Introduction (OECD) countries since the 1980s. It’s meant

 

 

 

 

 

 

 

 

Introduction

The current wave of economic
globalization has unlocked a window of opportunity for human resource to
agglomerate where it is best rewarded and yet already in abundant, i.e., in
countries which are advanced economically. 
The tendency has been enhanced by the steady introduction of selective
policies of immigration in many Organizations for Economic Cooperation and
Development (OECD) countries since the 1980s. It’s meant to improve immigrants’
quality in various developed nations, but over the years it has changed into an
international rivalry.  The countries
compete in attracting the skilled people among the developed countries.  Whereas the export/GDP ratio of the world has
amplified by 51 percent between 1990 and 2000 (Docquier and Rapoport 2004), the
aggregate number of individuals who are foreign-born individuals who reside in
the Organizations for Economic Cooperation and Development countries has
increased with the same margin (51%) over the same period. A figure that rise
to 70 percentage points for migrants who are highly skilled against a 28
percent point for the migrants who are considered to be lowly skilled (Docquier
and Marfouk, 2004).

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What are the significances of flight
of the human capital for the developing (sending) countries? In a perfect world
of competition, the free mobility of labor resources would seem to be Pareto improving:
the labor migrant would receive incomes which are higher and the natives in the
countries receiving the immigrants can share the surplus of immigration. More
so and the residents in the sending countries can profit from the increase in
labor/ land and labor/ capital ratios. However, when the highly –skilled
migrant are involved, such movements generate other issues which have to be put
into consideration. These factors are: – First, the skilled laborers are
crucial contributors of the budget of a particular government, and therefore
their departure causes an increase of the fiscal burden on the residents left
behind (budgetary externality). Secondly, the unskilled and skilled laborers
complement each other in a more productive process.  If there is abundant of unskilled labor and
scarcity of skilled workers as in the case of the developing countries, the
migration of skilled labor may cause an impact which is substantially negative
on the productivity and wages of the low skilled workers (intergenerational
spillover) and lead to an increase of domestic inequality. Third, the depletion
of human capital through emigration may see, to have a negative impact on the
growth prospect of a country, since the formation of human capital is viewed as
an engine for growth (intergenerational spillover). Fourth, as shown in some economic
frameworks, skilled capital is instrumental in attracting foreign direct
investment (FDI) and Research and development expenditures (technological
externality). Thus, human capital mobility will contribute to the concentration
of economic activities in locations which attracted the concentration of
skilled labor at the expense of regions of origin (Fujita et al., 1999).

On the other hand,
migration of the highly skilled may cause positive feedback effects since the
skilled emigrant will continue to affect the first country economy.  Such possible feedback that is considered
positive includes the remittances by the migrants, the return migration after
acquiring more skills from abroad, and network creations which facilitates
capital flows, trade, and diffusion of knowledge. Given the involvement of many
channels evaluation of the precise effect of skilled labor migration (the brain
drain) for the countries of origin of the emigrants is a complicated
endeavor.  Until recently, empirical
attempts to explain the impact has been hindered by lack of data that is
internationally harmonized data migration by country of origin and level of
education. In the absence of such literature review, the ongoing debate has
remained exclusively theoretical. In last two decades, there has been an
upsurge in the extent of brain drain. In the subsequent sections, the article
will discuss the magnitude of brain drain as well as provide estimates on the
mobility of skilled workers in the international front. Then it will provide
theoretical arguments of the “old” and “new” literature on brain drain by
reviewing early literature in brain drain and contrasting it with most recent
models. Then the writer will discuss the various channels that the skillful
migrants may impact their countries of origin after living (return migration,
networks, and remittances). Thereafter the author will take a position through
the conclusion about on the debate

