Brain drain and development policy

One of the negative effects of migration on development that is often talked about in the context of M&D is the exodus of high skilled labour, so-called brain drain, which is posing developmental challenges to developing countries, as brain drain means a loss of human capital and negative returns on educational investment. There exist a tension between the national policies of many developed countries, such as the Netherlands, which aim at attracting high skilled labour, while on the other hand policies exist to stimulate development and prevent brain drain at least in sensitive sectors, such as health and education. No consensus however exists on the extent of the problem of brain drain, nor its solutions.

The question is how ‘large’ the loss of brains is and whether this loss is compensated for by the tangible (remittances) and intangible transfers (innovations, experience) from the high skilled migrants to the country of origin. These questions are addressed to some extent by previous research. Studies have been undertaken on the aggregate level by Beine et al (2001) [1] , who found a positive and significant effect of migration prospects on human capital formation in a cross-section of 37 developing countries. Carrington and Detragiache computed emigration rates at three educational levels for a large set of developing countries. Beine, Docquier, and Rapoport (2003) make use of these data and find empirical support for the beneficial brain drain in cross-section for 50 developing countries. However, brain drain appears to have negative growth effects in countries where the migration rate of the highly educated is above 20% and where the proportion of people with higher education is above 5%. Especially small countries are strongly affected; the most worrisome is the situation in Sub-Saharan Africa and Central America. When observing the impact of brain drain, Docquier (2006) includes the impact of human capital formation, the role of remittances, the impact of return migration, the effects of diaspora externalities and the impact on governance and corruption. This research project will build on the existing studies and focus on the channels through which migration of highly skilled workers to developed countries has an effect on the sending country. The migration flows from one or several countries in the database to the main destination countries will serve as the starting point for this research.

The first channel refers to the effect that the option for emigration has on potential migrants or on institutions in the sending country. The effects on the uptake of education, the accumulation of local social capital, the incentives to start a business and others will be observed. In the second channel the effect of the emigration on the sending country due to the lost human capital will be analysed. The effects in terms of the economy (multiplier effects, dependency, labor market situation), education (quality of education, educational attainment), health (provision and quality of health services), institutions (the competence of local public institution, trust in public institutions) will be examined in this channel. The third channel looks at the effects that high skilled migrants have on a sending county while being abroad. This research will observe the effects of remittances, investments as well as knowledge flows from migrants in. Finally, return migration is considered to be a fourth channel, which can affect the sending country. Return migration is generally considered as positive and is, therefore, encouraged. The research will observe return migrants and their households regarding their profile, activity and integration back in the home country. Moreover, migrants will be asked about their plans to return to their home country.

The effects that take place through the abovementioned channels often overlap in reality, however we can still make a conceptual distinction between the different channels. The institutional arrangements related to migration will be observed in terms of the four channels by looking at how the policies the country of origin and countries of destination address migration issues.

The theoretical and empirical insights that will be gained through the abovementioned research will be used to specifically study the policy instruments that are used or could be used to reduce the impact of brain drain at both sides of the migration streams; these might range from “ethical recruitment policies [2] ” to compensating payments between states for the brain drain losses or the related investments in human capital.

Mainstreaming migration in development policy: the impact of development policy on migration
A specific set of questions is related to the impact of existing general development policy on the propensity of the highly skilled population in developing countries to migrate to developed countries. Questions like whether investments in education or investments in health services stimulate or refrain the highly skilled migrants to move (or vice versa). In order to investigate whether development policies have an influence on brain drain, the study will first analyse the determinants of migration of the highly skilled in order to understand whether their behaviour can or could be influenced by development policies. Since development policies also affect migration flows of low skilled labour, the study will also address the question to what extent these policies stimulate or prevent the movements of low skilled migrants. An interesting related questions is whether developing countries take migration on board as a factor in national development strategies and development instruments in general (for example targeting employment projects towards regions plagued by outward-migration (Senegal)), whether these strategies are effective and what are the other possibilities for mainstreaming migration into national development planning. This specific set of questions will explicitly be addressed in a separate document.

The project will use the data as collected in the database, but will also explore other data bases and secondary sources in order to map and evaluate the policies of developed and developing countries alike.

 


[1]

See also: Beine, M.., Docquier, F. and Rapoport, H. (2003), “Brain Drain and LDC’s Growth: Winners and Losers”, IZA Discussion Paper No. 819, July 2003. Docquier, F. (2006), “Brain Drain and Inequality across Nations”, EUDN-AFD conference, November 8, 2006. Docquier, F. and Marfouk, A. (2005), “International Migration by Educational Attainment (1990-2000) – Release 1.1”, Washington: The World Bank, March, 2005. Docquier, F. and Rapoport, H. (2004) “Skilled migration: the perspective of developing countries”, Policy Research Working Paper Series 3382, The World Bank. Rapoport, H. (2002), »Who is afraid of the brain drain? Human capital flight and growth in developing countries«. Stanford Institute for Economic Policy Research: Policy Brief, April 2002. Schiff, M. (2005), “Brain Gain: Claims about Its Size and Impact on Welfare and Growth are Greatly Exaggerated”. IZA Discussion Paper No. 1599, May 2005.

 


[2]

The NHS in the UK has restricted itself from actively recruiting from over 150 developing countries. The Commonwealth has developed a similar recruitment code. The Netherlands Foreign Employment Act also restricted recruitment of nurses from developing countries. The UK also has an ethical recruitment code for social workers.