Immigrant/Emmigrant Advantages

I think it's interesting that America, and the emerging economies of India and China have some of the same advantages, just in reverse.  America, an immigrant country, has a large population of people who have connections with others in other the country they came from.  China, an country with a large emigrant population, there is this network of connections abroad, as well people who went abroad and came back with experience and ideas from the outside world.

Both immigrants and emigres provide their countries with clear advantages.  As The Economist explains....

"This is because the diaspora networks have three lucrative virtues. First, they speed the flow of information across borders: a Chinese businessman in South Africa who sees a demand for plastic vuvuzelas will quickly inform his cousin who runs a factory in China.

Second, they foster trust. That Chinese factory-owner will believe what his cousin tells him, and act on it fast, perhaps sealing a deal worth millions with a single conversation on Skype.

Third, and most important, diasporas create connections that help people with good ideas collaborate with each other, both within and across ethnicities." 

These connections help a country take advantage of the opportunities of international trade.

Chinese and Indian diaspora populations.  From The Economist

Aside from these international networks, the clear advantage to being a destination for the driven and upwardly mobile is that these people actually work and pay taxes here.  And for the countries they come from, they can be a source of foreign direct investment and remittances.


And this is what both countries need.  America has the tools to invest in people, such as capital and good higher education, but it needs more people who have the enterprise to take advantage of this.

And India and China and the rest of the developing world need capital.  If immigrants know about some good investments abroad, it can help alleviate the depressing returns on capital we're getting right now, and allow us to counteract the effects of an aging population.  And if India and China can get well-targeted capital, they'll see increasing productivity from labor.  

In the section quoted above, the economist talks about a person living abroad who can quickly spot an opportunity to sell something in the country they live in.  But it works the other way too.  One thing you can say about Americans is that we are great at consuming.  We have access to an incredible breadth of products that are not marketed abroad.  A person who comes here might realize that the people back home might really enjoy some of the things we've got here.  And know how to sell it to them.