Diasporans as transnational brokers : a theory of homeland investment -- Research design and new firm-level data -- Measuring firms? : social connectedness -- How do diaspora-affiliated firms use social networks? -- The development impact of diaspora-affiliated firms
A causal relationship between diaspora populations and bilateral foreign direct investment has been established empirically, but the question of which elements of diaspora difference are responsible for this relationship, and what this implies for development, remains unanswered. A growing literature in economic sociology and business suggests that diaspora investors are motivated by patriotism and other social and emotional factors, endowing them with unique potential as a force for international development. This literature argues that diaspora-owned firms are more socially responsible than other foreign firms, and engage in a range of economic development-promoting behaviors when investing in the homeland: hiring more local labor, paying higher wages, and making more contributions to charity. I argue that diaspora-owned firms enjoy competitive advantages in the homeland based on access and attention to information. I evaluate these theories at the firm level, using data from an original survey of 174 foreign-owned firms in the post-conflict country of Georgia. Across a range of self-reported behaviors and priorities, I find no evidence that diaspora-owned firms are more likely to engage in a specific set of socially responsible, pro-development behaviors than are other foreign firms, and some evidence that they are less likely to do so. I argue that diaspora investors are uniquely capable, but not uniquely philanthropic, when doing business in their homelands. Adapted from the source document.
Fragile states are trapped in cycles of poverty, violence, and instability. War and instability deter investment. Low investment retards growth, and lack of growth engenders further conflict and instability. One path out of this equilibrium is for fragile states to succeed in attracting foreign direct investment (FDI) while political risk remains high. My dissertation explores firm-level variation in how investors experience and respond to political risk, identifying types of investors who are, and are not, willing to invest in post-conflict and other fragile states. I then explore the mechanisms through which these investors manage political risk. I focus specifically on foreign firms that specialize in political risk management, and on diasporans (i.e. migrants and their descendents), a group of potential investors that is theorized to be particularly willing to, and capable of, investing in fragile states. Empirically, I exploit both time-series-cross-sectional data on dyadic FDI between states, as well as firm-level data from an original survey of foreign firms in the post-conflict country of Georgia