Knowledge diasporas for development: a shrinking space for skepticism

Knowledge diasporas for development: a shrinking space for skepticism Eric Leclerc and Jean-Baptiste Meyer Journal of Asian Population Studies 3 (3) forthcoming 2007 Contact details Eric Leclerc Laboratory Ailleurs Department of Geography U.F.R des Lettres Rouen University 76821 Mont-Saint-Aignan Cedex France Tel: (33) 2.32.76.94.23 Email: eric.leclerc@univ-ruen.fr Jean-Baptiste Meyer IRD Département Sociétés et Santé (DSS) Franklin 643 1405 Capital Federal Buenos Aires Argentine Tel: 54 11 15 60 03 44 82 Email: jean-baptiste.meyer@ird.fr Abstract This paper deals with the contribution of diaspora knowledge networks to the development of home countries as a major potential brain gain. Although some questions were recently raised about the consistency, viability and efficiency of the diaspora option, the latest studies tend to validate its role in the development of knowledge intensive activities at home. The Asian experience (China and India), the current expansion of their highly skilled expatriate associations, their real intensity of activity as well as their responsiveness to policy factors, confirm the diaspora option. The case of the development of the Information Technology industry in India demonstrates the active involvement of the diaspora. Its integration into the global market has gone far beyond the sole effect of reputation enhancer, a minimal positive role often attributed to the diaspora. In fact, the active role of the Indian diaspora, a creative mediator rather than a passive intermediary in these processes, has changed strategic balance and geopolicy. The diaspora factor is indeed part of the knowledge transfer to the Indian IT 1

industry that helps it to move up on the value chain. The circulation exemplified by diasporas justifies shifting from binary/dichotomical explanations (host versus home countries benefits), to the analysis of mediation processes at work in non zero sum game analysis.

Keywords: Diaspora knowledge networks; brain gain; IT industry; India; development; Asian diasporas

Introduction: A novelty in the 1990s, the existence of diaspora knowledge networks consisting of highly skilled expatriates has gradually become a more familiar feature in the 2000s. Their contribution to the development of their home countries has been recognised as a major potential brain gain, and many national as well as international organisations are increasingly focusing on this new and interesting phenomenon. At least 50 countries today are—or have been—involved in developing such networks for and with their expatriates, and several intergovernmental agencies have committed themselves to study and promote the diaspora organisations (e.g. UNESCO, UNDP, International Organisation for Migration, the Asian Development Bank and the World Bank). However, the diaspora option as a route to development in home countries has recently come under strong criticism as certain serious shortcomings and difficulties of a couple of networks have indeed given rise to a legitimate concern regarding their activities. The questions raised about the consistency, viability and efficiency of the diaspora option in the context of their countries of origin are varied: Is it really as substantial as it is perceived to be? How many networks can be identified that do actually work for their countries of origin? Do they remain active over time or do they vanish after a couple of months or years? Are they really productive or should the results usually credited to their existence be mainly attributed to other factors?

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These questions and criticisms may be analytically divided into two separate parts: one concerning the very organisation of the networks, their existence, sustainability and activity; and the other in connection with their impact and developmental effects on the countries of origin. The first issue has been addressed in a recent work, on which we make a few additional comments here. We discuss the second point, about the effects of the highly skilled expatriate networks on development of home countries, in greater length.

The issues may be addressed by a direct approach through providing evidence that highlights the areas of doubts and uncertainties left by previous network studies. For both consistency and the impact of the networks, the additional evidence—quantitative for the former and qualitative for the latter—is substantive and corroborative enough to refute the critiques. The evidence mainly comes from some contemporary Asian case studies. We use the situation of Asian knowledge diasporas to develop the arguments in this article. The impact of a number of highly skilled diaspora networks from the Asian region on recent industrial high-tech expansion of the region has been identified and discussed in this paper.

