Migration  

Brain  drain  or  brain  gain?      

           Economic  and  Social  Development  Essay  –  15th  of  October  2014      Jelena  Dukic  &  Niamh  Deutz  Ebeling      

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Contents  Contents.................................................................................................................................... 1  Introduction .............................................................................................................................. 2  Migration .............................................................................................................................. 2  Motives  for  migration .......................................................................................................... 2  Content  essay ....................................................................................................................... 2  

Brain  drain ................................................................................................................................ 3  Definition.............................................................................................................................. 3  “Brain  drain”  effects ............................................................................................................ 3  Downsides  and  upsides........................................................................................................ 3  Examples .............................................................................................................................. 4  How  to  prevent  immigration? ............................................................................................. 4  

Brain  gain .................................................................................................................................. 6  Definition.............................................................................................................................. 6  Increase  in  migration ........................................................................................................... 6  “Reverse  Brain  Drain” .......................................................................................................... 6  Remittances.......................................................................................................................... 7  Education  and  economic  growth ......................................................................................... 8  Africa .................................................................................................................................... 8  

Conclusion .............................................................................................................................. 10  References .............................................................................................................................. 11                                                

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Introduction  Migration  

Since   the   late   1990s,   when   the   technical   boom   began   to   expand,   more   and   more  governments   opened   their   doors   to   immigrants,   and   specifically,   highly   educated  immigrants.  This  has  resulted  in  an  even  bigger  movement  of  people  across  the  world,  than  the   start   of   globalization   had   already   caused   in   the   19th   century   with   the   industrial  revolution.  In  2008  it  was  estimated  that  the  world  exists  of  191  million  immigrants,  of  which  60%  lives  in  developed  countries  (20%  in  US  and  33%  in  Europe).  To  get  the  facts  straight,  it  is  necessary  to  define  what  migration  means  and  which  types  of  migration  exist.  According  to   the   UN   (1998)   a   migrant   is   defined   as   a   person   who  moves   to   a   country   (other   than  his/her  usual  residence)  for  a  period  of  at  least  12  months.  There  are  two  types  of  migration:  immigration   and   emigration.   Immigration   defines   people  who  migrate   into   a   country   and  emigration  defines  people  who  depart  from  a  country.  

Motives  for  migration  Looking  at  migration  from  a  historical  point  of  view,  the  most  common  motive  for  migration  was  a  common  language  or  religion  in  a  different  country.  More  recent  examples  –  such  as  slave  trade  or  The  Irish  Famine  –  show  that  migrating  is  not  per  definition  a  choice,  but  that  there   are   different   reasons   for   migration.   In   this   context,   some   circumstances   can   force  people   to  move,   but   voluntary  migration   on   the   contrary,   has   become  more   widespread  over   the  past  decades.  The  current   trend  of  voluntary  migration  has  multiple  under   laying  causes:   the   emergence   of   a   global   labour   market,   the   development   of   knowledge  economies,   the   increase   in   foreign   investment   and   trade   and   the   tech   boom   of   the   late  1990’s   has  made  more   governments   open   their   doors   and   has  made   it   easier   for   human  movement  across  the  globe.  As  mentioned  above,  migration  has  become  a  very   important  aspect   of   the  modern  day  world.   Some  people   consider  migration   as   something  negative,  but   others   consider   it   to   be   positive.   So   can  migration   be   seen   as   “brain   drain”   or   “brain  gain”?  

Content  essay  In   the   first   chapter,   the   term  brain   drain  will   be   discussed.   This   especially   focuses   on   the  negative  effects  of  migration.   In  the  second  chapter,  the  term  brain  gain  will  be  discussed.  This   especially   focuses   on   the   positive   effects   of  migration.   In   the   fourth   chapter,   all   the  gathered  information  and  knowledge  will  be  formed  into  a  conclusion.    

             

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Brain  drain      

Definition  To  begin  with,  this  worldwide  phenomenon,  brain  drain,  refers  to  the  significant  emigration  of   knowledgeable,   well-­‐educated   and   skilled   professionals   from   their   home   country   to  another   country,   resulting   in   the   loss   of   the   skilled   people   –   the   so-­‐called   “brains”   in   the  places   they   come   from.   As   a   starter   example   to   better   understand   brain   drain   is   Albert  Einstein   who   moved   from   Germany   to   the   U.S.   as   a   result   of   unwillingness   of   German  government   to   invest   into   research  &   development.   It   is  widely   known   that   he   ended   up  influencing  the  nuclear  era  and  becoming  very  famous.  From  this  example,  and  many  more,  it  can  be  see  that  the  effect  of  “brain  drain”  causes  countries  to  lose  valuable  professionals.  Furthermore,   this   term   is   usually   used   to   describe   the   departure   of   doctors,   scientists,  engineers  or  any  highly  educated  person  from  that  specific  country.      

