Argument in Favour of Brain Drain - Term Paper Example

Is Migration of skilled labours boon ore bane? Contents Introduction 3 Discussion 4 Argument in favour of Brain Drain 4 Argument against Brain Drain 7 Conclusion 11 References 13 Introduction The term Brain Drain has gained particular wide usage in the late 1960’s and it is used to denote the international transfer of resources in the form of human capital from developing to developed countries. In particular the brain drain focuses on the migration of skilled labour from the developing countries to the developed countries. The Brain drain has long been focussed on and thought of as an exercise that is performed by the developed countries to attract the scarce population of skilled labours in order to aid in their development at the cost of developing countries and the welfare of the developing countries. The costs associated with brain drain are related to output and employment levels. Additionally the cost of brain drain is related to the fact that in many developing countries the education is financed by the government through subsidies. So when the educated individuals migrate to other countries after receiving the necessary skills through subsidised education in the developing countries. However in recent years the researchers have focussed on the positive effects of the brain drain on the developing countries in the form of remittances that the labour force will be sending back to their home countries. Additionally the skilled workforce may return back home after acquiring the necessary skills from abroad in order to help in contributing to the growth of the home country to which they belong. There is also a study by the scholars that has focussed on the fact that the restriction of the developed countries on the flow of the unskilled workers is not necessarily a disadvantage for the developing countries as this will create an additional pressure on the developing countries so that most of the individuals may pursue higher education and then travel to the developed countries. The following pages discuss both the positive and negative effects of the brain drain on the developing countries to arrive at the conclusion whether brain drain is either positive or negative and perhaps both. Discussion Argument in favour of Brain Drain After 1974 several policies by the countries in Europe put a tab on the migration or rather the emigration of the people to their countries (Brock and Blake, 2014). However further policy changes by the countries of Europe allowed for the immigration of the skilled workforce while continuing to keep a ban or restriction on the immigration of the unskilled workforce. The migration of the skilled workforce to the developed countries from the developing countries has been thought of as a negative impact on the developing countries in terms of loss of talented workforce. Another problem that is commonly sighted with brain drain is the fact that the host countries or the developing countries normally subsidise educational system with the public money that the government receives in the form of taxes. Now when the educated or the skilled workforce migrates to the developed countries after receiving the necessary skills training, this act is actually a drain on the resources of the country from which the workers are migrating. However despite the negative effects that was mainly focussed on by the earlier researchers in the field the brain drain as a phenomenon has not stopped. In fact it is found that there are an increased percentage of brain drains that has been occurring in the recent years. It is also found that the developed countries compete amongst themselves in order to attract the best talent by giving incentives to them (Boeri, 2012). In recent years the studies have found that there are several positive effects of brain drain which was overlooked by the previous studies. The brain drain actually occurs due to the fact that there are skill shortages in the developed countries which results from rapid skill based technical change and educational failures in the developed countries (Özden, and Schiff, 2006). The companies thus actively seek for skilled workforce from foreign countries as a substitute to the local talent. The gain for the importing firm, that is the firm which is involved in the importing of human capital is manifold and is in terms of lowering wage cost, dampening domestic wage pressure etc. Another possible benefit is in terms of the company which imports talents from the developing countries are in terms of widening of the talent base of the country (Hoeffner and Pistone, 2007). From the point of view of the developing countries the migration of the skilled workforce is increasingly thought of as not being negative. In recent years the European countries have tried to ban the emigration of the unskilled workforce to the developed countries and only entertain the migration or rather emigration of skilled workforce from the developing countries (Glassman, 2009). This is seen as a further negative impact by the developing countries as this means that the best of the talents of the developed countries after years of getting education in that country through publicly funded schemes are shifting to the developed countries in order to help that country prosper by providing them their services. However researchers have countered this belief system by countering on the lines that the migration of the skilled workforce to the developed countries actually serves as an incentive for other people in the developing countries to pursue higher education so that they can also move to the developed countries. This shows that other than counting the positive effects of brain drain in terms of the remittances received from abroad brain drain also has other positive effects in the form of brain gain. The positive effects of the migration of the skilled workforce from the developing countries to the developed countries may serve as an incentive for others in the developing countries in order to acquire more education. Thus the positive effect of the brain drain may involve raising the potential of the human capital and promoting growth in the developing countries. The other positive effect of the migration or the brain drain may be in terms of the fact that the migratory population may in due course of time return to the home countries. The migrant population may otherwise through resource repatriation such as through the process of remittances provide either monetary or through providing essential business inputs so that people in the developing countries may develop (McCormick and Wahba, 2000). Another positive effect of the emigration