Does the Indian Diaspora Work as a Strategic Asset for the Indian Economy? An Empirical Investigation

International migration plays a vital role in attracting foreign direct investment to their respective host countries and channeling remittances to their home country. Remittances from the diaspora contribute to the circular flow of money in the economy and increase aggregate demand along with economic growth. The present study examines the role of the Indian diaspora in the growth of outward foreign direct investment (OFDI) to the host countries and the contribution of international remittances to the economic growth of home country, that is, India. The study developed two models, first, considering Indian OFDI and the role of the diaspora and bilateral investment treaties covering 35 OECD host countries. Using FMOLS regression, a positive and significant impact of diaspora and bilateral investment treaties is found on OFDI growth in India. Moreover, in the second model, the study found that the international remittances sent by the diaspora to their home country are contributing to the economic growth of India. The study recommends that active policymakers in India should deliberate on the effective management of international migration and develop initiatives for strengthening the social networks between India and the host countries.