Diaspora and Small Country Economic Development

Abstract

The promise of diaspora business networks is yet to materialize in a sustainable fashion. This paper offers a realistic, survey-based, perspective of diaspora driven economic development in small economies of Europe and the former Soviet Union. Emphasizing new waves of international migration and remittances flows, the literature puts disproportionate hope on diaspora to fill the structural voids, what this paper calls a diasporization argument, to motivate international business growth. Informed by a unique Armenian Diaspora Survey, this paper critiques the conventional view and proposes a new analytical framework, reaching three conclusions. First, a diaspora is a multilayered socioeconomic construct, diminishing its first-mover potential. Second, any successful engagement is a function of a sustained interaction of a diaspora with homeland. Finally, in the absence of systemic engagement infrastructure, a diaspora transfer of nonmonetary skills is short-lived. Thus, small open economies remain structurally disadvantaged integrating international business networks. This paper attempts to inform international business and policy literature on small open economies that are seeking to diversify their development approaches, especially following the 2020 economic and health crises.

Keywords: development, diaspora, economic policy, migration, remittances, transition economies

JEL Classification: F3, O11, P2