Human capital flight: Difference between revisions

A brain drain or human capital flight is an emigration of trained and talented individuals ("human capital") to other nations or jurisdictions, due to conflicts, lack of opportunity, or health hazards where they are living. It parallels the term "capital flight" which refers to financial capital that is no longer invested in the country where its owner lived and earned it. Investment in higher education is lost when a trained individual leaves and does not return. Also, whatever social capital the individual has been a part of is reduced by his or her departure. Spokesmen for the Royal Society of London coined the expression “brain drain” to describe the outflow of scientists and technologists to the United States and Canada in the early 1950s. Its counterpart is brain gain in the areas to which talent migrates. Brain drain can occur either when individuals who study abroad and complete their education do not return to their home country, or when individuals educated in their home country emigrate for higher wages or better opportunities. The second form is arguably worse, because it drains more resources from the home country.

This phenomenon is perhaps most problematic for developing nations, where it is widespread. In these countries, higher education and professional certification are often viewed as the surest path to escape from a troubled economy or difficult political situation. For example, in 2005, eighty percent of Haitians and Jamaicans with college degrees live outside their country. And more than fifty percent of the university educated professionals from many countries in Central America and the Caribbean also live abroad.

They're just two of the findings of a new World Bank publication, entitled International Migration, Remittances and the Brain Drain. The volume is a product of the International Migration and Development Research Program of the Development Research Group, the Bank's research department.

"The report reveals the brain drain is massive in small and poor developing countries," says World Bank economist, Maurice Schiff, a co-editor of the volume.

"While over 50 percent of college graduates leave countries in Central America and the Caribbean, in some of them, the figure is as high as 80 percent."

L. Alan Winters, the director of the Bank's Development Research Group, says while the mobility of highly skilled workers can offer many benefits, the consequences of the brain drain could be serious for many developing countries.

And he says understanding the so-called brain drain remains one of the highest priorities for development research in the future.

The report's findings are based on the most comprehensive and rigorous database on the brain drain to date, created by researchers Frédéric Docquier and Abdeslam Marfouk, and presented in chapter five of the volume.

Schiff says the report shows the extent of the drain brain problem in larger countries is much less.

"On average for countries with more than 30 million people, the brain drain is less than five percent of all college educated people. The reason is that they have a large population of skilled people, so that even with a large share of skilled people in the migrant population, their share in the skilled population is nevertheless small," he says.

Countries such as China and India only have about three to five percent of their graduates living abroad. And it's a similar situation in Brazil, Indonesia and the former Soviet Union.

By contrast in Sub-Saharan Africa, skilled workers only make up four percent of the total workforce. But these workers comprise more than 40 percent of people leaving the country.

"Most of these college educated professionals from developing countries go to the United States, as well as the European Union, Australia and Canada. In fact Canada and Australia have the largest share of educated migrants out of the total number of migrants to those countries,"

With all the college graduates leaving their homelands, it raises the question as to whether their skills are being put to good use in the destination country.

Part of the volume looks at this issue, with co-editor and Bank economist Caglar Ozden finding that skilled migrants to the United States often fail to get jobs that match their education levels.

Overall, immigrants from Latin America and Eastern Europe with similar education levels are more likely to end up in unskilled jobs in the U.S. than immigrants from Asia, the Middle East and Sub-Saharan Africa.

Schiff says the data from the U.S. show educated migrants from India and the United Kingdom are more likely to get jobs in the US equal to their skill level.

"One of the main reasons is language. Both tertiary educated people from India and the United Kingdom speak English, and of course that's a big advantage when they come to the U.S. ," he says.

Regardless of the type of migrant - educated or not - the report clearly shows the money the migrants send back home does help alleviate poverty in their former home.

Close to 200 million people are living outside of their home countries, with remittances estimated to reach about US$225 billion in 2005, according to a forthcoming Bank publication, Global Economic Prospects 2006.

The World Bank's Chief Economist and Senior Vice President for Development Economics, François Bourguignon, says the household survey evidence presented in the volume demonstrates a direct link between migration and poverty reduction

A survey of Filipino households shows the remittances they receive mean less child labor, greater child schooling, more hours worked in self employment and a higher rate of people starting capital intensive enterprises.

In the Guatemala case study, remittances reduced the level and severity of poverty. The biggest impact was on the severity of poverty, with remittances making up more than half the income of the poorest ten percent of families.

The report shows the money migrants sent back to Guatemala was spent more in investments - such as education, health and housing, rather than on food and other goods.

While the report shows the money migrants sent back home generally meant a greater investment in education, one exception noted in the report is the case of rural Mexico.

Studies in the report find that children aged 16 to 18 years in households from which someone had migrated had lower levels of schooling compared to households where no-one migrated overseas.

It's a finding that's been put down to the special situation of Mexico's rural migrants in the US labor market - the fact that their low level of education only gets them unskilled jobs in the US, whether or not they spend an additional year in school. So people from rural Mexico planning to migrate to the US have little incentive to invest in education.

