From Brain Drain to Brain Circulation?How Countries Can Draw on Their Talent Abroad

Yevgeny KuznetsovWorld Bank Institute

International Workshop on the Economic and Social Impact

of Migration, Remittances, and Diaspora

Yerevan, Armenia

June 24-25, 2010

Table of Contents

1. Motivation

2. Promoting brain circulation3. Lessons from successful

initiatives -- from CIS and beyond

4. Conclusions

Market for the highly skilled• Will become even more globally integrated • Increasing returns to skills will continue to

favor spatial concentration: clustering phenomenon

• The brain drain will increase, both from developed and developing countries

• Expansion of far-flung Diasporas – networks of expatriates abroad

Motivation

Top Skilled Emigration Countries: A quiz

Stock of tertiary-educated foreign-born residents in OECD (2000)

All countries of origin

1 ………… 1,441,307

2 PHILIPPINES 1,226,260

3 INDIA 1,037,626

4 MEXICO 922,964

6 CHINA 816,824

18 USSR-RUS 289,090

23 UKRAINE 246,218

• A country with highly educated population and significant scientific schools but difficult business environment: brain drain (to Europe, Russia, US)

• From brain drain to circulation: a technology entrepreneur in US from Belarus recognizes opportunities at home: software producer EPAM is founded

• Now: 3500 employers with offices in USA, Hungary and Russia; a rapidly growing firm

• ‘Born global’ firm (although from its website www.epam.com you will never guess where work is done)

Investment Generation and Firms Creation: Example from

Belarus

• Tomsk, a city in Western Siberia (2000 miles East from Moscow), known for its technical R&D and universities

• In the 90’s, about a half of graduates of Tomsk University of Radio -electronics (TUSUR) leave the country

• The best come to Silicon Valley and become managers and owners of start-ups. They form Alumni association from TUSUR in Silicon Valley

• Members of this alumni association help to establish student’s business incubator; bring Tomsk’ talent to their firms for internship, finance R&D laboratories

• Impact on TUSUR and technology commercialization in Tomsk

Impact on local innovation clusters and university: Tomsk, Russia

Remittances Remittances

DonationsDonations

Investments

Knowledge & Innovation

Hierarchy of Diaspora Impact

Institutional Reform

• Be productively employed in the country: growth of clusters and non-traditional exports

• Leave the country and be lost for it: brain drain

• Leave the country yet be engaged in projects at home: brain circulation

• Leave and come back: return migration

Four Scenarios for Skills

Common Mistakes • Focus on the return of skills (physical

reallocation to home countries): unrealistic for CIS countries

• Focus on scientistsInstead: Create joint projects with skills abroad – leverage brain circulation

Focus on business and technical talent

Policies for Engagement with Diasporas

• In the long run: need for good business environment (investment climate). It is desirable but rarely present

• In the short and medium-run: focus on dynamic segments of the economy. Engage diasporas with these better performing dynamic segments of the economy (examples of Belarus and Tomsk)

Institutialization of search networks is the major issue

How does the diaspora engagement occur?

©Knowledge for Development, WBI©Knowledge for Development, WBI

Focus on exceptions first

Exceptions form search networks

Some sort of a critical mass emerge

This critical mass becomes an Archimedian lever to promote further change

Multiple Incremental Contributions from diverse points

• American-American real estate businessmen• Business opportunity seen by others, but no investment

had taken place yet=) Need for cultural intermediation and use of search

networks2004: ACRA Credit reporting LLC is founded:Involvement of WB, KfW, and Diaspora members in

ACRA’s advisory board, foreign-educated, local management team

• 2005: Outside, private Investors get involved in ACRA• 2007: Online reporting launched

Example: ACRA, Armenia: Creating a credit reporting agency

Similar Experience possible in Post-Conflict State: Bosnia

In many countries, Diasporas played a critical role In knowledge-based growth: China, India, Ireland

Two ingredients of success:•first generation ‘overachiever’ (highly successful individual) from the skilled diaspora•dynamic segments of economy at home •Providers of venture capital and trade networks •Indian experience •Chinese approach to attract back high level migrants: Specialized technology parks

How to trigger brain circulation?

Armenia: huge diaspora providing significant remittances and large philanthropic contributions

Yet contribution to the institutional development in Armenia has been modest

Armenia Innovation and E-society project: early stage venture capital fund. Diaspora ‘overachievers’ will be critical for its creation.

How to trigger brain circulation? Armenia

Emerging Lessons• Many initiatives to establish ‘brain gain’ networks

have failed

• A lot of initial enthusiasm which dissipates. E.g.: Red Caldas of Colombia

SANSA of South Africa

• Major lesson: Expatriate networks need to generate transactions (demonstration effects), people get tired of discussions

• New sources of promising experience: Chile, Armenia, Russia (particularly sub-national level)

What is the logic of successful initiatives to promote brain circulation?

Public sector should not be directly involved in diaspora programs, yet its role is critical

Venture capital logic: many fail, majority remain ‘living deads’, very few are successful

Successful initiative creates a search network linking exceptions from all sides

Nourishing and developing promising ideas, rather than selecting or matching them

Policy Implications

Tension Between Individual Creativity and its Organisational Support

Individual initiative and creativity Bottom-up impulse

Org

aniz

atio

nal s

uppo

rtTop-down

impulse

Living deadCapture or stifling by vested interests

Guided serendipityElusive synergyOrganizational

support of projects

Hit the wallUseful but tiny

Heroic successTalent moves walls

(Not replicable by definition)

Policy Implications What is the logic of public sector involvement?

Two-prong approach: Facilitate a diversity of initiatives from the bottom-up (‘let

one thousand flowers bloom’) Provide a framework for information sharing and

lessons-learning

Initiatives: Contests between domestic actors to leverage diaspora

members for long-term projects. Examples: Russia, Mexico

Russia: Recent (2009) initiative of Ministry of Education and Science to engage scientists from abroad

Conclusions1. Skilled diasporas can be very useful for home countries but

to develop their potential, concerted effort is required. This concerted effort takes time.

2. In the short term, individual champions and tangible success stories (demonstration effects) are the key

3. In the longer-term, institutions of the home countries are the key (Diasporas are not a panacea)

4. Focus on pragmatism: relying on individual champions to develop institutions

Thank you Yevgeny Kuznetsov

YKuznetsov@worldbank.org