The critiques: elusive networks and questionable results Each of the two approaches questioning the diaspora’s existence and its ability to work for development in the countries of origin may be best described through reference to two major papers. Both, written by well-known scholars, have focussed on the economic point of view. The first one, Diasporas and Economic Development: State of Knowledge, prepared for the World Bank by Lowell and Gerova (2004) deals with the issue of “professional diaspora networks”. It systematically reviewed the evidence on these networks brought to light a few years earlier and found that some of these have disappeared, and others seemed inactive, with weak support from the home government and no trace of effective results and concrete projects seen, suggesting no “proliferation of expatriate organizations and communities”

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(Lowell and Gerova 2004, p. 23). The authors see ‘a reason for pause’ in what they consider an exaggeration of the real phenomenon and its internet expressions by previous studies.

Though these critiques have already been refuted with new and extensive evidence and methodological clarifications about internet search in other publications (Meyer and Wattiaux 2006), we provide here a few additional empirical results related to the case of the Asian highly-skilled diaspora networks in the next section.

The second study, International Migration Regimes and Economic Development, prepared by Robert Lucas (2004) for the Swedish Ministry of Foreign Affairs, devotes a chapter on “The Diaspora and Transnational Networks” (chp 6). It states that ‘there is ample evidence of a wide variety of knowledge network forms and of international movement of the highly skilled …(but) there is far less evidence of the actual transfer of technology that results’ (Lucas 2004, chp. 6, p.12). Then, contrasting the findings of Anna Lee Saxenian on the one hand and Devesh Kapur and John McHale on the other, this chapter tends to show that the diaspora input in the development process is only additional to the existing dynamics at home, neither the first mover nor an irreplaceable agent in the transfer of technology: The example of the Indian IT industry is thus taken to demonstrate this point. Its recent success (supposedly in routine and non-strategic segments of activities) is mainly due to local factors (new liberal policy; supply of cheap, highly-skilled labour force rather than to a diasporic factor (Lucas, 2004, chp. 6, p.14). The latter would indeed be important in removing the reputation barriers to trade and improving the confidence in job transactions for outsourcing from US to Indian firms. But the knowledge contents in this relationship would be rather minor and the transfer of technology therefore less substantial than assumed from the existence of the highly-skilled diaspora’s potential abilities. Lucas (2004) finds it difficult, from a methodological point of view, to assess the contribution of the diaspora in terms of technology, and only mentions one instance of quantitative evidence on such a possible

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contribution, with a statistical correlation of patents, citation and expatriation between Canada and the USA. These views are shared by Kapur and McHale (2005) who emphasise the role of the diaspora as ‘both reputational intermediaries and credibility enhancing mechanisms that may be particularly important in economic sectors where knowledge, especially ex-ante knowledge of quality, is tacit’ (p. 127). Though these authors attribute more importance to the knowledge contents than Lucas (2004) does, they still hold back attribution to the autonomous diaspora factor, and state, ‘However, as in the case of software services, the diaspora can only augment, not substitute for domestic capabilities’ (p.127).

The evidence, today, actually allows us to go one step further. Our contention here is that there is now solid evidence of the diaspora contribution in knowledge intensive activities at home. The evidence refers not to dependent service sectors but to strategic competitive operations (Pandey et al. 2006; Warrier 2006). It is not a substitution for domestic capabilities but a new contribution that did not exist before, and possibly could not have been created without the diaspora input.

Methodology: a mix of quantitative and qualitative approaches Our two objectives—to establish the existence of numerous active diaspora knowledge networks and their positive developmental impact on home countries—require two distinct approaches. For the former, the method has been selected according to the field in which evidence could be found in a systematic manner: the internet. We have extensively described the new and specific techniques used to search the web in such a way as to extract the information about scattered and distinct networks. We will therefore concentrate our effort here in casting the spotlight on the case of Asia.

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A focus on Asia reveals that figures about diaspora knowledge networks comprising expatriates from this region have been underestimated to a large extent in previous studies. A recent study led by the Asian Development Bank offers a point of comparison and indeed shows that many networks are not easily visible on the internet (Westcott 2005). In the case of China, many networks with websites in Chinese languages have escaped the scope of our study (Xiang 2006). This confirms the hypothesis that the number of networks is much greater than the one cited in 2005 (see next section). Linguistic obstacles definitely limit internet research. Moreover, beyond these limitations, the survey through the internet is like a satellite picture; it does not give the same information that one can get in the field. For instance, recent fieldworks in Latin America point to new networks in this region. This makes it clear that the estimates made before and mentioned later here are minimal; without any doubt, the actual picture would be one of burgeoning networks in many parts of the world, a spring of diasporas as we have cited in the next section.

