Diaspora Interest in Homeland Investment
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Interest
in
Homeland Investment KateGillespie*
THE UNIVERSITY OF TEXAS AT AUSTIN
Liesl Riddle** THE UNIVERSITY OF TEXAS AT AUSTIN
EdwardSayre*** KENYON COLLEGE
DavidSturges**** THE UNIVERSITY OFTEXAS-PAN AMERICAN
This paper examines four diaspora communities resident in the United States that were targeted by their homelands as foreign investors during the 1990s. The homelands comprise Armenia, Cuba, Iran, and Palestine. We pose the question: What are the determinants of interest in homeland investment, and can
M
ost less developed countries cur-
rently welcome or even encourage foreign investment. In fact, they often find themselves in competition for such investment. Various empirical studies
they be generalized across the four communities? The paper explores concepts of ethnic advantage, altruism, homeland orientation, and perceptions of business impediments, as well as investigating the role of demographic factors regarding investment interest.
suggest that foreign direct investment (FDI) is affected positively by domestic market size [Davidson 1980; Dunning 1973; Nigh 1985; Scaperlanda and Mauer 1969; Terpstra and Yu 1988],
Gillespie is Associate Professor of International Business in the Department of Marketing Administration at The University of Texas at Austin.
*Kate
Riddle is a Ph.D. candidate in the Department of Sociology at The University of Texas at Austin.
**Liesl
Edward Sayre is Visiting Assistant Professor of Economics, Deparment of Economics at Kenyon College. David Sturges is Associate Professor of Management in the Department of Management, Marketing and International Business at The University of Texas-Pan American. JOURNAL OF INTERNATIONAL BUSINESS STUDIES,
30, 3
(THIRD
QUARTER
1999): 623-634.
623
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DIASPORA INTEREST IN HOMELAND INVESTMENT
adequate infrastructure, and attractive structural characteristics [Kumar 1994]. LDCs that rank relatively low on some or all of these factors may need to pursue creative strategies. Our study explores one such strategy: the targeting of diasporas for homeland investment. The international business impact of emigrant communities has been noted in a number of studies. Researchers have observed and even quantified the particular importance of emigrant investment
[Gillespie 1984; Kao 1993].
Overseas Chinese and Egyptians played significant roles as investors in their homeland at times in which these countries were considered unattractive by most multinational corporations. Some investments came from expatriate businesses that were already established abroad, while others were made by professionals whose homeland investments represented their first business creations; i.e., new transnational entrepreneurs. In either case, emigrant participation not only provided needed investment at the time, but it also helped improve others' perceptions of the investment climate. While many countr
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