Bonds of the Diaspora
With official development assistance insufficient to finance development needs in many poor countries, one resource that merits attention are the remittances and savings sent home by nationals working abroad. The challenge is to channel this income effectively.
WASHINGTON, DC – The goals of the post-2015 development agenda cannot be achieved without strong programs and adequate funding. Official development assistance amounts to roughly $130 billion a year; though foreign-direct investment and portfolio inflows can help poor economies, additional sources of development finance must be found.
One under-exploited resource is diaspora financing – that is, the remittances and savings earned by nationals working abroad and sent home to family and friends. The challenge is to channel this income effectively.
There are more than 230 million international migrants worldwide, which is more than the population of the world’s fifth most populous country, Brazil. The estimated $2.6 trillion that they earn annually exceeds the GDP of the United Kingdom, the world’s sixth-largest economy. Much of this income is taxed or spent in the host countries. But, assuming a 20% saving rate (close to the average for developing countries), this implies total annual diaspora saving of more than $500 billion.