice of
Economic Development at Harvard University, where he is also Director of the
Center for International Development.
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