Business, investment & industry

The role of Diaspora in poverty reduction in their countries of origin: the paradigm of business, investment & industry

Aim

This panel discussion will try to examine the role of Diaspora in promoting business, Investment and Industry in their countries of origin and the impact this may have on poverty reduction in the Third world through influencing the economic and industrial strategies there.

Background

The ex-Secretary-General of the United Nations, Javier Perez de Cuellar had declared that: “in the past decade, the social and economic situations in the most undeveloped nations worsened, GNP per capita decreased and the amount of foreign trade was only one percent of that of world trade”. According to the UN documents, the Third World nations, with 70 per cent of the world’s population, subsist on only 30 per cent of the world’s GNP. Their per capita income is only one-twelfth of that of the other countries. Indeed, the gap between the standard of living in the under-developed Third World and that of the “developed’ countries remains very wide: 43% of the world’s population still belongs to the “very poor” States, while one third of humanity suffers from food deficiencies, as per UNESCO publications.

The International development aid championed by the UN and supported by many western countries has not brought about the answer to the question of sustainable development in the poorest countries of the world. This is hardly surprising as only 7% of this aid was aimed at production as per OECD figures. The rest goes into humanitarian and social aid, owing to the reactive nature of these initiatives.

In fact, the present economic situation of third-world nations is in part the result of low levels of development, their backward industry, and outdated agricultural methods. According to UN documents, at present, most of the global research and development effort is devoted to military purposes or the commercial objectives of large corporations. Little of this is of direct relevance to conditions in developing countries. Developing countries therefore have to work, individually and together, to build up their technological capabilities.

Recall that all the developing countries that managed to get out of the poverty trap and significantly improved the standard of living of their citizens; such as the South East Asian countries, have adopted a clear industrialisation path as part of their development models (Dafa’Alla et al 2016). Likewise, to get out of the poverty zone, Under-developed countries need to adopt an integrated sustainable development plan, in which industry, business and investment represent the pivotal point. An injection of heavy industrialisation to their economy, with particular focus on higher value chain products for export, is required in order to improve the trade balance and lift the country out of the poverty zone.

According to OECD, poor and struggling countries will need national development strategies which respond to global macroeconomic trends to ensure that they thrive in a global economy. And this is where the role of Diaspora comes into play. According to the Migration Policy Institute (MPI), Diaspora groups may have a role to play in peace and reconstruction process, and governments that host them should carefully consider encouraging the involvement of those who can be seen as honest brokers. For many countries, the Diaspora are a major source of foreign direct investment (FDI), market development (including outsourcing of production), technology transfer, philanthropy, tourism, political contributions, and more intangible flow of knowledge, new attitudes, and cultural influence.  This emphasises the potential role of Diaspora in promoting business leading to poverty reduction in their own countries of origin, provided their huge resources and impact can be utilised intelligently and effectively.

There are different models for how countries of origin have elected to benefit from their respective Diaspora. For example, 26% of the Jordanian GDP comes directly from Diaspora remittances. China, India and Taiwan, however, focuses less on remittances in favour of pursuing three very different business-oriented models in seeking Diaspora contributions to development. China has long worked to attract direct investment and open trade opportunities through overseas Chinese communities. India’s recently launched Diaspora policy is multi-pronged, pursing direct investment, portfolio investment, technology transfer, market opening and out-sourcing opportunities. Taiwan, on the other hand, has pursued a “brain trust” model, focused on attracting human capital from the Diaspora. While the Chinese and Indian models are attractive from business and investment perspectives, the Taiwanese model is of special interest as it is the key to building up a technological capability as part of the national development strategies in the under-developed countries of origin of the Diaspora. But, can these models be universally applicable to the Third World?

In this panel discussion, we want to address specific questions regarding the under-developed state of the Third World and the role of promoting business, investment and industry in leading to sustainable development and mechanism for poverty reduction, if at all possible. These questions are:
  • First, is the poverty state of the under-developed countries a real one or a perceived problem as we unfairly compare them to the developing countries?
  • If real, then who is it to blame for this state of affair? Is it a legal, economic or political issue? Are there any legal implications that need to be pursued? How does the international law see this problem?
  • Irrespective of whom to blame and if the impact is global, how best can we address and rectify the problem? Globally or locally?
  • What is the role of industry, business and investment strategies in improving the situation?
  • What is the role of the Diaspora in this? Are they part of the problem or the solution?
  • Can Diaspora have a role in promoting business, investment and industrial sectors benefiting from their external exposure and expertise?
  • How can this role of Diaspora be integrated in in national development plans, if at all possible? Should host countries of Diaspora encourage this role and how? Are there any legal issues to be promoted or overcome to ensure positive outcome?
  • What can we recommend as a “winning formula” or “Diaspora Model” to promote business, investment and industry in the under-developed countries and hence get the Third World out of the poverty zone? Is this “universal” or “local”? 

Panel Members

Dr. Adil Dafa’Alla (Moderator)
Specialist
Aero Data for Loads Operations
Airbus Group UK Ltd.
Bristol – United Kingdom

Prof. Alain Ndedi
Professor and Chair
Entrepreneurship, Organisation, Strategy, School of Business and Public Policy
Saint Monica University,
Douala – Cameron

Prof. AbdelGadir Warsama Ghalib
Legal Counsel & Professor of Law
Manama – Kingdom of Bahrain

Dr. Bamidele Wale-Oshinowo
Department of Business Administration
Faculty of Business Administration
University of Lagos
Lagos – Nigeria