is that it might actively promote a more effective flow of knowledge and information. There is another positive effect of the immigration that is the changing nature of mobility due to the effect of major changes in the communication technology (Munshi, 2003). This might limit the extent to which skills are actually lost. The software industry is also a case in point. Recent theoretical literature suggests that the migration can have a positive impact on the developing countries. The migrating population can raise the expected return on the human capital and foster investment in the education sector in developing countries. There is also literature on the negative impacts of brain drain on the developing countries. The researchers have estimated that for the countries who have low levels of human capital and low skilled emigration rates are the countries which are likely to experience brain drain that is beneficial. Compared to these are the countries that are likely to have high levels of human capital and high skilled immigration rates (Katz and Rapoport, 2005). These are the countries which are likely to be affected negatively by brain drain. Through the studies the researchers have found out that there are likely to be more losers that the no. of countries who can be marked as gainers. Additionally it was noted in the studies that the gains of the gainers tends to be relatively less as compared to the loss of the losers. The situation of the countries in the Sub Saharan Africa and Central America that is the small countries is particularly found to be worrisome or troubling (Klenow and Rodriguez-Clare, 2005). In contrast to these losers due to the act of brain drain the main globalisers are shown to experience gains although negligible in amount. It is seen that if the total gains by the gainers are compared to the total loss by the losers then the total gains outweigh the total loss by the losers. This shows that the act of brain drain is ultimately positive for the developing countries. Thus it can be said that brain drain is a positive thing to happen in terms of the fact that Brain Drain migration helps to increase the total no. of skilled workers in the developing countries. This in turn shows that the long thought view of the negative effect of brain drain has no justification as seen through the empirical studies. The other positive effect of the Brain drain is seen in seen in terms of the fact that the brain drain has an important distributional effect amongst the developing countries. Argument against Brain Drain The early researchers’ in the field of brain drain pointed to the fact that although there are several positives that are associated with brain drain the brain drain in totality is a negative phenomenon of the developing countries (Beine, Docquier, and Rapaport, 2008). The researchers while discussing on the positive effects of migration has pointed to the facts of remittances return migration with additional skills acquired from abroad (Rapoport and Docquier, 2006). The other positive benefits are relating to the creation of scientific and business networks. However it was argued by the researchers that the welfare of those that are left behind would still fall given the fact that social return to education exceeds the private return to education. The table given below gives data on population, on the country’s expenditure in tertiary education and the percentage of the country’s population having tertiary education that have migrated. The table throws some interesting facts and figures. Firstly the figure states that there is a large no. of small countries that are located in the Caribbean and in Africa where the migration rates are quite high (Oderth, 2002). The next figure shows the migration rates as compared to the population of a country. The result shows that except a few countries the relation between migration rates and the population of the country follows negative correlation. If the large countries like India and China are taken as an example then it is found that the amount of skilled migration is not significant to the total population of educated youth in the country (Brauw and Giles, 2006). It is found in the data that in the year 1990 about 1.1% of the total skilled workforce of India and 1.4% of the total skilled workforce of China had migrated to the states (Sahay, 2009). Although there is data that suggests that these small percent comprise of the most skilled workforce of the countries. If the data of the very small countries are analyzed then it is found that the migration rate is of significant magnitude of the population of the educated youth of these small countries. It is additionally seen that the countries where the fraction of highly educated workers and the GDP per capita is low tend to lose more no. of skilled workers than the other case. Figure 1population, migration rate and total expenditure of different countries. Figure 2 Migrate rate vs. population The brain drain is negatively viewed from the point that the developing countries spend a huge amount of money in the form of providing subsidy for education and then when the skilled labours goes to the developed countries that investments goes in vain. The characteristics of the educational system are thus of major importance from the point of view of the de potential costs and benefits that are used to evaluate brain drain. For the developing countries it is a widely highlighted fact that the educational investment in totally lost. In most of the developing countries some part of the educational cost is indeed borne by the government of that country. This is because the social return of education is greater than that of the private one (Commander, Kangasniemi and Winters, 2004). Although it is found that over the last decade there has been an increase in the no. of private institution providing education and thus lessening of the government subsidy as the individuals have to themselves fun d their education in these private institutions, it is still found that any additional return to education as well as public investment in the primary and secondary education is lost when an individual actually emigrates. Brain drain has several negative impacts on the development and growth of many nations. Many people who are highly skilled and have entrepreneurial skills leave their nations and settle down in other countries. They use their skills and abilities in the improvement of various factors of foreign countries. Therefore the countries that provides them high salaries experiences different benefits for those talented people. As a result the countries where those people originally belong cannot utilize their talent