To check the developmental impact of these networks, we have decided to take another approach by focusing on some associations. The objective is to actually see the links and their consequences through time. It consists, then, in isolating the value added to certain activities, which is due to these particular relations (diaspora individuals with entities at home). Such gathering of information on particular associations has been exercised before (Saxenian 2002, 2006; Pandey 2006). In particular, the interview of dozens of US-Indian entrepreneurs in a big fair recently provides interesting material both for retrospective analysis of the high tech development success in India and the shift of centre of gravity of some technological branches. However, these valuable studies still had an anecdotal character. With increasing and cross-cutting evidence, allowing deeper analysis with finer heuristic guidance, the results are today becoming more conclusive.

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Overwhelming evidence about diaspora knowledge networks Five censuses of highly-skill diasporic networks have been taken at different times by various teams, aiming at grasping the magnitude of the phenomenon, beyond isolated case studies. Some salient features of these censuses are: •

41 expatriate networks of developed and developing countries were identified on the occasion of the June 1999 UNESCO World Science Conference (Meyer & Brown 1999);

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106 networks referred exclusively to developing countries, in a state of the art scientific diasporas, made by a panel of international experts in 2002 and published in September 2003 (Barré et al. 2003);

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61 expatriate networks of developed and developing countries were referred to in Diasporas and Economic Development: State of Knowledge, a report prepared for the World Bank (Lowell & Gerova 2004)1;

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158 networks referring exclusively to developing countries in 2005 (Meyer & Wattiaux 2006) ; and

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191 networks of both developed and developing countries were identified in 2006 (Tobin & Sallee 2006).

When looking exclusively at Diaspora Knowledge Networks (DKN) associated with developing countries and those actually involved in development strategies with their countries of origin, the increase of the networks identified through successive and partly cumulative studies stands as the following (Figure 1):

Insert Figure 1 here

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These networks are currently active as their re-activation has been tested through effective contact. Many are tied to the Asian region.

Some countries in Asia have made early attempts to mobilise their offshore human capital when no one thought of it. India, for instance, had exercised the option of occasionally calling on the non-resident Indian (NRI) experts to offset brain drain effects as early as the 1960s and 1970s (UNCTAD-CSIR 1977), although her efforts were not entirely successful.

However, the expatriate associations concerning the region started to become visible in the late 1990s. Since then, they have come to the forefront and have become some sort of a model.

The booming Asian diaspora option Of the major areas of the world, the Asian region has the highest number of highlyskilled expatriate associations registered, and of home countries being affected by these.

Fifty-seven per cent of all the confirmed active networks refer to Asian diasporas (see Table 1).

Insert table 1 here

Among these active networks, the breakdown per country is as following (see Figure 2): Insert figure 2 here However, non-Asian countries may also have high numbers of networks. Figure 3 shows a comparison of major countries of origin: Insert Figure 3 here There is a significant concentration of networks by country of origin. Specifically from Asia, India, China and Bangladesh represent half of the identified active networks. Not surprisingly,

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these countries with diasporic links traditionally have the highest numbers of highly-skilled expatriate associations.

Although these figures give a general picture illustrative of the relative importance of Asia and of some countries within this region, they cannot be taken as indicators reflecting the complete picture. A recent study led by the Asian Development Bank shows indeed that many networks are not easily visible on the internet. For instance, many Chinese networks, with websites in Chinese languages, have escaped the scope of the study presented above. This confirms the hypothesis that the number of networks is much larger than thought. For example, against nine associations identified through an internet search, the Overseas Chinese Associations Office’s (OCAO) records showed 200 associations (Xiang 2006). The case of China does point to the fact that the visible part of the DKN iceberg may reflect just a small proportion of the exact volume of such populations involved (Figure 4). It is unlikely that the total number of actual DKN would be 20 times higher than the globally visible (identified through the internet) networks, as in the Chinese case, but an estimate even of twice the globally identified number is a reasonable hypothesis to work with (see Figure 1).

