Financing Development at Home: A Survey Experiment on Diaspora Members

• In Event: The Political Economy of Migration and Finance

Abstract

Developing countries often depend on the wealth of diaspora communities, but under which conditions are migrants willing to sacrifice personal gain for their origin country's national welfare? On the one hand, diaspora communities may support home country governments as a means of assisting family at home or out of a sense of nationalism. On the other, diaspora communities may oppose home country governments, which they may have intentionally left by emigrating or come to question after leaving their country of origin. This paper investigates how social, political, and self-interested motivations explain the decisions of diaspora members to share financial capital with home country governments in the form of diaspora bonds. These bonds allow diaspora members to invest directly in the governments of origin countries, usually at below-market returns, a "patriotic discount" that encourages migrants to contribute charitably through a less-lucrative investment. We explore how national and political affinity can shape diaspora members' willingness to invest, adding to a growing literature that investigates the conditional nature of investors' risk assessments. Using a conjoint survey experiment fielded to members of the Indian diaspora in the United States, we randomly manipulate features of hypothetical bonds to measure heterogeneity in willingness to invest in Indian diaspora bonds. We conclude by discussing the relevance of findings for several African governments currently considering diaspora bonds as a potential and innovative source of development finance.

Authors

• Lindsay R. Dolan, Wesleyan University

• Alexandra Olivia Zeitz, University of Oxford