Fiscal Policy and Alternative Sources of Public Capital in Transition Economies: Diaspora Bond
State-sponsored projects in the transition economies often lack reliable finance sources as governments deal with orthodox policy limitations. At the same time reliance on relatively inconsistent natural resources export revenues, migrant remittances or conditional loans and foreign aid may not be adequate for long run development projects. One alternative is a Diaspora-sovereign bond program with a patriotic discount. Implied independent decision-making and fiscal responsibility will allow for strategic funds allocation, with an incentive for infrastructure and social initiatives investment with strong feedback into a productive economy stimulating effective demand. Ultimately these components define modern fiscal policy and are fundamental to economic growth and development. Regulated via Diaspora Supervisory Board,a Diaspora bond may also serve as the initial or renewed access to the international capital markets, especially for smaller economies and those with low sovereign ratings.