Diaspora externalities: A view from the South

Migration decisions affect those left-behind in ways that are partly taken into account by market forces (e.g., wage effects on labour markets) and for the most part these can be seen as pure externalities. Diasporas are an example of such an externality. This paper reviews the recent economic literature on diaspora networks and development from the perspective of the global South. It is split into two parts: a first section reviews the effect of diaspora networks on trade, foreign investments, and the diffusion of knowledge as well as technology across borders. A second section looks at the cultural sway of the diaspora, investigating on a macro-level the role of migration in cultural convergence across countries and on a micro-level the impact of emigrants in the formation of political attitudes, fertility behaviour, and other aspects of culture.