The Political Economy of South Asian Diaspora

Patterns of Socio-Economic Influence

G. Pillai

• Publisher: Palgrave Macmillan
• Year: 2013
• ISBN:
  9781137285973
• Topic: Economics
• Subtopic: Economic Policy
• Index: Economics

The South Asian diaspora is a diverse group who settled in different parts of the world, often concentrated in developed countries. This volume explores how transnational politics overlap with religious ideologies, media and culture amongst the diaspora, contributing to diasporic identity building in host countries.

Part I

Economics

1

Looking East and Beyond: Indian IT Diaspora in Japan

Anthony P. D’Costa

Introduction

Since the 1980s there has been considerable global economic and political realignment, with Asia as a significant centre. Japan’s dramatic rise in the post-World War II era, the rise of poverty-stricken East and Southeast Asian economies based on multinational-driven manufacturing growth, and more recently China and India’s wider and deeper engagement with the world economy have cumulatively created a dynamic Asian region. The character of the global economy has undergone fundamental shifts with rapid development of technology and innovations, dispersion of industrial investments worldwide and emphasis on exports. Asia’s place in this tumultuous process is not in doubt. However, there is another development accompanying this geo-economic shift, namely, the movement of people across national boundaries. The deployment of information and communications technologies (ICT), and the corresponding services revolution, leading to tradability of services, has redrawn the boundaries of firms. Companies increasingly rely on the mobility of highly skilled professionals to run their operations globally and they obtain services from providers located outside of the company and possibly outside the country. The increasing reliance on international outsourcing (or offshoring) has contributed to a new layer of globalisation with the international movement of high-skilled professionals, with significant national policy implications (Bhagwati, 2009; Menz, 2011). The flow of professionals from one country to another has led to the formation of a diaspora, generating a bank of professionals overseas. Governments have been anxious to generate the science and technology professionals at home that are so critical to contemporary economic activities driven by innovations, but they are also increasingly interested in tapping the technical and commercial knowledge and wealth of their country’s professionals living abroad.

India has been a major country for diasporic studies from a wide range of academic disciplines in the humanities and social sciences. However, much of the work has focused on India’s relationship with the West, with scant attention paid to India’s relationships with its neighbours in East Asia. In one otherwise excellent study of the Indian diaspora and the IT industry, there is no mention of Japan, although it still is the second largest IT market in the world (see Kapur, 2010). There are some exceptions in the literature, where the movement of people and diasporic developments are specifically located in Asia (Amrith, 2011). However, these tend to be historical accounts of the movements of people and not about professional diasporas that are contributing to international economic and social integration today. There are obvious reasons for this neglect. It reflects the small size of the Indian diaspora in Asia (with the exceptions of Singapore, Malaysia and Australia) and India’s ideological, intellectual, economic and political biases towards the West. In fact, it is precisely the large size of the Indian diaspora in the US, comprising a significant number of well-connected professionals in various sectors, which draws attention to India’s relationship with the West.

Yet, it would be a gross omission from a practical as well as an intellectual point of view to ignore India’s relations with the East, particularly, the large economies of Japan and China. While China offers both opportunities and challenges, Japan offers little competition for India’s IT industry, at least in those segments where India has been globally successful. Rather than dismiss the small number of Indian professionals in Japan as insignificant, I would argue that a closer look at the empirical reality is necessary because of emerging patterns of Indians resident in Japan. This does not reveal a fundamentally different picture from the mainstream view but does hint at the formation of a professional Indian diaspora, whose impact through ‘reputational intermediaries’ could be felt later in Japan, India and elsewhere (Kapur and McHale, 2006: 236–7). Furthermore, there are developments in the bilateral relationship between Japan and India, which if followed through, portend critical forms of engagement that could boost both the scale and leveraging of the small yet growing IT diaspora in Japan. Aside from the diversification on international economic relations, especially in the IT industry, such a partnership would also deflect American pressure on India to limit offshoring arrangements and minimise job losses in the US. At the same time, an engagement with the Japanese market could indirectly foster multilateral relationships with countries in Asia, where Indian companies operate out of Singapore and China for the Japanese market, and create alternative avenues for commercial and technological learning for Indian firms.

In the next section, I present a brief discussion of the relevance of a diaspora to economic development, especially in skill-intensive sectors. In the following section, I use Japanese immigration data to show that Japan, despite its limited engagement with foreigners, is accepting more immigration. I will also discuss the presence of Indians, especially IT professionals, in Japan. Why this might be the case is addressed in the section on Japan’s current predicament. I will specifically present Japan’s predicament, which includes a rapidly ageing population (demographic crisis), shortage of skilled workers, and acute Japanese business and government anxiety to cope with these challenges. In the section on India’s diaspora and looking East, I present some of the benefits to both India and Japan in forging strong bilateral and multilateral relationships, to demonstrate the importance for India of looking eastward.

