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Global Diaspora Forum for 2012 held at Washington

Combined buying power of the minority population in the US is around $2.5 trillion

Published: Aug 11, 2012 12:44:44 PM IST
Updated: Aug 13, 2012 11:39:00 AM IST
Global Diaspora Forum for 2012 held at Washington

As part of its efforts to leverage the strengths of the diaspora, the US Department of State and the US Agency for International Development (USAID) hosted the second annual, two-day Global Diaspora Forum for 2012 in Washington, D.C. in July. More than 500 leaders from diaspora communities with roots in over 50 countries, US government officials, private stakeholders and executives from nonprofit organizations and foundations explored new ways to tap the diaspora to boost economic growth in the US and in countries of their origin or heritage.

The Minority Business Development Agency (MBDA) of the US Department of Commerce estimates that the combined buying power of the minority population in the US is around $2.5 trillion. MBDA pegs the combined economic output of diaspora-owned and operated businesses in the US at $1 trillion currently and the number of jobs created directly and indirectly by minority-owned businesses at 16 million.

Participants discussed how the interplay of migration, culture, technology and economics is shaping a world that is less defined by a zero-sum game of winners and losers, but more by integration, interconnectedness and interdependence that offers the potential to create value globally. Along with this comes the growing concept of universal kinship, powered in large measure by diaspora communities whose hyphenated identities enable them to contribute to their country of origin and the country in which they live or have lived through entrepreneurship, volunteerism, mentorship, philanthropy and diplomacy.

The United Nations estimates the global diaspora population at 214 million, which would hypothetically make them inhabitants of the fifth most populous country in the world. Of this, the size of the US diaspora is 62 million. The Indian-American diaspora, which consists of People of Indian Origin (PIOs) and Non-resident Indians in the US (NRIs), is 2.8 million per the US Census data for 2010.

 “By tapping into the experiences, the energy, the expertise of diaspora communities, we can reverse the so-called brain drain that slows progress in so many countries around the world, and instead offer the benefits of the brain gain,” said Hillary Rodham Clinton, US Secretary of State, who was keynote speaker at the conference. She was alluding to the concept of the loss of intellectual capital in areas of the world from where people migrate.

That concept has since given way to terms such as brain gain, brain bank and brain circulation in the context of the diaspora’s transferable skills and knowledge across multiple geographic boundaries. (The International Organization for Migration and the Migration Policy Institute's 2012 handbook provides information on how governments, including India, are promoting these concepts. Click here to read more )

“Now, in terms of international development and our work to reduce poverty and improve lives, this can be a game-changing effort,” she said. “But that is not all. It is also a recipe for spurring greater economic growth in the United States as well. And it holds the promise of advancing strategic interests like rebuilding societies after conflicts or disasters and improving relations with key countries.”

As an example of how diaspora entrepreneurs create economic opportunities for the US and their countries of origin, Clinton talked about a recent trip to Hanoi, Vietnam, with a delegation of American businesses.

“The business leaders were all buzzing about the opportunities they are discovering in Vietnam’s burgeoning market. But a few savvy entrepreneurs were clearly way ahead of the curve. One was Jonathan Hanh Nguyen. He had left Vietnam as a young man, lived in the Philippines, and then studied in the United States, and when relations between America and Vietnam opened up in the 1990s, he was one of the first to see the economic potential. And he built a thriving business bringing well-known American brands into the Vietnamese marketplace, from designer clothing to fast food pizza, creating in the process thousands of jobs and bringing our countries closer together,” Clinton said.

In the area of soft diplomacy, Tara D Sonenshine, the Under Secretary of State for Public Diplomacy and Public Affairs at the US Department of State, talked about her mandate to strengthen people-to-people connections between the US and other countries.

“The diaspora community is central to our efforts,” she said. (Click here to read Sonenshine’s interview in Forbes India on how the Indian-American diaspora is an important voice in strengthening Indo-US people-to-people ties).  

Romi Bhatia, Senior Advisor for Diaspora Partnerships, Global Partnerships Division, USAID, discussed opportunities in promoting public-private partnerships with diaspora communities to enhance economic development initiatives. For example, leveraging the efficiency of Indian-American entrepreneurs in Silicon Valley to promote economic development in India. (Click here to read Bhatia’s interview in Forbes India on how the USAID is engaging the Indian-American diaspora to leverage social development goals).

US government officials discussed their strategy to build long-term economic opportunities for the US in developing countries through diaspora entrepreneurs.

During a breakout session at the US Department of Commerce, Steve Glickman, Director for International Economic Affairs, National Security Council at the White House, pointed out that the goal of the National Export Initiative of 2010 is to double US exports in five years.

He asked the group of immigrant minority-entrepreneurs what the government could do to leverage diaspora communities to grow exports. According to data from 2007, the US Census Bureau estimates that minority-owned businesses in the US are three times more likely to export.

Glickman said diaspora entrepreneurs have a natural advantage in exporting and expanding operations in countries of origin because they understand the culture, speak the language, are knowledgeable about the local business and policy environment and have local networks.

