Diaspora Bonds and Caribbean Economic Development

Tapping into an Innovative Financing Mechanism
  • Jwala Rambarran
  • Prakash Ramlakhan


The Caribbean has one of the highest emigration rates in the world and the region is the largest recipient of remittances in relation to its GDP. At the same time, many Caribbean countries have seen a dramatic reduction in flows of official development assistance (ODA) and have been encountering difficulties in obtaining private financing using traditional financial instruments, a situation which jeopardizes their prospects for long-term growth and employment generation. Inevitably, the Caribbean will need to adopt innovative financing mechanisms to target previously untapped investors. Diaspora bonds are one such mechanism that can enable the region to borrow from its diaspora community. For diaspora investors, these bonds offer the opportunity to help their country of origin while also providing an investment opportunity. This paper investigates how best the Caribbean can tap into the wealth of its diaspora during difficult times to obtain a stable and cheap source of external finance. Section 6.2 discusses the rationale for origin countries to issue and for diaspora communities to purchase diaspora bonds. Section 6.3 highlights some lessons for the Caribbean from the experiences of India and Israel, two countries which have successfully issued over US$35 billion in diaspora bonds. Section 6.4 presents the external financing needs of Caribbean countries and puts forward some ideas on the potential for issuing diaspora bonds to help narrow these gaps. Finally, Section 6.5 concludes with a summary of findings anddirection for future research.


Foreign Direct Investment Destination Country Foreign Direct Investment Inflow International Capital Market Debt Relief 
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Copyright information

© Springer India 2014

Authors and Affiliations

  1. 1.National Institute for Higher Education, Research Science & Technology (NIHERST)Port of SpainTrinidad & Tobago
  2. 2.Banking and FinanceUniversity of the West IndiesPort of SpainTrinidad & Tobago

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