The former Soviet Union countries and today's Russia continue to experience a brain drain in science, business, and culture, as many of their citizens leave for the United States of America, Israel, Europe, Japan, China and Latin America because of dramatic political and economic changes. The leaders of the initial post-Soviet governments of Russia destroyed many Soviet technological and research institutions because of these institutions' long-standing anti-Communist and anti-Socialist stances, a policy of economic “shock therapy”, and privatisation of scientific and research activities.

In particular, Eastern European countries have expressed concerns about brain drain to Ireland and the United Kingdom. Lithuania, for example, has lost about 100,000 citizens since 2003, many of them young and well-educated, to emigration to Ireland in particular. (Ireland itself used to suffer serious brain drain to America and Britain before the Celtic Tiger economic programs). The same phenomenon occurred in Poland after its entry into the European Union. At least 1 million Polish people, usually young and educated (90% of them under the age of 35), have emigrated to Western European countries since 1991, mostly to the United Kingdom and Ireland. Post-secondary education in the Soviet and Eastern European countries was, and still is, almost completely subsidized by the government, so that the loss of these people is immediately noted and regretted.

There may be a brain drain occurring currently in France, with young graduates moving to Britain, USA, and Canada because of economic and labor regulations making it extensively difficult to find white-collar private jobs, but this is heavily disputed.

Certainly there is a brain drain occurring in the last 5 years in Germany, with 144 814 people leaving their country in 2005 due to economic problems, the highest rate of emigration from Germany since the end of WWII.

The phenomenon of brain drain in South Eastern Europe was first problematized in the 1960s. During the next wave since the 1990s, around 40,000 highly educated people emigrated from Yugoslavia alone, which makes about 10 percent of all Yugoslav emigrants. The general number of migrants from Yugoslavia, Romania and Bulgaria during this time is estimated to be almost a million. However, scholars begin to argue that brain drain may even have beneficial effects to the "sending" regions if appropriate policies are created "that can turn the loss of talent into an exchange of knowledge." ^[1] Among the most notable Yugoslav talent losses is Rada Ivekovic.

Iraq is said by some to be presently undergoing a brain drain due to its political instability.^{[citation needed]}

In 2006, the International Monetary Fund ranked Iran highest in brain drain among 90 measured countries.^[2] The estimated exodus of 150,000 people per year is thought to be due to a poor job market, and tense domestic social conditions.^[3] (See Iran's Brain Drain problem)

New Zealand is experiencing somewhat of an economic brain drain for a variety of reasons. Historically a large proportion of New Zealand youth have always travelled overseas on OEs (Overseas Experiences). A long-standing New Zealand rite of passage for young people was a two-year working holiday in London, including bar work and roadtrips through Europe. However, the vast majority would return home to start careers and families in New Zealand. In recent times however, the number of émigrés choosing to remain expatriate (mostly graduates of higher education) has steadily increased, with Australia being the main beneficiary.

The New Zealand government has expressed concerns with this changing demographic, and several studies have been commissioned to find the reasons behind it. The studies have shown that the factors are varied and interlinked.

As New Zealand has striven to move itself from a largely agricultural economy to a knowledge-based economy, it has increased both the number of tertiary qualified individuals and the proportion of the fees payable by the students themselves. Since 1992, a loan system has been available to enable students to borrow for their education based on the social returns expected by higher qualifications.

The problems with this system occur after graduation, when large numbers of newly qualified individuals are launched into a small economy with limited or low-paying entry positions. The prospect of higher wages and better career opportunities overseas is often reinforced by the need to repay large student debts.

A Statistics New Zealand survey has found a strong correlation between the size of a person's student loan debt and the chance of that individual working overseas within a year of graduation.

Though many young New Zealanders travel, the desire to return to their home setting is strong; over 85% of those surveyed in a recent poll suggested that they would prefer to raise their children in a similar environment to that which they had been brought up in.

Herein lies the charm of neighbouring Australia. Many New Zealand graduates are lured to Australia, where wages are generally higher and economic opportunity more diverse. At the same time they can live the laid-back sport-based lifestyle they are accustomed to, and can easily return for visits. The Trans-Tasman Travel Arrangement makes such exchanges easy, although it is heavily one-sided, since many New Zealanders move to Australia while fewer highly educated Australians move to New Zealand.

Template:Sect-num-stub Many Filipino professionals are opting to work in other countries for higher pay.

Among the countries in Asia and the Pacific, the biggest source is the Philippines, with 730,000 migrants. Of these, the great majority have a tertiary education.

Three decades ago, seeking sources of hard currency and an outlet for a fast-growing population, then-President Ferdinand Marcos encouraged Filipinos to find jobs in other countries. Over time, the overseas worker has become a pillar of the economy. Nine million Filipinos, more than one out of every 10, are working abroad. Every day, more than 3,100 leave the country.

Philippine workers sent home more than $10.7 billion last year, equal to about 12% of the gross domestic product. [1]

There are two very different types of international Filipinos — balikbayans on the one hand and overseas contract workers (OCWs) on the other. The Marcos regime coined the term balikbayan in the mid-70s, from the Tagalog terms balik (to return) and bayan (town and nation). It was a clever marketing pitch to lure Filipino emigrants, most living in the states, back home as free-spending tourists. Balikbayans continue to send money regularly, and periodically return on vacations.

