Remittances are not only more stable than other forms of financing; they are also countercyclical. That is, they tend to rise when other flows fall, creating a useful cushion. When financial crises hit Mexico in 1995 and Indonesia in 1998, the inflow of remittances actually increased, as worried Mexican- and Indonesian-Americans sent cash home to their struggling relatives.
Additionally, migrants often invest in their homelands. A study of 6,000 small businesses in Mexico, for instance, found that 20 percent of their capital came from remittances, mostly from Mexicans working in the United States. Diaspora investors are braver and more patient than others because they have a long-term attachment to their homeland. Short-term shocks don't worry them as much. A typical foreign investor in Nigeria would be very frightened if he thought the local currency might collapse, since he wants to convert his profits into dollars and take them home. For a Nigerian-American investor, however, the same currency crash offers a chance to buy up land cheaply and build a mansion for his eventual retirement.
Remittances also ease poverty. In Bangladesh, a country that sends tens of thousands of construction workers to toil in oil sheikhdoms, families that receive remittances typically rely on them for half their income. In nearby Nepal, household surveys suggest that remittances account for perhaps half of the country's poverty reduction in recent years.
Emigrants take their skills with them when they leave home, but the money they send back helps others learn. It does so directly, when it is spent on school fees. It also does so indirectly, when it puts food on a poor family's table. Hungry children cannot concentrate in class. Amply fed families are less likely to pull their daughters out of school and put them to work in the fields.
The third way brain drain helps poor countries is that as migrants move back and forth, they open channels for commerce. Countries trade more with countries from which they have received immigrants. This is partly because diaspora networks speed the flow of information: A Chinese trader in Malaysia who spots a demand for plastic mobile-phone pouches will quickly urge his cousin, who owns a factory in Zhejiang, to start cranking them out. Because these two Chinese businessmen know each other, they trust each other. This is hugely important -- it means they can seal a big deal with a single phone call and get their product to market before anyone else.
Diaspora networks have been around for centuries, but they have grown much more powerful of late, for three reasons. First, they are bigger than ever before. Seventy million Chinese live outside mainland China, and 22 million Indians live outside India. There are also hundreds of smaller networks, from the Lebanese in West Africa to the South Koreans in the United States. All told, there are 215 million first-generation migrants in the world, an increase of 40 percent since 1990.
Second, diaspora networks have been massively empowered by modern communications. In the old days, a transatlantic phone call might cost several months' wages. Now it is free via Skype. So migrants stay constantly and intimately in touch with the countries they came from, and with each other.
Third, the places from which migrants come, such as India, China, and Africa, are much more open to trade than they were a generation ago. When China was a closed society, overseas Chinese traders had to make do with linking one foreign port with another. Now they link the world to China and China to the world.
These merchants speak the language, understand the culture, and know whom to trust. In countries where the rule of law is unreliable -- which includes most fast-growing emerging markets -- this matters. Some 70 percent of foreign direct investment into mainland China passes through the Chinese diaspora, broadly defined. American firms that hire Chinese-Americans find it easier to do business in China without the aid of a joint venture.
Diasporas also accelerate the spread of technology to poor countries. Most Asian scientists in Silicon Valley share ideas with their friends back home. The world's cheapest refrigerator, which costs only $70, was developed through the collaboration of brainy Indians in India and brainy Indians in America. So was the software behind India's drive to give all 1.2 billion of its citizens a biometric identity, thus enabling the hundreds of millions who cannot prove who they are to open bank accounts and borrow money.
The final, and most important, argument in favor of brain drain is that migration is good for the migrants themselves. If they did not think so, they would not move. Four out of five Haitians who have pulled themselves out of poverty (if one uses a global poverty line of $10 a day) have done so by moving to America. Nearly half of the Mexicans who have achieved this modest standard of living have done so by crossing the Rio Grande. And tens of thousands of infants are prevented from dying each year by the simple fact that their parents emigrated.
In the battle against global poverty, the most powerful weapon is a welcome mat.