Insert figure 4 here

Some preliminary lessons from the case of China The Asian Development Bank study focussed on three countries: Afghanistan, China and the Philippines (Westcott 2005). The case of China is the most advanced and a few lessons may already be extracted from its detailed description (Xiang 2006). However, the ADB study deserves more analysis and comment as it brings a wealth of interesting materials and perspectives, to be compared with other studies on other countries in Asia as well as in other parts of the world. Among the points more specific to the Chinese case which explain the

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magnitude and success of its highly-skilled diaspora mobilisation, the following may be emphasised: •

estimate of the population of Overseas Chinese Professionals (OCPs) in the world is about one million with a high concentration in North America;

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there are more than 200 associations of these OCPs registered with the OCAO (Council for Overseas Chinese Abroad Office);

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a definite policy (wei guo fuwu) has been set up in the late 1990s promoting linkages with talent in the diaspora;

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five ministries and a large number of provincial government agencies as well as parastatal entities are involved in programmes and activities with highly-skilled expatriates; and

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short-term visits, collaborative projects between OCPs and home academic communities, senior expatriate scientists’ lectures in China, occasional technical advice, local recruitments through big fairs or more selective encounters are part of the many activities displayed by the diaspora and counterparts in China.

The role of the associations of OCPs, whose numbers have increased during recent years, seems a key factor in the expansion of links between formal and informal networks.

The internet happens to be the major media used by OCPs to stay connected with the home country and with each other.

Summarising the major conclusions of this study, it appears that the Chinese case confirms the great number and current expansion of highly-skilled expatriate associations, their real intensity of activity as well as their responsiveness to policy factors. Therefore, the doubts about the consistency of the diaspora option are vanishing as increasing evidence confirms its actual existence. We now turn to its developmental effects.

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Lessons from the case of India’s IT revolution Assessing the impact of a diaspora on the economic development of the source or home country is a difficult task that many authors have been confronted with when trying to balance positive and negative impacts of migration. It has been very difficult to isolate the diaspora factor in a very dynamic economic environment even when international trade statistics were available and reliable.

In the case of India, one particular aspect that has attracted more attention during the last decade is the parallel growth of the IT economy and the expansion of its knowledge diaspora. Assessing the impact of migration on international trade, Lowell and Gerova (2004) found that ‘the employment of H-1Bs in the United States and the U.S. import of IT services are highly correlated’ (p. 33). Thus, the impact of the Indian diaspora on the subcontinent’s economic development is widely discussed among scholars. This phenomenon has indeed been able to shift from the paradigm of the brain drain—a common feature of the Indian scientific literature (Nayyar 1994; Sukhatme 1994)—to the new brain gain paradigm—what Khadria had termed as generic ‘return of human capital’ (Khadria 1999, p. 21; Saxenian 2000). The example of the Indian IT industry allows us to go further than the classical analysis of the effect of remittances or return on the sending country’s economic development. We look at the key role played by the Indian diaspora in the IT revolution at home, to show that knowledge is nowadays undoubtedly transferred, being certainly a major input in the rising information economy.

To establish this point, we first discuss the emphasis on the reputation argument used by authors minimising the diaspora factor through a historical analysis of the IT sector growth in India. In the second part, we detail how the Indian diaspora helped the IT industry in India to move up the value chain.

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Active role of the diaspora in integrating the Indian IT industry As mentioned above, the critiques of the diaspora factor downplay its impact by claiming that its members only act as intermediaries between the sending and the receiving countries and highlight the (positive) reputation conveyed by these intermediaries. In their review of the literature, Lowell and Gerova (2004) highlight the argument of Kapur and McHale (2004) that ‘networks may be most important not for making available otherwise scarce information, but rather for winnowing out important information from signal overload’.

However, in their latest publication, Kapur and McHale (2005) have gone even further; according to them, social networks have become an important asset to master the flows of information (p. 112). At the end of their analysis of the direct and indirect effects of the diaspora, they seem to emphasise the latter. The members of the diaspora become ‘reputational intermediaries’ (Kapur & McHale 2005, pp. 116-119) who find business opportunities in the home country, enforce contract signed by a supplying firm in the home country or enhance the business profile of their countrymen. The analytical framework used to differentiate direct and indirect effects of the diaspora limit this analysis to an international trade perspective and the assessment of comparative advantages. Reduced to a link between two national economies, the diaspora factor is opposed to local factors, which are considered as more important by Kapur and McHale (2005).