Recent Global Trends in
Brain Drain

 The United States and OECD countries have
experienced an upsurge in the number of skilled migration. Highly Skilled
individuals are classified as those who have attained the tertiary education
that culminates in the reception of academic degrees, diplomas, and certificates
(Zikic, 2015). The 2010-2011 censuses showed those 11.3 million migrants or 28%
of all immigrants between the ages 15-64 residing in the European Union had
achieved the status of skilled individuals which translates to a 92% increase
over a decade from 2000 to 2010. The number may somewhat be inflated given that
the migrant within the EU also includes individuals moving between different
states in the EU. The number of migrants doubled in Australia over the similar
period and increased by (72%) in Canada. Contrasting figures from the United
States of America shows that 11.1 million migrants who are equivalent to 31% of
the individual migrants in the USA have completed tertiary education, which
translates to only a 47% increase over the similar period. In Europe, about 50%
of all high-skilled migrants come from European Union member states while about
20% come from Asia. In the United States, an estimated (45%) of the migrants
who are considered highly skilled come from Asia while (20%) come from Europe
(Aure, 2013). Also, it was noted that the share of skilled immigrants into the
US from Europe is dropping while the percentage from Latin America is
increasing as shown in figure1.

             Figure 1: Share of Educated migrants IN OECD aged 15-64 by region of birth

             

 

Arguments of the “Old” And “New” Literature

 

Traditional View of
Brain Drain Phenomena

 According to migration and development
theories, the brain drain from developing countries has had negative impacts on
the path of developments of a source country. 
By the dependence and modernization theory brain drain is regarded as
the predominant cause of under-development in the nations of migration
(Panescu, 2003).  The buildup of human
capital is relevant to countries that are developing.  Brain drain condensed growth of the economy
by reducing the human capital assets of a source country and by not
compensating the source country by investing in education (Panescu, 2003). As a
result, emigration can siphon excess workers, dispossess sending states the
personnel they require as well as depriving a country the economic growth.
Subsequently, while it could be beneficial to the individual, brain drain
denotes a significant loss to the source countries which has invested heavily
in the training of workers. More so, without a doubt, the migration of
specialists and science professionals is beneficial to the destination
countries. The approximated losses for the countries that are sourcing are
that, given the expenses incurred in the form of educational costs, the nation
of origin retains fewer specialists that if not for brain drain. The losses are
intensified by the fact that people with relatively high educational level
choose to emigrate (Stalker, 2000).

Brain Gain
Hypothesis

The underlying assumption of this
hypothesis is the technical and intellectual elites from the developing
countries who have since emigrated represents a possible resource for the
development of their home countries both socially and economically (Stalker,
2000).  Brain gain hypothesis predicts a
long-term effect that is positive in case of a return or the process of network
building of the emigrated elite. The new theory also shows how brain drain can
be transformed into brain gain for the developing country. And as such, brain
drain is not viewed as the end of adverse development which intensifies social
and economic crises of developing countries (Hunger, 2002).

Uwe Hunger states that the
hypothesis of brain gain is anchored on two primary assumptions: – Firstly, all
the skilled workers who migrated from the developing countries and have
immigrated to the developed nations can play a critical role in the course of
development of their country of origin through a transnational network and
return migration. Secondly, it is possible to provide the emigrated workers
with adequate motivation to migrate even though they have been living away from
their homes in a long time and has not established contacts that are productive
to their countries of origin

 

Summarizing the Theoretical
Frameworks

The early
literature of the 1970s on “brain drain” demonstrated and emphasized the
negative consequences of the migration to the original countries.  The conclusion from these studies is that
skilled emigration yields inequality specifically at the international level
where the countries which are wealthy continue getting wealthier at the expense
of countries that are poor. By contrast, recently published works seeks to
determine whether the common negative effects of brain drain that was
emphasized in the early literature may be offset by the likely effects which
are beneficial. The beneficial effects that arise from remittances, creation of
trade and business works, return migration and the likely incentive effects of
the prospects of migration on the human resources formation at home

How Skillful Migrants May
Impact Their Countries of Origin

     
      Remittances

The remittances by migrants’
constitute a channel through which brain drain may produce indirect effects
which are positive for source countries. It is documented that the remittance
by workers often makes a substantial contribution to GNP and are income
generating to the developing countries. Remittance affects household’s
decisions regarding investment, labor supply, education occupation & choice
(Edwards and Ureta, 2003).

