Diaspora finance for development: from remittances to investment

This JRC technical report was originally published via European Commission. Authors of the report are as follows: Stephen Gelb; Sona Kalantaryan; Simon McMahon; Marta Perez Fernandez.

This report examines different forms of diaspora finance around the world. Diaspora finance involves remittances, understood as inter-personal financial transfers between migrants and their countries of origin, and diaspora investment, defined as asset-producing financial instruments through which diasporas (migrants and their descendants) can invest in organisations in their country of origin. There is an extensive body of research and data on remittances sent by migrants, the annual flows of which are now larger in aggregate than either official development assistance (ODA) or foreign direct investment (FDI). But much less is known about diaspora investment, or about how remittances and diaspora investment can be effectively channelled to support development.

We identify over 300 diaspora finance initiatives through a systematic review of over 500 research, policy and grey literature documents. The study highlights the broad diversity of diaspora finance mechanisms around the world, while also drawing attention to the lack of systematic international data on diaspora investment flows and to the severe shortage of quality evidence on the development outcomes of different diaspora finance initiatives.