In our analysis, we focus on the processes of both the IT revolution in India and the growth of the knowledge diaspora, and on their interrelations at each historical step. We think that the direct effects should not be downplayed and that the role of the diaspora will become more obvious. In any case, the global scale of the IT industry should be taken into account— instead of thinking in terms of a bilateral relationship—and India included in this global process.

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The complete evolution of the Indian IT industry need not be described here, since this has been done already in the literature (Heeks 1996, 1998; Arora et al. 1999; Desai 2003; Arora & Gambardella 2004; Dossani 2005). We will focus here on the evolving role of the diaspora during this process. The Indian IT revolution may be sequenced into three waves: 1. 1965-1980: the birth of an Indian IT industry; 2. 1980-1995: the ‘body-shopping’ stage; and 3. 1995 to the present: the outsourcing turn.

The first wave saw the slow growth of an indigenous IT industry and the emigration of fresh graduates to complete their studies in American universities, some of them coming from prestigious Indian institutions like the Indian Institute of Technology (IITs). At that time, the excellence of these institutions was known only amongst academic circles; their current fame is partly due in fact to the successful migrants’ retrospective evaluation of the institutions. In these pioneers’ biographies (Deb 2004), it appears that they had been convinced to move to the USA either through the contact with some visiting American professors or through networks of Indian academics both in India (e.g. Professor Ramamurthy in IIT Madras) and in America (Professor Amar Bose in MIT). Following the emigration path of Indian medical students, these engineers found job opportunities in the American IT labour market through the links between academic and entrepreneurial networks. To experience successes in the entrepreneurial world, they have had to break down the so-called glass ceiling. Many started their own firms, but in the early 1980’s in Silicon Valley it took, for instance, many months for Kanwal Rekhi to find US$ 2 million of venture capital to found Excelan. Even less successful Indian software engineers have then become reputation builders because of the increasingly well known quality of their work. During this first wave, the impact of the diaspora factor on the IT industry in India was weak. The nascent Indian IT industry was

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substituting import in the hardware segment with the withdrawal of IBM, and creating indigenous software behind a heavy import-duty barrier.

The second wave strengthened the links between the diaspora and the home industry with the growth of the ‘body-shopping’ activity, induced by the expansion of the global information economy. The human resource software shortage, first in the United States, and later in other OECD countries, has attracted a foreign workforce on site. India has been the main source country for these cyber workers or ironically called ‘techno-coolies’.

Derogatorily labelled as ‘body-shopping’, Heeks (1989) describes this practice in the following terms: ‘This is the process by which Western firms send a list of staff requirements to Indian software companies, who then send the required 'bodies' overseas to work for that client’. But Heeks ignored the central role played by the diaspora in the mobilisation of their countrymen, through informal contacts at the beginning, revealing the job opportunities in the United States. The analysis of the body-shopping model (Xiang 2002) reveals the pivotal role played by the diaspora as gate-keepers at the receiving end of this international movement of IT workers. At the peak period in 2000, there were nearly 1000 firms engaged in body shopping in the United States. The diaspora was more than a reputational intermediary during the second wave; it had become an actor in this international production system. Even though it is difficult to assess the national origin of the firms hidden behind the less derogatory term of consultancy, all the observers attribute a large share to Indians.

