How diasporas economically impact their homelands

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Image source: countrynavigator.com


Globalization has paved the way to a limitless mobility of people from around the world to move and find refuge, be it for political or economic security, from their country of heritage to a foreign land. Diasporas have made some of the world’s biggest cities into huge cosmopolitan centers, serving as melting pots for a great diversity of cultures, backgrounds, and ways of life. Cities like New York, London, Dubai, and Hong Kong have a substantial percentage of expatriates living and working within their boundaries.

Although the motivations of such mobility may be personal, there are ways in which groups in diaspora unknowingly help their countries of origin, especially in terms of social and economic impact. This is because they maintain their connections to their homeland and in many instances, they preserve a legal identity as well as establish a socioeconomic presence in their country of origin. In turn, this type of migration has contributed to an increasing dependence on transnational networks for social interaction and commerce.

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More importantly, establishing a socioeconomic link to their countries of heritage can greatly benefit both the nation of origin and their host country since it can create stronger diplomatic relations as well as promote global business and trade. While other countries like Armenia and Israel benefit from diasporas as vital political assets, communities from countries like India and the Philippines have introduced massive economic effects through remittances. The increase of remittances from this form of migration has been observed to cause noticeable economic and social development back home.

Beyond their known contributions through remittances, diasporas have played an important developmental roles for their countries of origin through unknowingly stimulating trade as well as foreign direct investments. This results in booming businesses and promising entrepreneurial projects.

Lastly and more importantly, these mobilized communities and engaged diasporas have helped fuel a dynamic transfer of new knowledge and skills that will, in the long run, contribute to their homeland’s strength and ability in competing in the globalized market.


LOM Financial is an award-winning offshore financial services firm based in Bermuda, serving clients—mostly high net worth individuals and global expatriates—for over 25 years. For inquiries, call (441) 292-5000 or visit its official website.  

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