Another type is the overseas contract worker (OCW). During the mid-'80s, major changes in the global economy generated demand for semi-skilled and skilled Filipino workers in the Middle East, Asia, and Western Europe. The Philippines sent some of its citizens to fill jobs.

Overseas Filipinos tend to be educated, literate English speakers. The world's cargo ships have a significant representation of able-bodied Filipino seamen. The mid-management ranks of multinationals around Southeast Asia are manned by Filipino business graduates. Some OCWs are professionals (doctors, nurses, engineers, and such). The majority work as construction workers, domestics, drivers, dancers, or "entertainers" of one sort or another.[2]

In Canada the brain drain to the United States is occasionally a domestic political issue. At times, brain drain is used as a justification for income tax cuts, although this causal relationship has been questioned. For example, Canadian conservatives often claim there is a drain from Canada to the United States, especially in the financial, software, aerospace, healthcare and entertainment industries, due to perceived higher wages and lower income taxes in the U.S., despite some statistical evidence to the contrary.^[4] The evidence shows that Canada is indeed losing its homegrown talent to the US, but it is gaining skilled migrants from abroad.^[5]

In many Latin American nations where enrollment at local medical schools is very high, there is a chronic shortage of doctors.

In Malaysia the government are trying to lure back these people. Most of the people opt to migrate to Singapore, Australia and New Zealand knowing that they will have a better life than staying in Malaysia.

After the independence of Surinam in 1975 from the Netherlands, many Surinamese people mainly emigrated to the Netherlands. These were mostly high-educated people. Still there are more than 300 000 people living in the Netherlands, mostly living in the big cities as Amsterdam, Rotterdam and the Hague. That is almost as high as the number of people in Surinam itself.

Brain drain is a social index that is difficult to measure. One statistically rigorous source is a US Census report called "Migration of the Young, Single, and College Educated: 1995 to 2000"^[6], which used responses from the 2000 census long form, received by one in six households. The study discusses intra-national brain drains and gains within the US.

An opposite situation, in which many trained and talented individuals seek entrance into a country, is called a brain gain; this may create a brain drain in the nations that the individuals are leaving. A Canadian symposium in 2000 gave circulation to the new term, at a time when many highly skilled Canadians were moving to the United States, while simultaneously many qualified immigrants were coming to Canada from a number of different nations. This is sometimes referred to as a 'brain exchange'. It should be noted, however, that the unemployment rate of skilled worker landed immigrants in Canada is 34%^[7], at a significant cost to governments^[8], bringing into question the existence of any net 'gain' to Canada (see related article, Economic impact of immigration to Canada).

In 2000, the US Congress announced it was raising the annual cap on the number of temporary work visas granted to highly skilled professionals under its H1B visa program, from 115,000 to 195,000 per year, effective through 2003. That suggests a ballpark figure for the influx of talent into the United States at that time. A significant portion of this program was initiated by lobbyists from the computer industry, including Bill Gates.^[9] In the same year the British government, in cooperation with the Wolfson Foundation, a research charity, launched a £20 million, five-year research award scheme aimed at drawing the return of the UK’s leading expatriate scientists and sparking the migration of top young researchers to the United Kingdom.

• Lincoln C. Chen, M.D., and Jo Ivey Boufford, M.D. "Fatal Flows Doctors on the Move" New England Journal of Medicine,

Volume 353:1850-1852 October 27, 2005 Number 17 online version, editorial

• Jeff Colgan, The Promise And Peril Of International Trade, (2005) ch 9.
• Devesh Kapur and John McHale. Give Us Your Best and Brightest: The Global Hunt for Talent and Its Impact on the Developing World (2005)
• Binod Khadria. The Migration of Knowledge Workers: Second-Generation Effects of India's Brain Drain, (2000)
• Fitzhugh Mullan, "The Metrics of the Physician Brain Drain." New England Journal of Medicine,

Volume 353:1810-1818 October 27, 2005 Number 17 online version

• Caglar Ozden and Maurice Schiff. International Migration, Remittances, and Brain Drain. (2005)
• David Zweig, Chen Changgui, and Stanley Rosen; China's Brain Drain to the United States: Views of Overseas Chinese Students and Scholars in the 1990s Institute of East Asian Studies, 1995 online edition

Fitzhugh Mullan, M.D.

• Human capital
• Immigration
• Instructional capital
• Edict of Fontainebleau
• Free rider problem
• Canadians of convenience
• Brain waste

• Mario Cervantes and Dominique Guellec, "The brain drain: Old myths, new realities"
• "Brain Drain: Brain Gain"
• How Extensive Is the Brain Drain? An article on the extent of brain drain today
• Sami Mahroum, "Europe and the Challenge of the Brain Drain"
• US Census Bureau report on migration of the young and educated
• SciDev.net - Brain Drain
• How To Plug Europe's Brain Drain. Time Europe, accessed October 9, 2006
• It's time to bring back the children An essay on youth flight in Upstate New York