This model had a tremendous impact on the Indian IT industry whose exports grew from US$ 12 million in 1982 to US$ 4 billion in 1990. All the major Indian firms—even some hardware firms like HCL—converted themselves to this business model. With the OECD countries’ shortage of human resources appeared the mushrooming of new IT training firms like NIIT, Aptech etc. that spread all over the subcontinent. During the entire second wave, these private training firms built the Indian comparative advantage in the low end skill

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segment that complemented the prestigious IIT. As the body-shopping model has been identified in different countries like Australia (Xiang 2004) and Malaysia (Leclerc 2006), i.e., not only in the United States, it is a robust proof of the involvement of the Indian diaspora in the growth of its home industry. Under various labour markets and different immigration policies, indeed, we might have expected more efficient actors than the diaspora members to manage these foreign workers, but it has not been the case. They also had an influence on the political agenda in India, one well-known case being the technology missions initiated by Sam Pitroda, a high profile NRI, under the prime ministerial tenure of Rajiv Gandhi in the mid-eighties. Chakravarty (2000, p.5), arguing that ‘the American high-tech NRI also plays a pivotal role in legitimating a relatively new technocratic development agenda in India’, contradicted the statement by Lucas (2004, p. 224) that ‘the more fundamental economic reforms came to India after 1990 with little participation from the Indian diaspora’. It is analytically not justified to separate the liberalisation process of 1991 from the first attempt of economic reforms that occurred precisely in this sector with the new IT policy of Rajiv Gandhi in 1984.

The mid-1980s have also constituted the starting point of the third wave, the outsourcing turn, with a new business model of Overseas Development Centre (ODC), the first one set up in Bangalore by Texas Instrument and General Electric in 1984–85. It took a decade for this movement to pick up, with the previous body-shopping model continuing alongside. Pandey et al. (2004, p.11) noted that ‘It is worth pointing out that the shift to the new business model was gradual because the savings even after sending Indian IT programmers to the US were quite large and many IT companies continued to follow the old model and send their programmers to the US, the UK and Canada’. The diaspora factor became more important during this third wave for two reasons. Firstly, it was more convenient for the multinational corporations (MNCs) to send employees of Indian origin to

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manage these ODCs to leverage the local difficulties. To handle the bureaucracy at various levels and the incomplete infrastructure, the MNCs required their cultural and linguistic skills.

The members of the diaspora at managerial position even played a crucial role to convince their American colleagues to engage in this adventure (Sahay et al. 2003). Secondly, the pioneers who had by this time achieved big successes in the Silicon Valley started to invest their time and money to open firms in India. Through associations like TiE (Lal 2006, p. 79) or SIPA (Saxenian 2000), they helped new IT entrepreneurs in India with their advice and contacts in the Silicon Valley to find capital. A recent survey of their involvement in venture capital in Bangalore shows that nearly 50 per cent of the new Indian firms received some money from the diaspora (Upadhya 2004) and the city served as a “corridor” for return of many Indian IT professionals from abroad (Khadria 2004; Khadria and Leclerc 2006).

To conclude with our first argument about the diaspora factor, we observe a growing involvement of the Indian diaspora in the development of the IT industry at home. The export-oriented model of the Indian IT industry after 1980 is strongly related to the share of the Indian diaspora in the American IT industry. In the second and third waves, the Indian IT diaspora became a catalyst in building new business models, rescaling the IT industry in India from the nation-state level to a global size. Our purpose is not to portray the Indian diaspora as the one and only factor—MNCs and Indian firms have also to be reckoned with—but to recognise that it played a role as pro-active mediator and not only a dormant intermediary. For Latour (2005), an intermediary just transmits something without transformation, but a mediator modifies it and adds a specific value, which is the case with the reputation of the IIT, or with the very knowledge that we are going to analyse subsequently. Moreover, this transformation is a process that has to be sustained through time in order to be efficient, meaning that the role of the diaspora is far from over.