“Brain  drain”  effects  There  are  two  different  ways  a  country  is  being  harmed  when  people  decide  to  leave  it.  First,  the  supply  of  those  specific  professions  that  people  who  leave  the  country  possess  declines.  Second,  the  country's  economy  is  harmed  as  each  professional  represents  surplus  spending  units.   It   means   that   as   professionals   often   earn   large   salaries,   their   departure   removes  significant   consumer   spending   from   the   country.   There   are   several   factors   that   cause   this  effect.  The  most  obvious  ones  are  the  availability  of  better  job  opportunities,  better  salaries,  working  conditions  and  standard  of   living.  Some  other   factors  are  wars,  health   issues,  and  political  instability.      

Downsides  and  upsides  There   are   downsides   and   upsides  when   discussing   the   brain   drain   phenomenon.   The   first  one   to  be   looked   at   is   the  upsides.  One  of   the  most   important   sides  of   brain  drain   is   the  money   the   emigrants   send   back   to   their   home   country.   Due   to   this,   emigrants   helped   in  alleviating   poverty   in   their   homes,   reducing   both   the   level   and   severity   of   poverty.   The  money  remittances  send  back  are  spent  more  in  investments  such  as  education,  health  and  housing,  rather  than  on  food  and  other  goods.  This  has  resulted   in  greater  child  schooling,  therefore  higher  literacy  rate,  less  child  labour,  more  hours  worked  in  self-­‐employment  and  a  higher  rate  of  people  starting  capital   intensive  enterprises.  Moreover,   there   is  one  more  aspect  of  “brain  drain”  gain  and  that   is   if   the  professionals  decide  to  return  to  their  home  country   after   some   time   spent   abroad.   That’s  when   the   country   that  was  once   losing   can  now  start  benefiting.  Unfortunately,   this  happens   rarely,   for   the  reason  that  only  one  side  truly  sees  the  benefit   from  this,  which   is  a   less  developed  country.  This   is  due  to  the  clear  difference   in   higher   job   opportunities   between   less   developed   countries   and   more  developed   countries.   Despite   this  way,   a   country   can   gain   in   one  more  way,   that   is,   if   an  international   network   is   established.   This   involves   networking   between   people   that   went  

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abroad   with   people   that   remained   in   the   home   country.   For   instance,   swiss-­‐list.com   is   a  networking   website   that   was   created   to   generate   a   relationship   between   Swiss   scientists  abroad  and  those  in  Switzerland.  On   the   other   hand,   the   country   that   experiences   brain   drain   suffers   a   loss.   Due   to   its  influence,  the  investment  in  higher  education  is  lost  as  the  highly  educated  people  leave  the  country  and  become  an  asset  to  some  other  country.  That  raises  the  question  as  to  whether  the  skills  are  being  put  to  good  use  in  the  destination  country,  since  many  college  graduates  are  leaving  their  homelands,  which  all  leads  to  a  shortage  of  skilled  and  competent  people,  and  vast  increase  in  wages  of  high-­‐skilled  labour.  “Brain  drain”  loss  seems  to  be  much  more  common  than  a  “brain  drain”  gain  and  loss  in  that  manner  is  much  more  substantial.  Why?  To  add  to  what  was  mentioned  above,  less  developed  countries  do  not  have  the  ability,  both  monetary   and   intellectual   to   support   a   developing   industry,   therefore   different   types   of  losses   arise   –   economic   loss   in   the   potential   capital   the  well-­‐educated   people   could   have  brought,  a  loss  of  education,  since  educated  people  leave  and  there  is  no  one  to  teach  the  next   generation   and   improve   them,   and   lastly,   loss   in   research   and   development   and  advancement,  since  the  knowledge  of  professionals  is  not  going  into  the  home  country,  but  the   other   country.   That   is   the   answer   to   why   the   losses   are   much   more   persistent   and  common.    

