Substantial Investments to Court Diaspora Entrepreneurs for Development Gains
As the world economy continues to struggle to regain its footing following the 2007-09 global recession and contend with the fiscal crisis that has engulfed most wealthy states, it has become clearer that the road to recovery will be a long and winding one for many.
Migrants and their descendants play a role in that recovery, whether by sending remittances, taking part in volunteer and philanthropic efforts in home countries, or creating jobs by initiating or supporting entrepreneurial efforts. (See Issue #4: Highly Skilled Migrants Seek New Destinations as Global Growth Shifts to Emerging Economies).
Issue No. 5 of Top Ten of 2011
With the goal of building and sustaining economic growth in mind, some countries have intensified their efforts to court investments from their nationals and co-ethnics abroad, recognizing that diaspora entrepreneurs are uniquely positioned to spot opportunities in their countries of origin and capitalize on them.
Take Ireland: Particularly hard hit in the economic downturn, the country has just launched a $14 million investment fund to draw in new business startups from members of the 70-million-strong Irish diaspora.
Targeted toward North America, the United Kingdom, Europe, and Australia, the Irish government program aims to provide between $275,000 and $825,000 to entrepreneurs who are willing to locate their investor-ready businesses in Ireland. In launching the fund, Ireland's Jobs, Enterprise, and Innovation Minister Richard Bruton said that companies started in Ireland provide more than three times more benefit proportionally than do multinational firms.
In addition to Ireland's recent effort to encourage entrepreneurship among the diaspora, 2011 also saw the creation or reinstatement of several private programs and public-private partnerships aimed at spurring or supporting diaspora entrepreneurship in developing countries. The funds invested in these programs are significant, and represent a shift from just talking about the need to encourage diaspora entrepreneurs to actually supporting them.
In May, the U.S. Department of State (DOS) launched the International Diaspora Engagement Alliance (IdEA) at the Secretary's Global Diaspora Forum. One of the main goals of IdEA — a platform of public-private partnerships designed to engage diaspora communities in the Unites States and managed by the Migration Policy Institute with the institutional support of DOS and the U.S. Agency for International Development (USAID) — is to support diaspora entrepreneurs.
As part of this platform, Secretary of State Hillary Clinton announced in November that the U.S. government will contribute $100 million toward a new partnership between DOS, the Inter-American Development Bank, Univision Networks, and others to create the Latino Idea Partnership (“La Idea”) — a business competition intended to support business and social entrepreneurs from the Latin American diaspora for startups in Central America and Mexico.
This announcement came on the heels of the June launch of the Caribbean Idea Marketplace (CIM), which was awarded $50 million in support from the U.S. government. Like La Idea, CIM is a business competition that fosters collaboration between local entrepreneurs in the Caribbean and their counterparts in the global diaspora, with particular focus on the Bahamas, Barbados, Dominican Republic, Guyana, Jamaica, Suriname, and Trinidad and Tobago.
In late 2011, USAID and Western Union launched a second round of the African Diaspora Marketplace (ADM) after a successful first program in 2009-10. Through ADM, members of the African diaspora in the United States compete for matching grants of up to $100,000 by submitting business plans for Africa-based startups with local partnerships that will contribute to economic development in sub-Saharan Africa. New this year is an emphasis on specific industries likely to create the most economic impact: agribusiness, renewable energy, and information and communication technology. Winners will be selected in 2012.
Other developments in the support of diaspora entrepreneurs in 2011:
- The Armenia 3500 program is a private initiative launched this year that aims to lure 3,500 members of the Armenian diaspora back to their native lands and encourages investments and entrepreneurship among repatriates.
- The Europe chapter of the Nigerians in the Diaspora Organization (NIDO) announced this past summer the reinstatement of a $200 million investment fund for new businesses in Nigeria.
- The Jamaican embassy in Washington, DC is embarking on an outreach campaign with Jamaica Promotions Corporation to encourage Jamaican entrepreneurs in the United States to seize investment opportunities on the island.
- The government of Haiti has prioritized diaspora investment in its recovery and development strategy, and is specifically looking for funds from its estimated 4 million global diaspora members to flow into the tourism, technology, and garment manufacturing sectors, although no specific programs have been announced.
- There has been increased talk of working to lure diaspora entrepreneurs and investors to do business in Nepal and Malaysia, based in part on the successful Chinese and Indian models. As yet, however, no private or government-led initiatives have been developed to reach out strategically to these groups.
Even with the increased attention and investment in diaspora entrepreneurship on the part of some developing and Western nations, there is more that can be done to encourage and support those in the diaspora who might be able and inclined to initiate or invest in new businesses in origin countries. Perhaps the most important way developing countries can encourage entrepreneurs is to establish a favorable business climate for investment with regard to property rights, rule of law, and a conducive tax structure for doing business, among other options.