Diaspora Networks: A New Impetus to Drive Entrepreneurship

In the early 1800s, John Ford and his son, William Ford, left their Irish homeland to come to America in search of greener pastures in the New World. What ensued was beyond the imagination of the elders of the Ford family. William’s eldest son, Henry Ford, established one of the greatest business empires in the world. Henry’s innovations revolutionized the way people would use transportation in their daily lives. The effects of his innovations were felt all over the world and, most importantly, in his ancestral home—Ireland.

One summer day in 1912, Henry visited Ireland to reconnect with his roots. Conscious of Ireland’s low development level Henry felt a strong emotional draw to apply the knowledge and ideas he had accumulated to revitalize the depressed area of Cork, where he traced his family roots. His decision to expand his company in his homeland was based on his emotional desire to reconnect and contribute to the development of his ancestral land. Henry’s story illustrates the significance of a Diaspora bond in global entrepreneurship.¹

This article examines how Diaspora entrepreneurs are uniquely placed to identify market opportunities in their home countries and are able to use this information to create and invest in new ventures, spurring job creation and economic growth. This article also advocates for a stronger element of Diaspora entrepreneurship in aiding sustained economic development efforts, and provides suggestions on Diaspora engagement policies to utilize this asset effectively.

The premise that entrepreneurship will translate directly into high levels of economic growth and lead to innovation is intrinsically tied to Diaspora entrepreneurship. The phenomenon of Diaspora entrepreneurship has been gaining considerable attention because it represents a rich resource that leads to promising prospects for economic growth. Consider the scale of the capital flows in a Diaspora network. In 2010, worldwide remittance flows are estimated to have exceeded $440 billion. Of that amount, developing countries received $325 billion, which represents an increase of 6 percent from the 2009 level. Recorded remittances in 2009 were nearly three times the amount of official aid and almost as large as foreign direct investment (FDI) flows to developing countries.² If emerging entrepreneurs from the Diaspora are leveraged optimally, they can help reduce overt unemployment, alleviate poverty, and raise the standard of living across the globe.

Diaspora bonds characterized by ethnic and social affiliations have played an important and strategic role in shaping cross-border trade and commerce activities and promoting global entrepreneurship. Historically, the term was used to describe the exile of Jews from their ancestral homeland, Israel. Incidentally, the term has evolved and has been applied to explain the potent economic force that the Israeli Diasporas have come to represent. Other historical Diaspora networks include Phoenician trading networks distributed throughout the ancient Mediterranean,³ 15-century Chinese business outposts in Southeast Asia, and the origin of international finance through Diaspora-based banking networks spanning 16-century Europe.⁴

In today’s context, the size of Diaspora networks and the global reach that they extend due to inexpensive air travel and communications channels are redefining their potential. At one point, Diasporas were internationally dispersed networks, but now they have evolved and have become more interdependent than ever before. The unprecedented movements of Diasporas on such a large scale have set a global demographic trend that marked the 20th and 21st centuries.⁵ It looks as though this trend will continue as processes of urbanization and globalization continue their advances, and the full impact of climate and population changes take effect.⁶ Today, there are 215 million first-generation migrants around the world representing 3 percent of the world’s population.⁷ If migration continues to grow at the same pace as over the past 20 years, some analysts predict that there could be 405 million international migrants by 2050.⁸

Indeed, the number of “transnational citizens” who have permanent residences and engage in businesses in both their adopted countries and their countries of origin are on the rise. These trends fundamentally illustrate that Diaspora networks offer a huge global reach and are potentially the...