Examples  In  order  to  better  understand  the  whole  concept  of  “brain  drain”  there  are  several  examples  to  be  shown.  For  instance,  in  Russia,  brain  drain  has  been  an  issue  for  quite  some  time  now.  During   the   Soviet   Union   and   after   its   collapse,   brain   drain   has   been   increasing,   due   to  talented  people  movements  to  the  West  or  other  countries  to  seek  better  opportunities.  The  Russian   government   introduced   many   programs   and   still   does   in   order   to   return   the  professionals   that   once   left   Russia,   and   to   encourage   future   professionals   to   remain   in  Russia   and   contribute   to   the   development.   Another   example   is   India,   whose   education  system  is  one  of  the  top   in  the  world,  although  the  problem  is,  when  an  Indian  graduates,  one  tends  to   leave   India  and  move  to  other,  better  developed  countries.  However,   in  past  few   years,   this   trend   has   started   to   reverse   itself.   Namely,   Indians   that   go   abroad,   for  example  in  the  United  States,  they  tend  to  feel  that  they  are  missing  the  cultural  experiences  of  their  home  country  and  want  to  go  back  to  seek  better  economic  opportunities.    

How  to  prevent  immigration?  From   examples   mentioned   above,   it   can   be   seen   that   brain   drain   is   more   common   in  developing  countries.  Every  developing  country  tends  to  become  developed,  and  in  order  for  one   country   to   do   so,   one   has   to   have   talented   people   that   will   contribute   to   that  development.  A  country  that  has  many  professionals  is  most  probably  more  innovative  and  growing   in   comparison   of   those   that   do   not.   As   a   result   of   this,   in   different   countries,  different  rules  and  policies  apply  when  it  comes  to  retaining  skilled  workers.  There  are  many  

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examples  of  which  African  countries  dominate,  and  in  several  various  measures  have  been  introduced   in   order   to   try   and   limit   the  migration   of   workers   to   richer   countries.   On   the  other   hand,   there   is   an   example   of   Kuwait,   where   people   have   argued   that   the   country  should  develop  a  sense  of  security  and  hope  among  the  nation,  since  the  reason  of  leaving  the  country   is  uncertainty  about  a  country’s  future.  Furthermore,  China  does  not  have  any  mechanisms  to  protect  this  phenomenon,  but  rather  tries  to  create  a  free  atmosphere  that  would   help   talents   develop   and   in   the   long   run,   stay   in   the   country.   Another   example   is  India,  a  country  that  has  suffered  severe  brain  drains  over  years,  and  their  government  has  not  adopted  any  strict  policies  since  they  believe  that  the  talent  that  goes  abroad  will  come  back  and  eventually  contribute  to  the  nation.    

           This   graph   shows   that   the   programs   invented   to  prevent   the   migration   (both   emigration   and  immigration)  in  Russia  works  very  well.          

                     This  map  shows  the  parts  of  the  world   that   receive   remittances  from  migrants  who  work  outside  the   country   and   region.   It   is   a  reflection  of  the  "brain  drain"  of  the  impoverished  world,  and  the  compensatory   flow   of   wealth  back  to  the  home  countries.            

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Brain  gain    

Definition  In  the  previous  chapter,  the  issue  of  “brain  drain”  has  been  defined  as  significant  emigration  of  educated  or  talented  individuals;  this  can  result  from  turmoil  within  a  nation,  from  there  being  better  professional  opportunities   in  other  countries  or   from  people  seeking  a  better  standard   of   living.   This   chapter  will   now   focus   on   “brain   gain”,  which   can   be   seen   as   the  opposite  of  brain  drain.  “Brain  gain”  can  be  defined  as  an  increase  in  the  number  of  highly  trained,  professionals  departing  a  country  to  live  and  work  where  greater  opportunities  are  offered,  with  the  prospect  of  returning  to  their  home  country.  According  to  the  Economist  (The   Economist,   2011)   several   economists   reckon   that   the   brain   drain   hypothesis   fails   to  account   for   the   beneficial   effects   for   the   home   country   such   as   remittances,   return  migration,  the  possibility  that  being  able  to  migrate  to  greener  pastures   induces  people  to  get  more  education.   If   these  aspects  are  taken   into  account,  some  argue  that   these  highly  skilled  people  could  turn  out  to  be  a  net  benefit  to  the  countries  they  leave.    

Increase  in  migration  Due  to  the  technological  boom  from  the  1990s  onwards,  connections  all  over  the  world  have  rapidly  improved  and  have  become  indispensable  to  us.  This  has  created  a  world  that  is  now  perceived  as  smaller,  but  yet  bigger  at  the  same  time.  Globalization  has  also  played  a  part  in  this,   creating   a   more   complex   world,   but   opening   many   doors   along   side   that.   Due   to  globalization,  it  has  increasingly  become  easier  to  enter  a  different  labour  market.  This  has  resulted   in  the  fact   that  migration  has   increased  rapidly  and   is  still   increasing,  with  people  seeking   to  work   in  different   countries.  Migrants   accounted   for   47%  of   the   increase   in   the  workforce   in   the  United   States   and   70%   in   Europe   over   the   past   ten   years.  Many   people  argue   that   (highly   educated)   migration   “drains”   the   native   country,   leaving   behind   the  unskilled  and  lower  educated  population.  But  on  the  contrary,  many  studies  have  shown  the  benefits  of  migration.  

