Strengthening the business sector in developing countries: The potential of diasporas

Diaspora entrepreneurship has witnessed dramatic and exciting developments in recent years, with successful entrepreneurs in the North expanding their business reach to their home developing countries, bringing along with them capital, technology and market knowledge. This has been most visible in certain high-technology sectors and in other areas such as pharmaceuticals. The two interrelated mechanisms through which the diasporas are playing a role in strengthening the business sector in developing countries are, firstly, inflows of financial resources (i.e. collective remittances, equity and bond finance) and, secondly, their ability to transfer knowledge, strengthen skills and facilitate trade through their networks and contacts. While illustrating the various success stories in this area, this chapter also emphasizes the diversity among diaspora groups and examines the underlying factors influencing the degree and nature of an expatriate community’s contribution to business development in the homeland.