New Zealand, like many countries, has recently shifted from disparaging emigrants to celebrating expatriates as heroes. What explains this change? The new government initiatives towards expatriates have been attributed to a neoliberal ‘diaspora strategy’, aimed at constructing emigrants and their descendants as part of a community of knowledge-bearing subjects, in order to help the New Zealand economy ‘go global’ (Larner 2007: 80). The research in this paper confirms that the new diaspora initiatives emerged from a process of neoliberal reform. However, it also highlights that, in the same period, older, inherited institutional frameworks for interacting with expatriates were being dismantled as part of a different dynamic within the same wider neoliberalization process. In this way, the research builds on and refines the ‘diaspora strategy’ concept by placing it within a broader analysis of institutional transformation through ‘creative destruction’. At the same time, this study opens up a wider research agenda aimed at revealing, understanding and explaining how states have related to diasporas before and beyond the era of neoliberalism.