“Reverse  Brain  Drain”  The  International  Organization  for  Migration  is  trying  to  encourage  more  emigrants  to  come  home  on  a  permanent  or  temporary  basis,  to  give  back  some  of  what  they  have  learnt  and  achieved  abroad.  One  of  the  programmes  they  support   is  called  “Reverse  Brain  Drain”.  Dr.  Noppawan   Tanpipat   (Vice   President   of   the   International   Relations   and   Organization  Communications,   National   Science   and   Technology   Development   Agency)   says:   “But  what  we  are  really  seeing  is  the  exchange  of  ideas,  of  attitudes,  of  different  ways  of  doing  things.  We  have  become  used  to  the  phenomena  of  ideas  flying  across  borders  through  cyberspace  but  we  don't   recognize   the  human  hard  drives   that  physically  bring   their  entrepreneurism  and  experience   to  host   countries,   and  back  home”,   stressing   the  positive   effect  migration  has,  but  the  lack  of  recognition  for  this.  No  higher  mathematics  is  needed  to  understand  that  highly  educated  migrants  moving  to  another  country  with  better  prospects  will  bring  back  a  vast  amount  of  knowledge  on  their  return.  This  knowledge  can  be  gained  from  for  example  

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the  high  quality  of  education  abroad,  working  in  (international)  companies  abroad  or  setting  up   businesses   abroad.   Besides   that,   many   observers   claim   that   the   newly   acquired  knowledge  or  technology  by  migrants  to  developing  countries  can  increase  productivity  and  economic  development.  

Remittances  Another   argument   that   supports   “brain   gain”   is   that   a   lot   of   the   migrants   send   back  remittances  to  their  relatives  in  their  native  country  after  having  moved  abroad.  In  its  annual  report,   Western   Union   stated   that   almost   84%   of   its   annual   revenue   was   derived   from  consumer-­‐to-­‐consumer   (C2C)   money   transfer   services   (Market   Line   Western   Union   Case  Study,   2012).   Also,   an   important   demand   driver   in   this  market   segment   is   an   increase   in  global   net  migration   (immigration  minus  emigration)  over   the  period   from  1990   tot   2010,  see  figure  5  below.  It  shows  that  migration  has  come  from  Africa,  Asia-­‐Pacific  and  the  non-­‐US  Americas  towards  the  US  and  Western  Europe.  The  Case  Study  gives  the   increase  from  lower  to  higher  income  countries  in  search  of  better  wage  levels  and  living  standards  as  an  explanation  for  this  phenomenon.  

 In   contrast   to   figure   5,   figure   6   shows   the   net   flow   of   funds   (remittances   received  minus  remittances  sent)  for  the  major  geographical  regions.  The  graph  substantiates  the  idea  that  remittances  are  sent  out  of  more  developed  regions  such  as  US  and  Western  Europe  and  are  sent   to   the   less   developed   economies.   In   the   Western   Union   Case   Study   it   explains:  “According  to  the  International  Monetary  Fund,  for  poorer  recipients  remittances  may  help  pay   for   basic   needs   such   as   food,   housing,   healthcare,   and   education;   for   higher   income  recipients,  they  can  help  support  new  business  ventures.”  (Market  Line  Western  Union  Case  Study,  2012).  In  2012  the  value  of  the  remittances  of  the  migrant  population  had  increased  to   around   $400   billion.   In   Lebanon,   Lesotho,   Nepal,   Taikistand   and   a   few   other   places,  

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remittances  are  more  that  20%  of  GDP  (The  Economist,  2011),  this  is  due  to  the  fact  that  the  skilled  migrants  may  earn  several  multiples  of  what  their  income  would  have  been  at  home.  

