Harnessing the Resources of the Diaspora • 153
trading partners for which data are available. This relationship could, of course, reflect other variables that affect trade flows between the OECD and Africa.3
DIRECT INVESTMENT Diasporas can increase investment flows between sending and receiving countries, because they possess important information that can help identify investment opportunities and facilitate compliance with regulatory requirements. Language skills and similar cultural backgrounds can greatly contribute to the profitability of investment in unfamiliar countries.4 Diasporas may use the information they have regarding their countries to invest directly. Alternatively, investors can improve their profitability by tapping the expertise of a diaspora member. A major barrier for a multinational or a foreign firm setting up a production facility in another country is uncertainty and lack of information regarding the new market. For this reason, professionals and managers from Taiwan, China are very much sought after by multinationals for their operations in China. Members of a diaspora may be more willing than other investors to take on risks in their origin country, because they are better placed to evaluate investment opportunities and possess contacts to facilitate this process (Lucas 2001). Emotion, sense of duty, social networks, the strength of diaspora organizations, and visits to the origin country may also be important determinants of diaspora investment (Nielsen and Riddle 2007). Some studies find a significant relationship between migrants, particularly skilled ones, and investment inflows to origin countries. Kluger and Rapoport (2005); Javorcik and others (2006); Docquier and Lodigiani (2007); Murat, Pistoresi, and Rinaldi (2008); and Leblang (2011) find that migration facilitates foreign direct investment. Some government agencies in Africa are attempting to improve their contacts with diasporas to generate investment opportunities for origincountry firms. Ethiopia, Ghana, Kenya, Nigeria, Rwanda, and other African countries are looking to tap into their diasporas for investments in their homeland countries (see annex table 4A.1). Recognizing the need to create suitable mechanisms to encourage diaspora members to channel remittances toward investment projects in partnering states, the East African Community is developing a proposal to attract diaspora financing.5 Both governments and the private sector have supported business forums to attract diaspora investors. One of the new roles of African investment