THE DIASPORA OPTION: REMITTANCES AND DIASPORA BONDS

Abstract

Diaspora bonds are long-dated sovereign debt agreements sold to a country's diaspora by its home governments. A product of the Diaspora Option, diaspora bonds is a financial mechanism that allows home states to capture a portion of migrants' economic capital for the purposes of financing development. Despite the increasing attention received by both the migration and development finance epistemic communities, research on diaspora bonds and its issuance is very thin. This thesis studies the link between countries' remittance levels and its diaspora bond issuance. Using an original dataset for countries' diaspora bond issuance, this thesis finds that countries receiving high levels of remittances are more likely to issue diaspora bonds. The study controls for countries' levels of political constraints, political risks, democracy levels, GDP per capita, GDP growth as well as countries' desirability to be diaspora-bond issuers -- an original dataset. All in all, this thesis finds support from a time-series cross-country logit analysis between the average of countries' remittance levels over five years and its diaspora bond issuance from 1974 to 2017.