Some ideas are born in institutions. Others leave the institution with the people who first developed them. The idea of a diaspora hedge fund belongs to the latter category.
Its origins go back to the formative years of the International Centre for Migration Policy Development (ICMPD) in Vienna in the mid-1990s. At that time, ICMPD was still a small institution, but it was already unusually ambitious in its attempt to understand migration beyond the narrow confines of border control. In the less-than-100 m² office with only 4 staff members, just across the street from the world’s oldest diplomatic training center—the Vienna Diplomatic Academy—I had the privilege of working alongside its founder, Jonas Widgren, a top Swedish governmental official, as well as Willibald Pahr, then already a retired Austrian foreign minister; one Swiss official; and a technical secretary.
The discussions of those early years ranged widely: migration control and repatriation, labor markets and development, the economics of prevention, and the question of how migration could be addressed not only through managing its consequences but also through tackling some of its underlying socio-economic, developmental, and demographic causes.
One small anecdote from that period remained particularly memorable.
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The Economics of Prevention
In the mid-1990s, Slovenia was reportedly apprehending approximately 3,000 Romanian nationals annually as they attempted to cross its tiny stretch of border with Italy illegally on their way to Western Europe. The administrative costs of apprehension, processing, documentation, and repatriation were estimated at around one thousand Deutsche Marks per person. The resulting expenditure, therefore, approached three million Deutsche Marks a year—an amount that, adjusted for inflation and purchasing power parity in Romania, would be at least three times higher in today’s money.
The significance of the example was not the precise calculation. Nor was it an argument against border management or the sovereign right of states to regulate migration. It illustrated a broader question that arose repeatedly in those early discussions: what might be called the economics of prevention—the economic irrationality of spending substantial resources on managing the consequences of migration while devoting comparatively less attention to the economic conditions that generate migration in the first place? Or, to put it differently, it was about linking migration to development.
Would some of the resources spent on apprehension and repatriation produce a greater long-term effect if invested instead in employment, vocational education, local enterprise, agriculture, or infrastructure in regions of origin? Repatriation addresses a consequence; prevention addresses a condition.
This was only one of many observations and anecdotes that shaped the thinking of those early, formative ICMPD years. But it helped reinforce a proposition that would remain with me: migration policy and development policy could not sensibly remain entirely separate.
From Migration Control to Migration Capitalization
Much has changed in migration policy since those early years of huge migratory movements in Europe, driven by political changes on its eastern and southern flanks. For decades, the dominant emphasis was migration control: borders, visas, irregular migration, return, and readmission. This gradually evolved into a broader approach of migration management, encompassing legal mobility, integration, labor migration, development cooperation, and more comprehensive international coordination.
But there is arguably a third stage still waiting to be fully developed: migration capitalization. The term is broader than finance. Migration does not move people alone. It also moves capital, knowledge, professional experience, entrepreneurship, technology, (ethno-)networks, and institutional memory.
Diaspora communities therefore represent considerably more than a source of remittances. The question is how these dispersed resources can be organized so that they contribute systematically to productive development.
This is where the idea of the Diaspora Hedge Fund returns.
The proposition was never simply to collect diaspora money. It was to create an institutional mechanism through which relatively modest individual contributions could be pooled, professionally managed, and connected with the leverage and governance standards of established multilateral development-finance institutions.
In its simplest form, the architecture would bring together four elements: (i) diaspora capital; (ii) multilateral development finance; (iii) national development priorities; and (iv) professionally governed investment.
The government of the country of origin would establish priorities and provide appropriate guarantees. The diaspora would provide catalytic capital, potentially doubling it through an appropriate development bank or entity—e.g., European, international, or regional, such as OFID, etc. A participating developmental-finance institution would undertake due diligence, apply fiduciary and procurement standards, and, where appropriate, leverage or match the diaspora contribution. Productive enterprises and local communities would ultimately benefit from the investment.
