Comparative study on diaspora engagement in emerging economies : India and China

Abstract

India has the world’s second largest diaspora (estimated at around 25 million1 in the world) next to China with a substantive presence in all the six continents. The contribution of the Indian diaspora to India’s economy and society is a matter of great pride and achievement for Indian’s the world over. Non-Resident Indians (NRI) and People of Indian Origin (PIO) have transferred knowledge and expertise, added to India’s income through remittances and recently have mediated the massive entrepreneurial energy that has led to the rise of India’s Information Technology (IT) and IT Enabled Services (ITES) sectors. However, the Indian diaspora has not come forward as investors in the Indian economy in the scale that was expected post-liberalization in the early 1990’s. Diasporic FDI, especially in comparison with China, has been very modest in India. This study investigates some of the major themes as to why diasporic involvement has been so modest and provides some important policy recommendations that will allow for better engagement with the Indian diaspora. The study is carried out by doing a comparative analysis of diaspora engagement methods adopted by the neighbouring country China. Among several aspects associated with diaspora engagement by a country, the following are studied: a) the diasporic investments back to country, b) remittances and c) retaining talent and skilled labour management. The Foreign Direct Investments (FDIs) are taken as a main proxy for investments coming to the country. The initiatives to enhance engagement with diaspora taken at state level are included. A unique aspect of the remittances coming back to India is that a major share is directed towards philanthropic activities, a part of which is covered at the end of this report.