Diaspora Bonds: Explaining Their Mixed Record

43 Pages Posted: 5 Sep 2013

See all articles by Clarisa Perez-Armendariz

Clarisa Perez-Armendariz

Bates College; Department of Poltical Science, Santa Clara University

Katrina Burgess

Tufts University

Date Written: 2013


A diaspora bond is a debt instrument issued by a country — or potentially, a subsovereign entity or even a private corporation — to raise financing from its overseas diaspora (Ketkar and Ratha 2010). World Bank economists argue that they can help developing countries raise much needed capital, and that these countries may issue them successfully at a discounted “patriotic” interest rate. However, the mixed success of the countries that have issued such bonds begs the question: Why do some countries issue diaspora bonds successfully, while others fail? Using Fuzzy Set Qualitative Comparative Analysis (fs/QCA) (Ragin, 1987, 2001, 2008) we compare nine diaspora bonds issued by six countries (Nepal, Ethiopia, India, the Philippines, Ghana, and Kenya) to identify the causal configurations that are necessary and sufficient for a diaspora bond issuance to succeed. Our main finding is that, while widely accepted conditions such as interest rates, credit risk, and political regime also affect diaspora bonds, their success or failure cannot be understood without taking into account institutions and politics particular to diasporas and their unique relationship with the bond-issuing government.

Keywords: diaspora, development, international migration, sovereign bonds, networks

Suggested Citation

Perez-Armendariz, Clarisa and Perez-Armendariz, Clarisa and Burgess, Katrina, Diaspora Bonds: Explaining Their Mixed Record (2013). APSA 2013 Annual Meeting Paper, American Political Science Association 2013 Annual Meeting, Available at SSRN: https://ssrn.com/abstract=2299696

Department of Poltical Science, Santa Clara University ( email )

500 El Camino Real
Santa Clara, CA 95053
United States

Katrina Burgess

Tufts University ( email )

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