Global Diaspora Forum for 2012 held at Washington

He said that in addition to gaining economic benefits from exports, the goal is to promote what he referred to as economic statecraft – building trading relationships with companies and other governments, which would lead to better bilateral foreign relations.

The US Commercial Services of the Department of Commerce currently has seven international offices in India located in Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi. The goal is to facilitate US companies to start exporting or increase their sales in India.

Steve Gardner, Chief Counsel for the Commercial Law Development Program (CLDP) at the US Department of Commerce said diaspora entrepreneurs who are exporting to their countries of origin could provide valuable information on how to make US trading partners better importers.

Benjamin Rhodes, Deputy National Security Advisor for Strategic Communications to US President Barack Obama, said it’s important to build partnerships and engage in markets.

“Diaspora communities are going to be central to that,” he added.

Rhodes said the US wants other economies to thrive because these are its markets. He also pointed to how diaspora communities are an important voice in the diplomatic process, especially during times of crisis.

For example, when the Arab Spring broke out, Rhodes said the US government was able to increase contacts on the ground through its diaspora. He said Arab-American entrepreneurs are keen to participate in rebuilding efforts. Offering another example he said after the earthquake in Haiti, Haitian-Americans reached out to the US government to provide knowledge and understanding of how to mobilize resources with most impact. He said the Pakistani diaspora is actively engaged with the US government to explore ways to improve US-Pakistan relationship.

“The input that we get from diaspora communities have a real impact on policy,” he said.

Another key aspect, remittances by the diaspora serve as a subset of foreign direct investments and lower contagion risks in a globally integrated financial system.

“My compass for my work is my dad. He made me understand that remittances are a personal commitment to where you came from,” said Dr. Rajiv Shah, USAID Administrator.

According to the World Bank, migrants worldwide sent $440 billion in remittances in 2010, up from $132 billion in 2000. Of this, $325 billion was sent to developing countries. Remittance from immigrants in the US was $95 billion in 2010.

Shah discussed how remittance income not only benefits individuals and families but also increasingly is a hedge against capital flight risk in some parts of the world. In a financially integrated global economy, remittances provide macroeconomic stability in tough times.

But beyond initiatives to harness the financial capital of diaspora entrepreneurs, efforts are underway to tap diaspora communities for mentorship and volunteerism.

Last year, the US Department of State, USAID and the Migration Policy Institute (MPI) created the International diaspora Engagement Alliance (IdEA), a nonprofit organization managed via a public-private partnership.

“Since IdEA’s launch, we’ve engaged over 1,500 diaspora community groups and organizations representing 67 countries around the globe – or as I always say, half the flags out there in the front hall. We want to continue this work and look for new opportunities to work together to mobilize partnerships, to maximize investments in programs in communities of heritage around the globe,” said Kris Balderston, Special Representative for Global Partnerships, US Department of State.

New initiatives from IdEA include a diaspora volunteer corps in partnership with USAID, Accenture LLP and Cuso International. Highly skilled diaspora professionals will volunteer on development assignments in their countries of origin. The pilot phase of the initiative will include five countries: Jamaica, El Salvador, Bolivia, Ethiopia, and the Philippines. (Click here to read an interview in Forbes India with Roopal Shah, co-founder of US-based Indicorps, a nonprofit organization that enables volunteerism among young Indian diaspora).

IdEA announced a partnership with MentorCloud, an online mentoring platform that aims to promote human resource development globally by connecting US-based diaspora with students and young entrepreneurs in their countries of origin. (Dr. Ravishankar Gundlapalli, CEO of MentorCloud, talked to Forbes India on his company’s initiatives in India. Click here to read the interview).

Another new partnership is with GlobalGiving, a charity fundraising website for over 1,100 social entrepreneurs and nonprofit organizations in more than 120 countries. IdEA announced a collaboration with GlobalGiving to link diaspora communities to an online platform for giving back to their countries of origin or heritage.

As part of this initiative, GlobalGiving is inviting diaspora organizations to develop online fund raising opportunities and to expand their networks. 

Dennis Whittle, co-founder, told Forbes India that around 20 percent of crowd-sourced grants and corporate matching funds awarded through GlobalGiving go to social development in India.

“There is a lot of accelerating interest to provide grants to entrepreneurs in India especially in the area of water treatment,” he said. “We have a large number of corporate partners who think India is one of the most important emerging markets in the world.”

But beyond multinational corporations and nonprofit organizations, the diaspora’s strengths in contributing toward economic and social development were largely untapped until recently.

“When I first started out, people thought diaspora was two you took when you had a headache,” said Kingsley Aikins, CEO of Dublin, Ireland-based Diaspora Matters, which advises companies and governments on methods for engaging with diaspora communities.

“Migration is the phenomenon of our times. But now you can be here and there, with hyphenated identities. Geography used to dictate your identity – no more,” he said, adding that governments should be facilitators rather than implementing diaspora engagement to create co-value.

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