The essential ingredient is trust.
Diaspora communities often possess both the willingness and the capacity to invest in their countries of origin. What is frequently missing is an institutional framework that gives them confidence that their money will be professionally managed, transparently allocated, and protected from political interference. The idea is therefore less about creating another financial product than about creating an institutional bridge between resources that already exist.
From Remittances to Strategic Investment
The original hedge fund idea emerged before the terminology of migration capitalization had taken shape.
At its heart was a simple proposition: remittances should not be regarded only as private transfers supporting household consumption—and mostly flowing through informal networks among family members and people with other direct bonds. They could, under the right conditions, become part of a much broader pool of organized diaspora capital capable of supporting productive and strategic investment.
The distinction matters. Remittances are already among the largest and most reliable financial flows associated with migration. Yet they are predominantly fragmented across millions of individual transactions and household decisions. Their social and economic importance is undeniable, but their potential as organized development capital remains comparatively underused.
The challenge is therefore not to redirect remittances by administrative fiat. It is to create an attractive and trustworthy mechanism through which diaspora members who wish to invest can do so collectively, professionally, and with a clear developmental purpose. That was the intuition behind the diaspora hedge fund.
An Idea That Travelled
The idea did not remain confined to the European migration-policy environment. Soon after my years at ICMPD, my own professional path moved to academia, research, and international policy engagement. Jonas Widgren, whose contribution to European migration policy was pioneering, passed away prematurely. ICMPD itself evolved, as did the migration agenda.
The question, however, remained. Over the following decades, the same underlying idea resurfaced in university teaching, research, policy papers, and discussions with governments and international organizations.
It was present, in different forms, in my engagement with the United Nations system, particularly UNODC, and in my work surrounding the Palermo Convention negotiations, signing, and its implementation (as well as a few other fundamental international instruments such as the UN Corruption Convention, etc.). Some of these reflections subsequently found their way into my numerous writings and into my own book, published in 2025, examining the Palermo Treaty system and other fundamental pillars of the contemporary international criminal law regime.
The same broader question also appeared in my engagement with the OSCE, including policy work that contributed to discussions reflected in an OSCE Ministerial Council process. The institutional settings changed; the underlying question did not. How can migration become not merely something to be managed but also a resource for development?
The discussion traveled beyond Europe as well: Over the years, I had opportunities to discuss aspects of the concept with senior representatives of international organizations and institutions, including Donald J. Johnston, former Secretary-General of the OECD; Surin Pitsuwan, former Secretary-General of ASEAN; Sheel Kant Sharma, former Secretary-General of SAARC; Moussa Faki Mahamat, former Chairperson of the African Union Commission; and Albert Ramdin, now Secretary General of the Organization of American States, as well as Nasser Kamel, Secretary General of the Union for the Mediterranean, and a number of officials engaged over the years in the Barcelona Process and Euro-Mediterranean platforms, including John Bruton, former Irish Prime Minister, to name but a few.
These conversations, in different moments and institutional and regional contexts, reinforced a broader observation: countries across Africa, Asia, Latin America, the Caribbean, and Southeast Europe confront remarkably similar circumstances—substantial diasporas, significant remittance flows, persistent development needs, and insufficient mechanisms for transforming dispersed private resources into strategic development investment.
Particularly significant were my engagements in Jeddah, where I conducted invited seminars for both the Organization of Islamic Cooperation (OIC) and the Islamic Development Bank (IsDB). During that period, I also had substantive discussions with Dr. Bandar M. H. Hajjar, then president of the Islamic Development Bank, about connecting diaspora resources with multilateral development finance.
These exchanges were important not because they produced an immediate institutional solution, but because they demonstrated that the original question raised in the early ICMPD discussions had a relevance far beyond European migration policy.
From remittances to strategic investment, it was becoming a question of international development, not merely migration management.