   

Education  and  economic  growth  The  economic  growth  and  average  workforce  skill  in  the  native  country  can  also  be  increased  by  another   factor.  The  possibility  of  emigration  for  higher  wages  -­‐  which  other   inhabitants  have  successfully  achieved  -­‐  could  stimulate  individuals  to  pursue  education,  which  may  also  cause  domestic  enrolments   to   increase.  As  a   result,   the  educated  population  will   increase  and   contribute   to   the   economic   growth   of   a   country.   A   study   on   this   topic   looks   at   Cape  Verdeans,  showing  that:  “An  increase  of  ten  percentage  points  in  young  people’s  perceived  probability   of   emigrating   raises   the   probability   of   their   completing   secondary   school   by  around  eight  points.”   (The  Economist,  2011).  Even   if   they  don’t  all  end  up  emigrating,   this  will   increase   the   rate   of   educated   people   in   their   home   country,   benefiting   their   national  economy.  The  culture  and  knowledge  an  emigrant  brings  to  a  foreign  country  will  make  local  people  more   acquainted  with   products   from   the  migrants   native   country,  which   in   return  will   increase   the   export   of   the  migrants   native   country.   So   the   increased   export   will   also  stimulate  the  overall  economic  growth  of  the  country.    

Africa  According  to  a  new  paper  from  the  World  Bank:  “Does  Migration  Foster  Exports?”,  migration  does   indeed   foster   exports   in   Africa.   It   suggests   “one   additional   migrant   creates   about  $2.100   a   year   in   additional   exports   for   his   country   of   origin.”   (World   Bank,   2014).   An  estimation   tells   us   that   a   half-­‐million   more   African   migrants   moving   around   the   world  (accounting   for   1/100th   of   the   world’s   population)   would   create   more   than   $1   billion   in  additional  exports  for  Africa,  per  year.  “Looking  at  Africa’s  expected  population  boom  in  the  

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next  decades,  the  impact  Africans  have  from  a  distance  on  their  home-­‐country  is  only  set  to  grow.”  (The  Atlantic,  2014)  

     

                                                                 

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Conclusion    In  assessing  the  usefulness  of  brain  drain,  it  is  important  to  understand  that  for  some  of  the  world’s   developing   countries   "the   gains   from   migration   accrue   neither   from   migrant  remittances  nor  do  they  return  home  with  amplified  skills  acquired  abroad”.  This  shows  that  the   highly-­‐educated  migrants   not   returning   home,  will   cause   a   loss   of   knowledge   for   the  home  country,  which   in  turn  will  also  have  a  negative  effect  on  the  economy  of  the  home  country.   Looking   at   the   phenomenon   from   this   point   of   view,   brain   drain   only   seems   to  benefit  the  host-­‐country.  On  the  other  hand,   it  can  be  argued  that  the  gains  for  the  home  country   come   from   the   increase   in   promotion   of   education   of   highly   skilled   labour   in  developing  countries,  as  well  as  investment  in  infrastructure.  Nonetheless  there  does  exist  a  vast   "remittance  economy  worldwide  worth  $400  billion   in   2012".   This   goes   to   show   that  globalization   has   made   labour   markets   in   different   countries   more   accessible,   increasing  migration  all  over   the  world.  Highly  educated  people  are   receiving  more  opportunities   for  mobility.  As   a   result,  we   can   conclude,   that  migrants  have  been  moving   to   countries  with  better   opportunities,   sending   remittances   back,   stimulating   education   on   return   and  increasing  export  and  the  economic  growth  of  the  native  country.                                                  

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References    Ehrhart,  H.  &  Goff,  Le  M.  &  Rocher,  E.  &  Singh,  R.J.   (2014).  Does  migration  foster  exports?  Evidence  from  Africa.  The  World  Bank.    Lowell,  B.L.  &  Findlay,  A.   (2001).   International  migration  papers:  Migration  of  highly  skilled  developing   countries:   impact   and   policy   responses.   International   Labour   Office,   Geneva,  Switzerland.    Organisation  as  the  author  Market  Line    Case  Study:  Western  Union:  Globalization  benefits  a  money  transfer  market  leader.  Market  Line  Advantage  (2012).    Organisation  as  the  author  The  Economist  Economic   focus.   (May  26,  2011)  Drain  or  gain?  Poor  countries  can  end  up  benefiting  when  their  brightest  citizens  emigrate.  http://www.economist.com/node/18741763    Parle,   De   J.   (August   20,   2007).   Border   crossings:   Rising   breed   of   migrant:   skilled   and  welcome.  The  New  York  Times,  New  York,  USA.    Raviv,  S.  (February  12,  2014).  Why  ‘Brain  Drain’  can  actually  benefit  African  countries:  A  new  study  reveals  that  the  farther  African  migrants  move,  the  more  they  increase  exports  in  their  home  countries.  The  Atlantic.