CAPRI | Towards stronger partnerships with the Diaspora
The following is a contribution from the Caribbean Policy Research Institute.
Economic growth is about bridging separate economic spaces. With as many Jamaicans living abroad as at home, individuals and policymakers have been increasingly recognising the value of the diaspora, with some suggesting that there is untapped potential.
With little empirical evidence to support this notion, the Caribbean Policy Research Institute (CAPRI), in partnership with the Jamaica Diaspora Institute (JDI), set out to establish both the current and potential value of diaspora contributions.
The initial findings of this research were presented at the Jamaica 55 Diaspora Conference held in Kingston last month.
The 'Economic Value of the Jamaican Diaspora' study has three objectives. First, it seeks to identify and measure the ways in which the diaspora currently contributes to Jamaica.
Second, it will determine what economic value the diaspora possesses which remains untapped (potential value).
Finally, it will be using the evidence gathered to formulate recommendations to inform the Government's strategies to effectively engage and partner with the diaspora in order to successfully harness the potential value that exists, towards mutually fulfilling objectives.
To realise these objectives, the study assessed five critical areas: remittances, investment, tourism, exports and philanthropy.
US$2.2b in remittances flowing into island each year
Remittances are the best tracked and quantified area of diaspora contributions by the World Bank and major recipient countries, and the single most popular indicator of the diaspora's connection and value to Jamaica and its citizens.
Current remittance flows are recorded at US$2.2 billion annually. Estimates also indicate that approximately US$188 million are collected annually by remittance companies.
Although the entire value is not attributable to the Jamaican companies, it gives an indication of the value to the business environment. Our analysis also revealed that Jamaica is performing better than expected when we assessed the remittances received across major recipients of remittances in the region and across the globe in relation to the size of their diaspora.
Beyond sending remittances, the diaspora was found to be investing as much as US$800 million in Jamaica, with over US$330 million held in local banking institutions, US$320 million in the stock market and another estimated US$175 million in business investments.
Preliminary data also show members of the diaspora holding in excess of US$500 million in mortgages in local banks. Considering the diaspora's income, size, and propensity to save, our estimates indicate that the diaspora saves an average of US$12.8 billion annually.
This represents a significant amount, a portion of which Jamaica could reasonably target for investment opportunities.
In the export market, the diaspora not only purchases local goods and products, but they also help to facilitate the entrance of local exporters into the international markets.
The exports facilitated by the diaspora were measured at US$89 million, which accounts for 10 per cent of the exports to the United States, Canada and the United Kingdom.
The potential recorded was US$126 million, up to 14 per cent of the exports to these regions.
The Jamaican diaspora's philanthropic contributions have been most consistent and evident for education and health care, with donations valued at US$14.5 million to health care since 2014 and US$100,000 for education.
In addition, almost 200 health care missions are carried out by diaspora groups annually. These groups provide free health care in medicine, dentistry, ophthalmology and a host of other medical specialities, as well as hospital equipment and pharmaceutical supplies.
CAPRI's analysis revealed a potential for this area as high as US$514 million, factoring in the remittances received by a number of countries with significant remittance flows.
Sizeable GDP contribution untapped
Preliminary results also demonstrate the value of the diaspora to the tourism market. A recorded seven per cent of all stopover visitors are diaspora tourists, spending approximately US$150 million.
Because diaspora tourism is not necessarily as seasonal as international tourism, it may entail a steadier use of infrastructure throughout the year and provide employment opportunities in off-peak times.
The potential value of the diaspora for the tourist market is not simply that more diaspora members and their descendants will visit or spend money, but that the niche that they occupy will attract other non-diaspora customers and grow into a larger and more profitable market. Diaspora populations can help to open markets for new tourism destinations, acting as brand ambassadors and promoters of the Jamaican brand.
In total, the diaspora currently contributes 23 per cent of Jamaica's GDP (the value of all goods and products of the country), and there is an untapped value of at least another 12 per cent of GDP, which represents a share much larger than the leading foreign exchange earner. Furthermore, beyond capital, relationships, skills and expertise constitute additional value.
Having shared the preliminary findings of its research, CAPRI is currently working towards finalising existing estimates.
The next step will be an assessment of diaspora-engagement strategies across the globe, to inform recommendations to effectively engage Jamaica's diaspora, to realise the potential identified, and sustain current contributions to the economy.