Why and How ‘Diaspora Direct Investment’ can be the saviour of Wales’ Rural and Valley Communities

In four weeks time Wales will go to the polls to elect its next government at a time when its economic fortunes are at a low ebb and its ability to retain and attract talent is adding to its wider malaise. Could encouraging investment from its diaspora, a rich resource that remains largely untapped, hold the key to its future prosperity?

Diaspora Direct Investment (DDI) has far more potential to create high value jobs than Foreign Direct Investment (FDI) and can more effectively help Wales address its long standing economic challenges and decline. While this may seem contentious, we will try and explain why this is the case, why governments have not taken it seriously and what is the best way to build and drive DDI into Wales.

The Welsh Government has consistently focussed on FDI, as last December's investment summit demonstrated. GlobalWelsh had already identified a large number of DDI opportunities (500), through its ‘Brain Drain to Brain Gain’ research and requested suitable opportunities be involved in the summit. Our Founding Patrons, all global business leaders, also wrote to the First Minister pleading for the inclusion of DDI in the summit agenda. Both requests fell on deaf ears and an opportunity was missed.

• Summary ‘Brain Drain to Brain Gain’ report here:
• Full ‘Brain Drain to Brain Gain’ report here:

Diaspora Direct Investment (DDI) can be understood as a hybrid form of foreign direct investment combining financial capital, transnational networks, and identity-based commitment, particularly effective in small, open economies. Evidence from comparable small nations illustrates its growing significance.

In Ireland, diaspora networks, particularly in the United States, have played a pivotal role in scaling indigenous firms such as Stripe and Intercom, not only through capital provision but by facilitating market entry, mentorship, and global connectivity, often supported by state agencies such as Enterprise Ireland (Enterprise Ireland, 2023; Boyle, 2021).

Estonia offers a complementary model, where diaspora and returnee entrepreneurs, most notably alumni of Skype, have reinvested in the domestic startup ecosystem, contributing to the emergence of globally competitive firms such as Guardtime and reinforcing Estonia’s status as a leading “unicorn” economy per capita (Kattel & Mergel, 2019; Startup Estonia, 2023).

In Armenia, diaspora engagement has taken a more institution-building form, exemplified by initiatives such as the TUMO Center for Creative Technologies, which combines philanthropic and investment capital to develop long-term human capital and innovation capacity (Kharas et al., 2020).

Meanwhile, in Romania, returnee diaspora entrepreneurs have driven grassroots economic renewal by transferring business models, capital, and skills acquired abroad into sectors such as hospitality, retail, and SMEs, often motivated by a blend of opportunity recognition and affective ties to the home country (Roman & Voicu, 2018).

Across these cases, DDI extends beyond financial investment alone, functioning as a mechanism for knowledge transfer, market access, and ecosystem development, highlighting its particular relevance for regions such as Wales seeking to leverage diaspora networks for sustainable economic growth.

So why the lack of interest in DDI? This is a question we have agonised over for a long time. From an outsiders private sector mindset it makes no sense. If you have Welsh diaspora business leaders, owners and entrepreneurs expressing a desire to explore creating jobs in Wales in places they were born, educated and where they still have friends and relatives, why would you not take full advantage of the opportunity to create jobs all over Wales, not just the M4 corridor, which is normally where FDI locates.

What we learnt from a long career in business is that empathy is important if you are trying to make sense of the nonsensical. So putting myself in the shoes of the Welsh Government this is what I have concluded:

1. Governments are more in their ‘comfort zone’ talking to large enterprises than SME entrepreneur led businesses.
2. Successful FDI projects make for a great PR headline, since they typically create a higher number of jobs (many are likely to be blue collar).
3. Successful FDI projects are usually located in the most densely populated parts of Wales and hence have a more positive influence on voter intention than rural areas.
4. FDI is totally under the control of the Welsh Government, hence opaque and less open to scrutiny.
5. FDI is an area that the WG has experience at and some notable successes (and failures) - DDI is subject to the Welsh Government's ‘not invented here’ syndrome.

FDI is incredibly competitive, doesn’t always deliver on its potential and is rarely strongly rooted in Wales. As we have learnt FDI can depart as quickly as it arrived, leaving communities devastated.

DDI is different and less compatible with government skills, culture and resources. This is why it should be outsourced via a Public-Private-Partnership and managed differently.

1. DDI is more organic.
2. Attracting entrepreneur led businesses and talent is highly competitive and where networks, relationships and affinity can make the difference.
3. It requires the management of many more transactions.
4. Each lead requires private sector knowledge to effectively qualify the opportunity.
5. DDI jobs are likely to be higher value roles in emerging sectors that require an agile response that empathises with new business models.
6. Welsh diaspora business leaders, owners and entrepreneurs will ask uncomfortable questions, raise objections about Wales that may be a barrier to them investing - see real quotes from our research below. This puts unwelcome pressure on the government.
7. Has the potential to attract small, high growth businesses and entrepreneurs that could be valued in billions within a short time. We are already observing the rise of the micro-team (and the solo founder) which should be taken seriously when considering any future DDI strategy. Sam Altman, CEO of OpenAI, predicted we will “see 10-person companies valued at a billion dollars very soon”. And Business Insider lists a dozen AI unicorns worth ≥ $1 billion with 50 or fewer employees.

“I built my company from scratch in California, now valued at $200m. I’d love to create an R&D hub in Wales, but we need better infrastructure and support systems to make it viable.” Silicon Valley Tech Leader

“We need clear pathways for investment and engagement. Many of us want to contribute but find the current system opaque.” Tech CEO, San Francisco

GlobalWelsh can continue to build on its groundbreaking ‘Brain Drain to Brain Gain’ research to identify more DDI opportunities and with the cooperation of the WG we can curate, qualify, address perceived barriers and facilitate the best cases. We can also target specific regions of Wales that have the greatest need of investment. We uniquely have the global network, technology platform, skills and experience to deliver a constant supply of DDI opportunities, fully qualified and aligned with the Welsh Government's priority sectors and regional development goals.

Our survey of 1,709 respondents uncovered 500 DDI leads (29%). Even if only 20% were a good fit with the WG criteria and could be encouraged to set up a Wales based operation, if each created 2 - 5 jobs, that's 200 - 500 high value roles for our young people. DDI can play a significant role in stemming our brain drain problem that is getting more acute. Imagine the total potential across our 3 million diaspora. Moreover these businesses are more agile, have simple decision making processes and by setting up in the communities that they left, will be more rooted and likely to stay and grow in Wales.

Our proposed DDI strategy will deliver higher returns than FDI for Wales because they are relationship, place and affinity driven, not just chasing grants.

Join us at our ‘Connect to Cymru’ Inward Investment showcase in June >>

Attracting international businesses to Wales is a valid endeavour but we believe Wales should not put all its eggs in the large corporate basket. These large businesses are difficult to convince, timescales are long and they are more than likely to be interested in locating along the M4 corridor, leaving the rest of Wales, that arguably have the greatest need for inward investment, missing out. Moreover, global uncertainty and geo politics is making attracting FDI more unpredictable and challenging.

GlobalWelsh is particularly interested in entering into a dialogue with the new Welsh Government, when elected on the 7th May 2026, to ensure DDI forms part of their economic development plans and they can hit the ground running on attracting jobs to Wales.

Authors: Professor Sarah L. Birchley and Walter May