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The diaspora’s creation of knowledge in India Our second argument about the diaspora factor is its involvement in the creation of knowledge intensive activities at home. For the vast majority of the Indian students during the first wave, and for the Indian IT engineers during the second, their sojourns in America was an opportunity to update their technical knowledge. The second and third waves served not only towards updating knowledge but also to change their work habits when they worked onsite in US firms. This was done with the help of the Indian diaspora through specific programmes designed to cater to their needs. The former completed their graduation in prestigious American universities and became researchers (and even directors e.g., Dr Arun Netravali) for the US government or private laboratories like IBM, Microsoft and Bell Labs, and in certain cases became renowned inventors. As America continued to attract excellent specialists from India—the Sabeer Bhatia of Hotmail fame or the Vinod Khosla of Sun Microsystem (Khadria 2006) of today being Jagdeep Singh (Infinera Networks, chip designer), Parag Pruthi (Niksun Inc, network security) or Amit Singh (Perebit network, bioinformatic) of the past, for instance—the generation change did not alter the process. These are, indeed, not anecdotal cases. From figures of the US National Science Board, Pandey et al. (2004, p.8) remarks that ‘Between 1985–2000, Indian students constituted the largest group among all foreign-born communities in terms of the number of US doctoral degrees awarded in computer and information sciences’ and concludes that ‘the Indian presence is likely to grow even further in the US technology sector’. Therefore, if the Indian IT industry plans to use cutting-edge technology, it has to collaborate with labs in America, where it interacts with members of the Indian diaspora, unless they produce these technologies on their own. As the US R&D budget is $265 billion compared to India’s $3.15 billion, the relationship will certainly last for some time. Today, some of them are financing Indian students in US universities, like Venkatesh Shukla who helped 900 students with his

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“Foundation for Excellence�, or Prabhu Goel and Kanwal Rekhi who decided to sponsor 15,000 students.

But since 2000, a new trend is developing rapidly in India, the outsourcing of R&D Centres on the previous model of Business Process Outsourcing. In 2003, around 100 MNCs had already decided to implement R&D facilities in India, mostly in the IT sector but also in other fields like automobiles (DaimlerChrysler, Delphi, etc.) and chemicals (Akzo Nobel, DuPont, Monsanto, etc.). In this latest phase, the Indian diaspora has had the same importance as during the process of outsourcing business. Members of the diaspora initiated the movement, and set up new labs in India on behalf of the MNCs. Alok Aggarwal was a pioneer in 1998 when he started a research laboratory for IBM, in the premises of the IIT, New Delhi, and they were able to file 19 patents within a year (Evalueserve 2004). In 2003, the Indian entity of Philips, Intel and Oracle had delivered ten per cent of the total number of patents of the global entity, and more for some firms like Texas Instrument with 20 per cent or even 50 per cent for Cisco system (Evalueserve 2004). The latest version of its drawing software, Illustrator, has been fully developed in the Adobe unit in New Delhi. Even if these knowledge activities are more on the Development side (80 per cent) than on the fundamental Research of the R&D, these firms have already invested nearly US$1 billion within five years in this activity.

Knowledge has also been transferred through donations from successful diaspora members to higher education institutions in India. Obviously the IITs have in the past been the prime beneficiaries, with donations around US$36 million as of January 2003, to open management schools, research laboratories and technology centres. With a population of 35,000 IIT alumni in the US, the diaspora could invest more money. The IIT foundation from Kharagpur is trying to attract US$200 million from its network. The money also helped establish endowed professorship, a common practice in US academic life, to foster the

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knowledge transfer. The IIT, Delhi acquired 17 professorships between 1996–2000. In fact, the IIT alumni wanted the privatisation of their alma mater but there was, naturally, a strong protest from within India. Some other diaspora members opened new private institutions like the International School of Business (ISB) in Hyderabad, created by Rajat Gupta who became the managing director of McKinsey from 1994 to 2003. ISB is associated with three leading international business schools (Kellogg School of Management, The Wharton School and London Business School), and many Indian professors abroad spend their sabbatical year teaching there. Management skills are a very important input for the Indian IT industry to compete on the global scale.

The process of knowledge transfer from the diaspora to the Indian IT industry occurred in various ways along the time line. In America, this transfer started with the programmes conducted by members of the Indian diaspora to update the knowledge of cyber workers. Today, cutting edge knowledge is acquired by Indian students directly in American universities and laboratories, like that of the IT pioneers, and with their financial help. But knowledge activities are also reaching India directly with the outsourcing of R&D facilities by MNCs. This trend might convince more members of the diaspora to return to India with their embedded knowledge. That is what occurred after the downturn of the US IT industry in 2001. Nearly 40,000 IT workers on H-1B visas became unemployed and had to fly back to India. These people who had already spent two or three years in America found job opportunities back home because Indian firms needed middle level managers. In contrast to the workers from Kerala who had to escape from the Gulf in 1991, and who became unemployed back in India, the IT workers were in a better position with the outsourcing turn that coincided with their return. This combination of outsourcing and return boosted the industry’s developments, with India being a direct beneficiary but with worldwide expansion too. In their recent study of 225 IT firms, Commander et al. (2004, p.25) observe that

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although only 8.5 per cent of Indian firms are owned by Indians abroad or return migrants, between 45 to 55 per cent of the managers, conceptualisers and developers had a relevant experience abroad (p. 27). Even in Indian IT firms, half of the top rank employees have for some time been a member of the Indian diaspora abroad.