In a primary frame
with a constant marginal utility of income, transmittals do not affect the gain
of education and marginal cost, and it influences the formation of a human
capital merely when liquidity constraints are binding. For example, in a case
where the distribution of abilities is uniform: 
without migration, the share of the educated amounts to cL.. With
migration openings, as these educated individuals leave the country, two
effects which are opposite are observed. Initially, the persons who are trained
remaining in the state fall to CL-CM. If the
emigrant’s workers remit some of their foreign income, the liquidity constraint
becomes less binding for beneficiaries in the source country. The customary
adverse effect can, therefore, be compensated by increased access to education
for the once left behind assuming that a state is steady. Furthermore, migrants may return to their original
countries after accumulating saving abroad and use the savings to promote
investment projects and entrepreneurship (Mesnard, 2004).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                               

 

 

 

 

 

 

 

             cM                 T+cM          
cL                 T+cL     cn            co                            c

 

Figure 2: Brain drain and remittances

Network Effects

In the
short term, with migration that is not anticipated, emigration of workers who
are educated is a loss to the home country. However, as time goes by cohorts
adapts their decisions on education and the economy-wide average of education
partly as in( figure 3a)  or catches up
totally with a  possible net gain in the
long run (as in figure 3b).  In the
transitional phase, additional effects are likely to come into play. In
particular, there is Sociological literature emphasizes the creation of the
networks by the migrants which facilitates movement of factors, goods and ideas
between the migrant’s home and host country. Two types of systems may arise:
networks that facilitate trade, foreign direct investment (FDI) and diffusion
of technology and networks which enhance further migration.

Existing
literature has analyzed the consequences of the establishment of the migration
networks on the pattern of migration. Massey Goldring and Durand (1994)
developed the cumulative theory of migration where they noted that the first
migrants are usually from the middle ranges of the socioeconomic ladder and
persons with sufficient resources to meet the risks and the costs of the trip,
however, they are not affluent of the unattractiveness of foreign labor.
Friends and families then draw on the ties that they established with this
migrant to access assistance in migration and employment and hence they
substantially reduce the risk and cost of movement to them. It increases the
feasibility and attractiveness of migration to other members, permitting them
to expand through further immigration hence setting you more people who are
well connected. This migration networks can be seen to reduce the cost, and
perhaps also enhance the benefit of migration (McKenzie and Rapoport, 2004). In
other words, the incentives of immigration become endogenous with the
introduction of network effects

      Detrimental
brain drain                                                                              
beneficial brain drain

Ht

                                                                                                                Ht

 

 

 

 

 

 

 

 

                     

 

 

                       0                                                           t                                      0                                                     
t                                                                              

Figure 3 (a) and (b): The dynamic impact of brain drain

 

Kanbur and Rapoport (2004) made an
assumption that the cost of migration, ‘k’, decreases with the size of the
network established at the destination, that is with the number of known
emigrants who have already lived in the receiving country. The role of the
migrant’s networks is to pass information about job opportunities as well as
provide help and hospitality to other emigrant job seekers. Hence past
migration will influence the potential emigrants to invest in education so as
to be skillful enough to handle potential job opportunities that may open thus
raising the optimal number of individuals engaging in education in their
country of origin. Hence one can say the migrant’s networks assist or have a
positive impact of the formation of human capital which also helps to mitigate
the detrimental effects of brain drain.

 

Business and trade network is also
another type of network effects which has gained recognition in sociological
literature and by international trade economists (Rauch and Casella, 2003. In
many ways indeed, and in contrary to the expectations of many in a standard
trade-theoretic framework, migration and trade appears to complement each other
rather than substituting each other.  Such
as complementary prevails for trade of heterogeneous goods, where cultural networks
assists in overcoming information challenges associated to the very nature of
the exchanged goods (Rauch and Casella, 2002)

 

Conclusion

The analysis done propels the author
to support of the topic that, developing countries benefit as senders of
unskilled migrants and therefore the “brain drain” is not a problem. It Is
because the author can conclusively state that based on the above analysis that
for any given country, optimum migration of educated population is likely to
yield positive effects. It, therefore, implies that any state which may impose
restrictions on the international mobility of the human capital may stand to
lose on the benefits pertaining thereunto. The developed countries should not
necessarily see that they are the beneficiaries of the movement, but they are
also helping this nation which is growing to be self-sufficient.

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