Capital is necessary for investment and to finance trade—behaviors that drive economic growth. Access to capital, whether from public or private sources is essential.

Investment is all about risk and return: Investors are willing to lend to a household, corporation, or government if they believe that the risk-adjusted return exceeds the potential loss of investment. Capital, like commodity trade, ebbs and flows based on supply and demand. Yet unlike commodity trade, there is no equivalent to the WTO for cross-border investment that provides information and a semblance of contract enforcement.

Unlike commodity trade, there is no equivalent to the WTO for cross-border investment that provides information and a semblance of contract enforcement

We argue that the growth and spread of capital investment across the world is, in part, due to migration. As investment opportunities become more complex—from portfolio equities, to venture capital, to mergers and acquisitions, to Greenfield investment—the information required to ensure an adequate return and acceptable level of risk increases.

Migrants, we demonstrate, are essential in providing potential investors with information about investment opportunities and the contracting environment. Just as migrant networks provide information to potential emigres regarding opportunities across destinations, we argue that migrant networks provide potential investors with information vital to decisions of global capital allocation.

Migrants are essential in providing potential investors with information about investment opportunities and the contracting environment

Excerpted from The Ties that Bind: Immigration and the Global Political Economy, published by Cambridge University Press and Assessment ©2023