and skills for the growth of their nations (Faini, 2003). Many countries of the world incur huge amount of cost for educating its citizens. The government of those countries also provide many monetary and non monetary benefits to the students. These facilities and benefits help the students to become talented individuals and good professionals. But when these persons go to other countries or work for other countries then they contribute only in the growth of those countries. As a result the home countries of these people do not receive any benefits from them in spite of spending huge amount of money and providing many facilities to them. Human capital is one of the most important resources of country (Docquier, Lohest and Marfouk, 2007). If large number of skilled workers move from a country to another country then the home country will face serious economic crisis. The developing countries of the world face this type of crisis. When a skilled worker of developing country move to other country for getting more benefits and facilities then other skilled worker of that country get influenced by this and they also try to move other countries for availing many extra benefits and facilities which they are not getting presently. This influences the immigration of people to other nations. The governments of those countries which have invested huge amount of money of the development of industry or business face loss for the immigration of skilled workers (Hunter, Oswald and Charlton, 2009). For brain drain the developed countries experiences more growth and development whereas the growth and development of underdeveloped countries are hindered by this process. Brain drain is significantly observed in every professional field. Many Health professional of developing and underdeveloped countries are moving to developed nations for earning more money. Health care professionals have to spend less amount of money in developing countries or under developed countries for their education. The governments of these countries provide many subsidies to its health care system therefore the patients have to pay less amount of money to the doctors. The health care professionals get few opportunities to earn money in these countries. For these reason they move to the developed nations. This weakens the health care system of developing and under developed nations. For curing critical disease the people of these countries have to travel to other nations. As a result the people of these countries face many major health related issues. These problems are increasing day by day which reduces the strengths of a country. For the loss of skilled human capital the developing countries cannot compete with the developed countries. Conclusion The paper discusses in the above pages both the positive and the negative impacts of brain drain. In analyzing the effects of brain drain it is found that there is a traditional belief that has focussed on the negative impacts of brain drain. The negative impact of the brain drain that has been primarily focussed on includes factors such as loss of skilled workforce, loss of the investment in the education of the workforce etc. However the recent studies on the brain drain have focussed and highlighted more on the positive effects of Brain drain. The positive effects of brain drain that has been focused on are monetary help provided by the migrating population in terms of the remittances from abroad. The other positive effects focus on the providing of skill feedback and the additional skills that the migratory populations bring with them when they return from their stint in abroad. The studies have also shown that when the highly skilled workforce migrates to the developed countries then there is an additional incentive by the rest of the population to pursue higher education. The studies have found that comparing the gains and losses of the developing countries due to migration of the skilled workforce it is found that the total gains is higher than total losses. However it is also found that the small countries were the worst losers of the process. Thus it can be said that there are both positive and negative effects of migration on the developing countries. References Beine, M., Docquier, F., and Rapaport, H., 2008. Brain Drain and Human Capital Formation in Developing Countries: Winners and Losers. The Economic Journal. 118(4). pp. 631-652. Boeri, T., 2012. Brain Drain and Brain Gain: The Global Competition to Attract High-Skilled Migrants. Oxford: Oxford University Press. Brock, G., and Blake, M., 2014. Debating Brain Drain: May Governments Restrict Emigration? Oxford: Oxford University Press. Commander, S., Kangasniemi, M., and Winters, L. A., 2004. The brain drain: curse or boon? A survey of the literature. Challenges to Globalization: Analyzing the Economics. Chicago: University of Chicago Press. Brauw, A., and Giles, J., 2006. Migrant opportunity and the educational attainment of youth in rural China, IZA Discussion Paper No 2326, September. Docquier, F., Lohest, O., and Marfouk, A., 2007. Brain drain in developing countries. The World Bank Economic Review. 21(2), pp. 193-218. Faini, R., 2003. Is the Brain Drain an Unmitigated Blessing? , Wider Discussion Paper 2003/64. [online]. Available at [Accessed on 16 April 2015]. Glassman, C. F., 2009. Brain Drain. NY: RTS Publishing. Hoeffner, J. J., and Pistone, M. R., 2007. Stepping Out of the Brain Drain: Applying Catholic Social Teaching in a New Era of Migration. Plymouth: Lexington Books. Hunter, R. S., Oswald, A. J. and Charlton, B. G., 2009. The Elite Brain Drain*. The Economic Journal. 119(538), pp. 231-251. Katz, E., and Rapoport, H., 2005. On human capital formation with exit options, Journal of Population Economics. 18 (2). pp. 267–74. Klenow, P.J., and Rodriguez-Clare, A., 2005. Externalities and growth, Handbook of Economic Growth. Amsterdam: Elsevier-North Holland. McCormick, B., and Wahba, J., 2000. Overseas unemployment and remittances to a dual economy. Economic Journal. 110(463). pp. 509–34. Munshi, K.,2003. Networks in the modern economy: Mexican migrants in the US labour market. Quarterly Journal of Economics.118 (2), pp. 549–99. Oderth, R., 2002. Migration and Brain Drain: The Case of Malawi. Lincoln: iUniverse. Özden, Ç., and Schiff, M. W., 2006. International Migration, Remittances, and the Brain Drain. Washington: World Bank Publication. Rapoport, H., and Docquier, F., 2006. The economics of migrants remittances. Handbook of the Economics of Giving, Altruism and Reciprocity, Amsterdam: Elsevier-North Holland. Sahay, A., 2009. Indian Diaspora in the United States: Brain Drain or Gain?. 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