Diaspora, demography and the innovation ecosystem

The literature on diaspora is squarely anchored in immigration and to a lesser extent, in emigration, though both are critical for the formation of a diaspora. Kapur (2010) emphasises Indian emigration and its relationship to the US-based diaspora. Emigration suggests simply an outflow of citizens to various countries, which could result in diasporas, with immigrants concentrated in a few countries, or the scattering of nationals in different countries. It is a given that a critical mass of nationals is needed to form a diaspora, but how many are needed to form a diaspora is an open question. The composition of the diaspora is also crucial. While the US-based Indian diaspora is large, it is also socially and economically very successful and thus able to offer economic and technical knowledge to the home country (Kapur and McHale, 2006: 240–4). Due to the large flow of Indian students to US universities, many graduates stay in the US, contributing to the formation and expansion of the diaspora.

I raise two questions that are relevant to the understanding of diaspora development and dynamics. First, what drives the formation of diasporas in specific receiving countries composed largely of technical professionals? Second, what are the expected benefits of such diasporas to sending countries such as India? Regarding the formation of diasporas, it is obvious that the receiving country must be receptive to foreign professionals, since governments manage immigration. However, the demand for workers, both skilled and unskilled, has increased under global capitalism for a variety of economic and social reasons, including labour shortages due to demographic shifts, reduced enrolments in science and technology education and increasing tradability of services. A small number of globally oriented centres are able to specialise in specific types of high-skill activities leading to the spatial congregation of professionals. Silicon Valley and Bangalore are joined at the hip, each attracting professionals internally and externally (D’Costa, 2011). Japan has not been perceived as a foreigner-friendly destination compared to the US or the UK. However, when it comes to skilled professionals, there is no a priori reason that nationals of any one country should concentrate in the receiving country, since the demand could be met by any country that generates the acceptable quantity and quality of technical professionals. Countries with good technical educational systems tend be major providers of high-skilled professionals. Large countries such as China and India can generate large absolute numbers of science and engineering graduates, albeit of uneven quality.

To be effective as a diaspora, the concentration of technical professionals of a particular national background (or ethnicity for heterogeneous sending countries) must be spatially concentrated in urban areas, with tightly knit professional communities. Cities and regions rather than countries as a whole tend to be innovation hubs today (Moretti, 2012). Countries with high emigration of tertiary educated professionals tend to concentrate in global innovation centres. Subsequent network effects work to attract more such professionals from the same sending country. A host of factors could trigger initial emigration, such as weak employment opportunities or lack of professional challenges. Students studying overseas, though deemed temporary migrants, often remain in the receiving country if professional opportunities become available. As a result, students could become permanent residents and citizens, adding to the stock of the diaspora. Thus, in this simple narrative there is a demand and supply dimension to the formation of a diaspora, although the precise mechanisms that determine why some cities and regions become innovation hubs, such as Silicon Valley or Seattle, are not always clear. Innovation hubs generate their own ecosystem in which entrepreneurs, businesses, local governments and others work collectively, formally and informally. This suggests that there is a certain ‘stickiness’ to innovation hubs, meaning these areas will attract talent (domestic and foreign) under globalisation and thus could contribute to the formation of a diaspora, in addition to sustaining the hub.

How could members of a professional diaspora contribute to their home country in spite of the ‘stickiness’ that attaches them to an innovation hub outside of their own country? Strong economic growth and increasing professional opportunities in the home country can attract members of the diaspora either through return migration or through business opportunities, which lead to the transfer of capital and knowledge. There appears to be a home country bias by diasporas (Kapur, 2010: 28–30), although not remittance income, given that such emigrant professionals tend to come from middle-class families (Bhagwati, 2009: 9). For example, several Indian Americans in leadership positions in US corporations have launched important India-based IT operations (Kapur, 2010: 198). Related to the pull effect, which home countries exercise in high-skill activities, the role of institutional actors, including business and government in fostering an ecosystem commensurate with today’s innovation activities is necessary in reinforcing the diaspora effect on investment, innovation and exports. This is an important component to incrementally transforming, though not reversing, brain drain and achieving a form of ‘brain gain’.

Since professionals are generally high-skilled workers enjoying a skill premium, they are an economic resource to the receiving country in the context of shortages. But the second question, what are the expected benefits to sending countries, is really about the anticipated contribution of such a diaspora on sending-country development. While there are many theoretical benefits of a professional diaspora to the home country (for a summary, see D’Costa, 2008a), these are hard to document empirically. Nevertheless, there is evidence of economic and technological benefits from diasporas, especially through the social and professional links to their home country (Kapur, 2010). In the absence of empirical data, the precise mechanisms are unclear. However, using technical and commercial knowledge gained in the receiving country to set up business in the sending country as part of the diaspora or as a return migrant is a major contribution. Professional networks, not only within the diaspora but also outside it, with professionals and institutions in the sending country are platforms through which technical and commercial knowledge are disseminated. Thus for a diaspora to be effective, it must meet the following necessary conditions: (1) it must contain a critical mass of expatriate professionals, technical and entrepreneurial, concentrated in an innovation hub or region; (2) there must be strong networks within the community in the innovation hub or region; and (3) there must be strong economic and social links to the home country.

Emigration from a sending country and receptivity of the receiving country contribute to the formation of a critical mass under conditions of economic/sectoral growth. However, the second and third conditions lis...

Table of contents

• Cover
• Title
• Introduction: South Asian Diaspora: Patterns of Socio-Economic Development
• Part I   Economics
• Part II   Religion
• Part III   Media
• Editor’s Postscript
• Index