Diaspora Entrepreneurs: From Brain Drain to Brain Gain

Jonathan Ortmans, President, Public Forum Institute

We have long argued that the American model for development assistance could improve dramatically if entrepreneurship becomes a stronger element of economic development efforts. Unfortunately, the importance of new firm creation is a concept that has yet to gain relevance in traditional development models, such as the Washington Consensus. However, there are a few actors who understand the power of entrepreneurship and have been using it to improve lives. Diaspora entrepreneurs are using their experience and understanding about entrepreneurship to invest in new ventures in their country of origin. These transnational entrepreneurs view a globe of porous borders.
 
Diaspora entrepreneurs for example leverage networks of fellow “diasporans” to gain knowledge about market opportunities and infrastructural gaps that they can fill (e.g. provision of telecommunication services). They have firsthand experience in working in two business environments, and are eager to tackle the hurdles of doing business in their home country using such experience. This was the case of Patrick Awuah, a former engineer at Microsoft who recently started one of the top universities in Ghana.

This phenomenon of diaspora entrepreneurship has been receiving attention from development communities. The contributions of diaspora entrepreneurs are beyond the financial impact of remittances used for investment in the most capital-constrained countries in the world. Development experts have identified various types of diaspora capital—human, social, and financial—as a useful development resource for migrant-sending countries.

Business incubators have also been paying attention to this phenomenon. Many incubators now specialize in diasporans’ new ventures, helping turn migrant’s investment interest into actual start-ups. For example, IntEnt has been offering services to entrepreneurial and enterprising migrants residing in the Netherlands who wish to set up a business in their country of origin (so far, Ghana, Surinam, Morocco, Turkey, Ethiopia, Afghanistan, Curacao). Social projects have also spawned around the idea of diaspora entrepreneurship. Investors without Borders (IWB), for example, provides a lending platform where individual lenders—beginning with the Ghanaian diaspora, then branching out to include the broader community of socially responsible investors—could loan money to small- and medium-sized enterprises (SMEs) in Ghana.

Many readers of this blog are familiar with the research showing that the entrepreneur is the chief agent for innovation, job creation and economic growth. Diaspora entrepreneurs are extending that role across borders, expanding human welfare one new entrepreneurial venture at the time.

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Jonathan Ortmans is president of the Public Forum Institute, a non-partisan organization dedicated to fostering dialogue on important policy issues. In this capacity, he leads the Policy Dialogue on Entrepreneurship, focused on public policies to promote entrepreneurship in the U.S. and around the world. In addition, he serves as a senior fellow at the Kauffman Foundation.

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