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Diffusion studies have rightly emphasized external ideas and resources that propel liberalization in the developing world. There remain two gaps: first, the literature has not covered the types of diffusers and the ways diasporas may shape liberalization in their homelands; second, it pays little attention to internal diffusion after national adoption within a country. This article explores the utility and conditions of diffusion by diasporas and examines the roles of diasporas and internal diffusion in China and India’s FDI liberalization. In both countries, diasporas were main diffusers that led national adoption of liberalism at home. In China, however, entrepreneurial diasporas’ networks with local governments helped expansive internal diffusion. India’s professional diasporas did not strongly engage local governments or domestic companies. National adoption in India was followed by reversal and partial internal diffusions. India’s software services provide a similar diffusion by diasporas to that in China.
