Japan should tap expatriates
Watching coverage of the disaster at a Japanese restaurant in the Liberty area of Sao Paulo, where most of the Brazilian "nisei" (second-generation Japanese) live Credit: Getty/NELSON ALMEIDA
As the United States joins the rest of the world in asking how to help Japan through its worsening humanitarian and economic crisis, there are some 1.3 million Americans who may have the answer: Americans of Japanese descent.
For over a decade, international development practitioners and migration scholars have heralded the power of immigrant and next-generation savings to lift many parts of the world out of poverty and disaster, and set them on course for long-term economic development.
Remittances -- the fancy term for money immigrants send back home -- can be anything, from a quick cash infusion sent via wire transfer or mailed in a manila envelope to family members, to endowments for local hospitals or the construction of retirement homes. The very breadth and variety of remittances have made it hard for economists to figure out how to calculate their amount or impact, let alone how governments and grassroots organizations can employ them in major development or humanitarian efforts. The Migration Information Source estimated that some $414 billion worth of remittances crossed borders worldwide in 2009, some three-quarters of which traveled from developed nations to developing ones.
Just last week, we were reminded of yet another way to capture immigrant financial power in the service of devastated and underdeveloped homelands. The Greek government announced its intention to issue $3 billion in "diaspora bonds." Greece isn't the first country to issue diaspora bonds -- both India and Israel have done so, to varying degrees of success. But this is an option very few developing countries -- and countries recovering from major humanitarian crises -- have effectively put to use.
A "diaspora bond" is issued by a government to emigrants living in other countries in an effort to tap into their assets in their current countries. It's usually issued in the form of long-dated securities that can be redeemed only at maturity. The bonds are the most directly quantifiable source of funds from a given diaspora to its native government.
Consider that a single immigrant may buy just a few hundred dollars worth of diasporic bonds in his native government. Thousands of immigrants buying these bonds can create a potent source of investment financing -- without the administrative costs of an international humanitarian agency or the budgetary restrictions of foreign governments.
As early as 2006, the World Bank began tracking the prospects of diaspora bonds as vehicles for long-term economic development in poorer countries, under the prospect that they may be far more effective than foreign aid or foreign development. Although these bonds would only be as effective as the governments to which they were bequeathed, World Bank economists suggested that diaspora bonds offer a uniquely long-term, dedicated form of foreign financing that can be used to help fund investment projects.
Just this week, World Bank economists Dilip Ratha and Ngozi Okonjo Iweala suggested in the New York Times that diaspora bonds could meaningfully engage the nearly 23 million African migrants around the world -- and their annual savings of more than $30 billion -- in the development of major agricultural resources and markets.
If the events of the past week have taught us anything, it is that no country is invulnerable to disaster, no matter how developed its economy, and that one wounded economy has the potential to affect the fiscal health of the entire world. In our global economy, it's important to realize that immigrants are more than just labor seekers. They can also be resources for international development and humanitarian assistance.
Japan, one of the world's most stable governments -- with one of the world's most prosperous diasporas -- may find valuable help from its sons and daughters overseas.