Conclusions: The evidence brought forward in this article shows both the quantitative importance of diaspora knowledge networks today, especially in Asia, and their actual impact on some very substantial developments in the country of origin, particularly in India. The Indian IT industry case study is an example in a very competitive and knowledge intensive sector, although diaspora efforts could benefit other sectors such as health or education in a more sustainable and long-term manner as emphasized by Khadria (1999). Further research should conceptualise with more precise details how transfer successes could actually happen, for example through ethnographic case studies of diaspora network realisations embedded in the matrix framework suggested by Khadria (2007). Stating that the diaspora networks may be highly productive does not downplay the efforts needed to achieve success. There are many failure stories in spite of the great potential exhibited by the networks. Therefore, the analysis of transfer processes should go to the point of explaining the differential achievements, according to both internal dynamics and the context in which these experiences took place. A sociological analysis exploring this perspective of understanding both successes and failures emphasises the mediation processes at work (Meyer 2006). In fact, this article comes with a similar conclusion. In the Indian IT developments, it is not only the sending (India) and the receiving (USA) ends that benefit from the brain gain or the win-win situation but also all their multiple associates, in between and even besides them—in other words, the colateral entities connected to them and independent of both ends. This justifies shifting from

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binary/dichotomical explanations of who gives/receives, generates/follows, pushes/pulls, etc.

The circulation exemplified by diasporas does correspond to the logics of heterogeneous innovation networks with iterative non-linear developments. A second lesson to be drawn refers to the status of mediation operated by the networks: these are not simple channels of information or chain of transmission but rather complex associations of actors. Therefore, there are no mechanistic instruments or management recipes that can be advocated for sustaining networks in an optimal manner. There are simply actions to be observed, understood and eventually supported.

ACKNOWLEDGEMENTS We deeply acknowledge the enormous pains that the anonymous referees and Dr. Nandita Khadria took in polishing our text for editorial and corrective changes.

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Figure 1: DKN identified through web search at different times by different studies:

350 300 250 200 150 100 50 20 04 W at t ia ux To 20 bi 06 n & Sa Bi ao lle e 20 20 06 06 + M ey er 20 06

G er ov a &

et

M

ey er &

Lo we ll

Ba rr ĂŠ

M

ey er &

Br ow

n

al .

19 99

20 03

0

(Source: Meyer and Wattiaux 2006; Xiang 2006)

Figure 2: DKNs by country of origin in Asia

7% 7%

23%

7%

13%

14%

13%

India China Middle-East Bangladesh South East Asia Nepal Korea Others

16%

(Source: Meyer and Wattiaux 2006)

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Figure 3: Major countries of origin for identified and active DKN

Active 2005

Total networks

16 14 12 10 8 6 4 2 In Et dia hi o M pia o Ba ro ng cco la de sh C hi na N ep Tu al ni si Ar ge a nt in a Ko r Th e a ai la nd

0

(Source: Meyer and Wattiaux 2006)

Figure 4: Numbers of Chinese DKN identified through general web search and by the Overseas Chinese Associations Office (OCAO)

200 180 160 140 120 100 80 60 40 20 0 Identified by the OCAO Identified through (Xiao 2006) websearch (Meyer & Wattiaux 2006)

28

Table 1 : Breakdown of diaspora knowledge networks by regions of the world (regions of origin) Diasporas Regions

Identified networks

Networks active in Number of home

Latin America Africa Asia Total

25 51 82 158

2005 15 27 56 98

countries 9 11 18 38

(Source: Meyer and Wattiaux, 2006)

29

1

A new and not yet published report by the same authors expands these findings to 97 “e-diasporas� organisations.