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Indian Diaspora: How High Is the Ceiling?

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By Anand Kulkarni

The economic and cultural impact of Indians abroad is profound. For example, in the U.S, members of the Indian diaspora have median annual incomes that are some $39,000 higher than the population as a whole. They are more likely to have advanced degrees and to be in the labour force. Also, half of all Indian Diaspora households in the U.S have annual incomes in the top 25%. And more than a quarter of Indians had annual incomes in the top 10%. Indians run almost 10% of companies in Silicon Valley. Additionally, Indian migrants have been admitted in large numbers as specialist employees under the H1-B visa (Migration Policy Institute 2014).

The impact of the Indian Diaspora is not confined just to the U.S. The rapid growth of Indian migration, especially skilled, has also been seen in Australia. This growth has played an important role in addressing skills shortages and gaps in the country.

The Home Effect: Research and Remittances

To these impressive facts we can add the researcher “diasporic effect”. A recent survey found that researchers in Australia, that are born overseas, tend to collaborate with peers back in their country of origin. Approximately 60% of Indian researchers and 67% of Chinese researchers collaborated with researchers from their home countries (ACOLA 2015).

Approximately 60% of Indian researchers and 67% of Chinese researchers collaborated with researchers from their home countries (ACOLA 2015).

This can be attributed to common cultural norms and backgrounds and shared linguistic skills. Additionally, it provides a “win-win” scenario for both home and host countries and augments the global flows of ideas and know-how. The benefits to the home country of the Indian Diaspora are most acutely demonstrated via remittances. In 2015, India was the largest global recipient of remittances, worth some $68.9 billion (12% of the world’s share of remittances).

In 2015, India was the largest global recipient of remittances, worth some $68.9 billion (12% of the world’s share of remittances).

This number was just ahead of China which received $63.9 billion (11% of the world share). Remittances to India from its diaspora on a per capita basis reveal that Indians in the U.S, Australia, UAE and Saudi Arabia contributed the most on average to India (World Bank 2016 and United Nations 2016).

Remittances are the most obvious expression of financial engagement between the Indian diaspora and India. The influence, commercial and technology links and connections that Indians abroad bring to bear are more subtle. For example, the Indian diaspora in the U.S has been a powerful figure in the development of India’s IT industry. Particularly through, for example, facilitating offshoring from the U.S, leveraging trade and investment, and generally advocating for India’s IT sector.

The Question of the Clout

However, is all that glitters necessarily gold? Consider the diagram below:

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‘Political Clout versus Economic Clout’ of the Indian (and other) diaspora in the United States. | Source: U.S Census Bureau and author

Economic Clout is defined as the share of the number of businesses owned in the country by ethnic origin. ‘Political clout’ is represented by the share of membership of the U.S Congress and Governorships by ethnicity.

As the diagram shows, people of Indian origin own 1.4% of U.S businesses but only have 0.3% representation in the U.S Congress and Governorships. On both indicators, this is below Chinese representation – 1.9% of business ownership and 0.5% of political participation. It is also well short of the representation of Hispanic business owners and participants in the political process in the U.S (12 and 14% respectively). When the Economic Clout is examined by the value of business (not shown in the charts), the position is reversed. Indians account for a higher share of the U.S economy by the value of business compared to Chinese.

Therefore, while Indians and Chinese make important economic contributions in the U.S through business ownership, it is not as great as one would imagine. There is something of an “old boys (and possibly girls) network” when it comes to political participation. 

The Diasporic Effect Down Under

In a broader context and looking beyond just political decision-making in Australia, a recent report by Australia’s Human Rights Commission is instructive. The table below shows the cultural backgrounds of Australia’s senior leaders:

  Indigenous Anglo-Celtic European Non European
Australian Stock Exchange top 200 Executives 0 76.62 18.41 4.96
Federal Parliamentarians (MP’s and Senators) 1.77 78.76 15.93 3.54
Federal Ministry (Ministers and Assistant Ministers) 2.38 85.71 11.90 0
Federal/State Public Service 0.81 82.26 45.32 1.61
University Vice Chancellors 0 85 15 0
Cultural Backgrounds of Australia’s Senior Leaders (%) | Source: Australian Human Rights Commission

This study reveals that as in the U.S, the ceiling is way too high. This is not just for Indians, but more broadly for indigenous people and non-Europeans as a whole in Australia.

This study reveals that as in the U.S, the ceiling is way too high. This is not just for Indians, but more broadly for indigenous people and non-Europeans as a whole in Australia.

Secondly, it reveals that the ceiling is not just confined to the Government arena but extends to the leadership of the major firms and to the Higher Education Sector. For example, of Australia’s top 200 corporate leaders only 5% are from non-European backgrounds. Thirdly, as the report shows, there is a mismatch between the share of non-Europeans in leadership and their share of Australia’s population as a whole. Some 32% of Australia’s population have non-Anglo-Celtic backgrounds, and 10% have non-European backgrounds (Australian Human Rights Commission 2016).

Various studies point to the importance of diversity in raising economic performance. According to McKinsey analysis of firms globally, companies in the top quartile on measures of cultural diversity were 35% more likely to exhibit financial returns in excess of national industry medians (Australian Human Rights Commission 2016).

Breaking Through the Ceiling

So does of all this really matter and what is to be done? The answer to the first is yes, it matters. It matters because a country’s policies and progress must be reflective of its societal composition. Further, the different insights, perspectives and experiences of a culturally diverse population are important in shaping national prosperity.

Clearly, to break through the ceiling is a long term goal. It takes time to alter long standing practices and behavioural norms. However, for Indian and other diasporas to make their presence felt even further in host countries, and to really shape national and corporate decision making, more work needs to be done.

There needs to be greater attention paid to creating opportunities for advancement, building strong networks between Diaspora members and host country institutions, and raising awareness more generally about the important role and impact of foreign born populations.


Dr. Anand Kulkarni is the Senior Manager, Planning and Research, RMIT University in Melbourne, Australia, overseeing planning, analysis and strategic projects for the University. He is the Associate Editor for the Journal “International Review of Business and Economics” and a Fellow at the Centre For Policy Development in Australia.

Bibliography

Australian Council of Learned Academies (ACOLA) 2015 Smart Engagement with Asia: Leveraging language, research and culture Final Government

Australian Human Rights Commission 2016 Leading for Change: A blueprint for cultural diversity and inclusive leadership

Migration Policy Institute 2014 The Indian Diaspora in the U.S

United Nations Trends in International migrant stock by destination and origin 2015

United States Census Bureau Survey of Business owners and self employed persons 2012

World Bank Migration and Remittance Data 2016 (updated as at April 2016)

Featured Image Credits: Alessandro Pellacini Benass via Unsplash

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