BRAIN GAIN vs. BRAIN DRAIN:

A CASE STUDY OF PAKISTAN

Safwan A. Khan, Vaqar Ahmed

Migration and Development: Emerging Debates

•Balanced growth theory (Haas, 2012)▫Migration development of human capital▫Reverse transfers of money, knowledge, best

practices, technology etc.

•Asymmetric development theory (Haas, 2012)▫Migration underdevelopment of the

sending country▫Brain drain

•Migration and development: no relationship (Skeldon, 2012)

The Case of Pakistan• Average growth in annual emigration flows

(1970-2011): 7%

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

Emigrant Numbers

Emigrant Numbers

Year

Em

igra

nt

Nu

mb

er

Research Approach

• Data▫Pakistan Economic Survey▫World Development Indicators▫Bureau of Emigration & Overseas Employment

• Theory triangulation▫As on previous slide

• Methodological▫Qualitative methods (Key informant interviews)▫Quantitative methods (Time-series analysis)

Migration Patterns in PakistanGDP growth and emigration (% change)

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

-60

-40

-20

0

20

40

60

80

GDP Growth (%)

% Change in Emigrant Numbers

Year

%

Pakistan: Consumption, savings, and remittance flows

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

0

20

40

60

80

100

120

Gross domestic savings (% of GDP)Final consumption expenditure, etc. (% of GDP)

Year

%

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

0

2000

4000

6000

8000

10000

12000

Remittances (Million US$)

Year

Mil

lion

US

$

Top emigrant destinations

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

50000

100000

150000

200000

250000

300000

Saudi Arabia. U.A.E. Oman

Nu

mb

ers

Migration by labor type

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

0

50000

100000

150000

200000

250000

Highly Qualified Highly Skilled Skilled Semi Skilled Un-Skilled

Year

Nu

mb

ers

Migration by province

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

0

50000

100000

150000

200000

250000

300000

PUNJABSINDHK.PakhtunkhawBALUCHISTANAZAD KASHMIRN/AREATRIBAL AREA

Year

Nu

mb

er

The number of overseas Pakistanis (2010)

Source: Bureau of Emigration and Overseas Employment (2010)

Africa2%

Americas  19%

Asia and Far East3%

Australia and New Zealand

1%

Europe28%

Middle East47%

Region-wise percentage of overseas Pakistanis (2010)

Time-series Analysis

•3 SLS estimation (Foldvari et. al, 2012)

•Variables used▫GDP per capita (lny)▫Physical capital stock (lk)▫Annual emigration numbers (ltm)▫Literacy rate (lr)

•Period covered▫1972-2011

Model specification

lnyt = β10 + β11lnkt + β12tmt + β13lrt + u1,t

lnkt = β20 + β21lnyt + β22tmt + β23lrt + u2,t

tmt = β30 + β31lnyt + β32lnkt + β33lrt + u3,t

lrt = β40 + β41lnyt + β42lnkt + β43tmt + u4,t

Regression Results

•Effect on GDP per capita

•Effect on capital stock

•Effect on migration numbers

•Effect on literacy rate

Migration & Development: Cross-cutting Themes• Overseas exposure and training: qualified diasporas

• Japan: Knowledge and technology transfers due to increased migration

• Globalized citizenry

• Lack of economic opportunities migration away from the country

• Pakistani exports 20% higher owing to Pak diasporas

•1970s and 1980s: Loss in production quality as qualified personnel moved abroad

• The case of illegal migrants: over 33 million in EU

• Bilateral readmission policies being undertaken by EU to address illegal migration

• The EU model of increased labor mobility and increased economic activity

• Two-way migration for reverse transfers and development

• Malaysia: improved markets lower migration

Labor Mobility and Development

•Cluster phenomenon: concentration in sectors of comparative advantages rather than subsidies

•Exchange programs can be more beneficial for brain gain

•EU reintegration support fund: to facilitate migrant settlement in home country; run by NGOs instead of the GoP

Remittances & Development•Higher remittances inflationary pressures

poverty

•Remittance flows only second to export earnings

•Remittance spending consumption goods and investment goods

•Use of remittance flows: financing of CAD less available for expenditure on social services

•Positive effect of remittances (Ahmed et al., 2010)▫GDP growth▫Household expenditure▫Real investment▫Poverty▫Income inequality

•But need to be aware of ‘Dutch Disease’

Conflict & Migration

•Push and pull effects of migration

•Karachi: conflict push migration flight of capital

•FATA: conflict pull migration source of livelihoods

Case Studies on Returning Migrants•Faculty at various public and private

educational institutions

•Shifa International

•Omar Saif (SMSall)

•Centaurus

•Rozee.pk

Future Outlook•2014 withdrawal of US troops from

Afghanistan influx of Afghan migrants

•Push migration likely over the next 5 years flight of talent

•Competitive markets opportunities for commercial investments by diasporas▫China▫India

Policy Implications• Skills training for manpower export high end skills

• Too narrow a focus on remittances alone engaging Diaspora in knowledge, ideas and technology transfer

• Easier transition for returning migrants conducive business environment

• Diasporas opportunities for export markets

• Competitive markets where Diaspora can enter into Joint Ventures: ASEAN economies, China, India

Thank yousafwan@sdpi.org, vaqar@sdpi.org