Harnessing remittances and diaspora knowledge

A recent report by UNCTAD on harnessing remittances and diaspora knowledge to build productive capacities in LDCs, although a study on the LDCs, the findings, conclusions and recommendations are also valid for developing countries such as Sri Lanka which also has a similar diaspora.

The report examines the potential role of the diaspora as a source of development finance and as channel of knowledge transfer and as a facilitator of trade and market opportunities in the host country and identifies policies to consider in designing policy framework for harnessing remittances and diaspora knowledge to build productive capacities. Remittances constitute a significant source of external financing, if properly managed, would be valuable for capital scarce developing countries.

There is also growing interest in the role of migrants, especially skilled professionals who can play a role as ‘development agents’ linking home and the countries they work in. The report therefore discusses options for turning the ‘brain drain’ into ‘brain gain’. ‘Skilled persons’ in this context are those with university education such as doctors, engineers, scientists, managers, lawyers and entrepreneurs.

The report discusses not only their saving and investment potential, but also their role as ‘knowledge brokers’ who could facilitate the emergence of new trade patterns, technology transfer, skills and knowledge exchange.

It is also pointed out that the onus of mobilising the diaspora and transferring specialised knowledge and technology, instead of being wholly placed on the diaspora, should be viewed as a potentially important complement to a country’s development strategy to be mobilised within the framework of broader policy initiatives to support the financing and development of productive capacity.

In the context of a lengthy period of global economic stagnation, not only the LDCs but developing countries too would have to be prepared for a decline in trade and investment. In such a situation it would be appropriate to rethink remittances policies and the role of the diaspora in transferring knowledge and being catalysts of industrial development in their home country.

The recommendations for unlocking the LDC’s diaspora potential are also valid for developing countries with a sizeable diaspora, particularly of highly skilled people. The main recommendation is for policy makers to improve the current policy framework on remittances and diaspora knowledge in order to better harness them for the development of productive capacity.

It is also suggested that policies on migration, remittances and diaspora engagement should not be formulated in isolation, but as an integral part of national development strategy. They should also not only be considered as givers, but also receivers in return.  The report gives examples of diaspora contribution in some middle income countries including India, China and Israel in building knowledge based industries in the home countries in the recent past. The lesson being that such entrepreneurs can help develop firms at home and also serve as a two way link for market knowledge and technology knowhow, etc. Entrepreneurs working in light industries can help develop similar industries at home through contacts, knowhow, etc. developed in the host countries and also contribute to upgrading managerial and innovating capabilities at home.

The diasporas could also strengthen the knowledge base in home countries as they form a knowledge pool which can be organised as Diaspora Knowledge Networks (DKNs) facilitating flows of knowledge and technology to home countries.

The report notes that there is ample evidence from case studies among developing countries that DKNs have played a critical role in technological upgrading, industrial development and building of productive capacities in their home countries. However, a proactive diaspora policy is essential for ensuring that DKNs which are in essence voluntary networks gain the trust and confidence needed to remain engaged and ensure that their activities create a positive impact.  While the role of DKNs is important to impart new technologies, etc., the report cautions against perceiving them as a panacea or a substitute for local efforts to build productive capacity, but should be considered as another element in growth based on domestic productive capacities. Failure to recognise the role of DKNs in accelerating technological change and direct investment would, according to UNCTAD, remain an untapped resource and a missed opportunity.



(Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.)