The Diaspora Hedge Fund
The proposed diaspora hedge fund should not be understood as a conventional hedge fund in the financial-market sense. The name reflects the original concept; the substance is an organized mechanism for transforming dispersed diaspora savings into professionally governed development investment.
The basic architecture is deliberately straightforward. Diaspora members contribute voluntarily to a professionally managed pool. A participating multilateral development institution evaluates and, where appropriate, leverages or matches those resources. Governments identify development priorities and provide the necessary institutional framework and guarantees. Projects are selected according to transparent economic and social criteria — including tripartite participation and decision-making — and implemented under professional financial and procurement standards.
The objective is not to replace development assistance, foreign direct investment, or existing development-finance mechanisms. It is to add something that has often been missing: a structured connection between diaspora capital and national development priorities.
A small South-East European state provides one possible illustration. More than 220,000 documented Bosnian citizens reside in Austria alone. If each contributed only ten euros — roughly the price of a coffee and a slice of cake — the resulting capital would already exceed two million euros from a single diaspora community in a single country annually. (Rough estimates project a volume of some 25 million euros for Bosnians from their European diaspora alone, while, for example, the Moroccan diaspora would be ten times larger.)
The point, of course, is not the precise amount since both the sending and receiving countries are relatively small. The point is that development capital does not necessarily begin with billions. It can begin with participation and trust.
If such pooled capital were subsequently leveraged through an established development-finance institution, professionally appraised and directed toward productive investment, relatively modest individual contributions could acquire considerably greater economic significance.
The small SEE country could therefore serve as one possible pilot. But the concept is not specifically Bosnian. Its potential application extends to countries across Africa, Asia, Latin America, the Caribbean, MENA, and Southeast Europe—indeed, anywhere substantial diasporas, significant remittance flows, and persistent development needs coexist.
Why Revisit It Now?
There is a certain irony in revisiting an idea after almost three decades.
When the original discussions took place in Vienna, the language of migration capitalization was not yet established, and the institutional infrastructure for diaspora investment was considerably less developed.
Today, the environment is different. Diaspora communities are larger, more professionally connected, and increasingly sophisticated financially. A variety of communication tools—instant and practically cost-free—together with digital finance, have transformed the possibilities for collective investment. Multilateral development banks possess sophisticated instruments for project appraisal, risk management, and blended finance. And the developmental significance of diaspora networks is now much more widely recognized.
The question is therefore no longer whether diaspora communities possess resources. They do. Nor is the question whether development-finance institutions possess the instruments and expertise to mobilize capital. They do.
The more interesting question is whether these two realities can finally be connected through an institution capable of commanding the confidence of diaspora investors while remaining aligned with the development priorities of countries of origin.
That was the intuition behind the discussions in the formative days of ICMPD.
It is also why the idea has survived successive changes of institution, profession, and international context: from a small office in Vienna in the 1990s, through academia, the UN and UNODC, the OSCE, the OECD, the African Union, ASEAN and SAARC, the OIC and the Islamic Development Bank, and through conversations with policymakers and development-finance leaders in different parts of the world, the idea has been discussed, tested, and gradually refined.
It is therefore not presented here as a new idea. Quite the opposite. It is an old idea that has had nearly three decades to mature.
The purpose of revisiting the diaspora hedge fund is not to add another grand theory to the already crowded field of migration policy. It is more modest—and perhaps more useful—to recover a pioneering idea from the formative days of European migration policy cooperation and ask whether today’s institutional and financial environment is finally capable of giving it practical form.
Migration control remains necessary. Migration management remains indispensable. But if migration is also a source of capital, knowledge, entrepreneurship, and transnational commitment, then the next step should be to capitalize on migration.
And if remittances can become organized diaspora capital, then the next step is to move from remittances to strategic investment.
The Diaspora Hedge Fund is proposed as one possible institutional bridge between those two worlds. An idea conceived in Vienna in the 1990s may, after all, have arrived at the right moment.