Role of Diaspora in Socio-economic Development of India

Remittances - The principal focus with respect to the economic effects of Diaspora on the country of origin has been on their substantial financial contributions through remittances – private transfers from migrants to their families. According to the World Bank remittances can (i) reduce recipient household poverty, with spill over to other households; (ii) increase investment in education and health as well other productive activities; (iii) reduce child labour; and (iv) increase entrepreneurship.

Investment -Beyond remittances, Diasporas contribute to the economic development of their country of origin through Foreign Direct Investment (FDI) and transnational entrepreneurship, including support for entrepreneurs, start-ups and small businesses in the country of origin. They may be more likely to invest in economics that others would consider high-risk, simply because they have better knowledge and relationship opportunities that other investors lack. Diaspora investments may be guided not only by profit motives but also by long run considerations of establishing a base in the countries of their origin. They are likely to be better informed on the capabilities and requirements of domestic labour and the sort of training local labour requires. Third, quite often the factors which influenced the Diaspora to migrate from their homelands may influence the extent of their involvement and contribution to the development of their countries of origin.

Diasporas’ Knowledge Transfer - The constructive contributions of Diasporas to development in their country of origin are transfer of acquired knowledge. These Diasporas are a great source of transfer of technical knowledge and skills in the form of ‘brain gain’. Where knowledge exchange is concerned, Diaspora members can act as important interlocutors between the technology and country of origin. They can contribute these through not only permanent repatriation but also through short- term return.

Diaspora Philanthropy - One of the most important ways that Diaspora contributes to their countries of origin is through philanthropic engagement in many areas. Philanthropy has a pivotal role to play in advancing global equity.

Diaspora Advocacy - Diaspora organizations (and sometimes even individuals) are seen to be getting increasingly vocal and influential in their countries of origin and of settlement. They increasingly seek to influence government, media, corporate sector and other prominent groups and are therefore speaking up on a range of issues affecting their homeland.

Increase demand for Indian goods abroad – Diaspora has catalyzed the demand of Indian goods in their countries of settlement. The goods range from food, fashion to Indian entertainment industry. This has increased Indian export especially of handloom and handicraft sector.