By Moisés Naím
New links between émigrés and their home countries can become a powerful force for economic development. Lucio García, a gardener in Merrifield, Virginia, speaks daily to his family in a remote town in Bolivia using a prepaid phone card that costs him a few cents a minute. Eddie Baron Levi, a Mexican Congressman, commutes weekly from Mexico City to Los Angeles,where he and his constituents reside. Iqbal Farouqi, a Pakistani waiter working in Milan, has used the money he earns to purchase two small trucks in Karachi that he rents to relatives and manages through the Internet. This is not your parents’ diaspora. Globalization has greatly expanded the means through which people in one country can remain actively involved in another country’s cultural,economic, and political life. In fact, money transfers, travel and communications, networks and associations of nationals living abroad, and other new or improved opportunities for expatriates to “live” in one country even as they reside in another may be creating a powerful tool for development. In the old days, the main methods for communities of émigrés to keep in touch with their homelands andtheir cultures were through language, cooking recipes, and the occasional letter or visit to their countries of origin. Now cheaper travel allows for more frequent trips to their original homelands and for more friends and family to reciprocate the visits. Trade liberalization and export promotion mean that more goods from the old countries are available in the new ones. Émigrés can sip their morningcoffee while reading online newspapers from their native countries or even listening to the radio stations they left behind. In the evening, satellite dishes allow immigrants to catch the broadcast news of their homelands. Phone calls back home are a fraction of their cost a decade ago, fueling a fivefold boom in the number of minutes billed to prepaid phone cards since 1997 and making such cardsa $4 billion a year market. And none of these privileges are necessarily limited to the well-to-do. Moreover, the deregulation of international financial markets coupled with new technologies has made sending money back home easier and cheaper than ever. Last year, people residing abroad sent home more than $100 billion. For many families, the money sent by family members
overseas spells thedifference between relative poverty and total indigence. That goes for many countries, too. Worker remittances account for 24 percent of Nicaragua’s gross domestic product, 19.6 percent of India’s, and 6.5 percent of Morocco’s. In Mexico, remittances are the third largest source of foreign exchange after oil exports and tourism. And in Turkey, they are four times larger than the country’s inflowsof foreign direct investment. In most developing countries, remittances are far larger than funds received through official development assistance or foreign portfolio investment. In fact, many expatriate communities routinely organize events to raise money for projects in their home countries. But the impact of these economic ties goes well beyond supporting individual relatives or helping rebuildthe local school. For example, surveys show that about 10 percent of Hispanic immigrants in the United States also trade with their home countries. In fact, the engagement of immigrants in international trade can have a significant economic impact. As James E. Rauch writes in the December 2001 Journal of Economic Literature, over time “a 10 percent increase in immigrants to the United States willincrease U.S. exports to the country of origin by 4.7 percent and U.S. imports from the country of origin by 8.3 percent.” Rauch also reports that in Canada a 10 percent increase in immigrants from a given country eventually increases Canadian exports to that country by 1.3 percent and imports from there by 3.3 percent.
Successful entrepreneurs of Indian, Israeli, Chinese, Taiwanese,...