Do developing countries gain or
lose when their brightest talents go abroad?
“THE people I have recruited, I
have convinced personally. I have gone to their houses, met their families.
They come here because they see this as a challenge.” Edi Rama, the mayor of
Tirana, capital of Albania, faces a familiar struggle for a boss these days, to
get and keep good staff. But he is fighting for talent in a country where GDP
per head is under $4,000—less than a quarter that of neighbouring Greece, where
some 500,000 Albanian emigrants now work.
Mr Rama is increasingly in
direct competition with much richer countries, too. Canada and Australia, which
pioneered “points” schemes to select would-be immigrants with skills, have been
tilting these to take an even higher proportion of such people, and the United
States has rapidly increased the supply of temporary visas for skilled workers.
Even governments that once
strove to keep people out are encouraging the skilled to come in. Germany's
recent immigration legislation includes a points system for skilled workers.
Britain has rapidly expanded the availability of work permits for skilled
migrants, and pushed down the required level of skill. And many countries are
softening the rules that normally force foreign students to go home as soon as
they graduate. Australia decided last year to allow foreign students of
information and communications technology to apply for permanent residence on
the basis of their education alone.
About 30% of all highly
educated Ghanaians and Sierra Leoneans live abroad
America, the world's biggest
skills-magnet, absorbs large proportions of the most educated people from
neighbouring countries. A survey of new legal immigrants to America finds that
about 21% of them have at least 17 years of education, implying some
postgraduate study, compared with only 8% of native-born Americans.
Cumulatively, estimates Lindsay Lowell of the Pew Hispanic Centre, a
think-tank, 12% of Mexico's population with higher education is in the United
States, and 75% of Jamaica's. Such figures are all the more striking because,
in poor countries, only about 5% of the young tend to be in higher
education.Migrating, legally or illegally, is expensive. So a higher proportion
of the well-educated can afford to emigrate than of the poor. In some regions,
the discrepancy is staggering. A study by Lindsay Lowell and Allan Findlay for
Britain's Department for International Development found that three-quarters of
Africa's emigrants have higher (tertiary) education, and roughly half of Asia's
and South America's. Of the 1m people from India living in the United States,
more than three-quarters of those of working age have a bachelor's degree or
better. About 30% of all highly educated Ghanaians and Sierra Leoneans live
abroad.
Not only are the skilled
disproportionately likely to leave: it is often the best of the crop. Although
about 3% of Indian doctors emigrated in the 1980s, the proportion for graduates
of the All India Institute for Medical Sciences, the country's best medical
school, was 56% in 1956-80 and 49% in the 1990s. In the case of Mexico, says Agustin
Escobar of CIESAS Occidente, a research institute, 12% of the total labour
force is in the United States—but 30% of Mexicans with PhDs are there.
America educates one-third of
all foreign students
Education abroad aggravates the
exodus. America educates one-third of all foreign students and, not
surprisingly, about half of all students who get PhDs in the United States are
still there five years later. The proportion rises to over 60% for those with
doctorates in physical sciences or mathematics. Students from India, China and
Britain are especially likely to stay on when their studies are over. Some
acquire temporary visas for the skilled: some 23% of holders of H1-B visas in
February 2000 had previously held American student visas. Some find American spouses,
a quicker and more certain route to legal immigration. And some simply
overstay.
Australia and Canada find, to
their irritation, that the most skilled immigrants use them as entrepot
countries
Poor countries are not the only ones affected by outward
migration. Australia and Canada not only lose their own people to the United
States. They also find, to their irritation, that the most skilled immigrants
use them as entrepot countries, acquiring citizenship and education before
moving on to the largest and richest job market in the world.
For Canada, membership of the
North American Free-Trade Area has opened the door for a stream of southbound
migrants. “They did a quick one on us,” complains Don DeVoretz of Simon Fraser
University. For every three Canadians heading south, only one migrant moves
north. Again, it is mainly professional people who go. For the past five years,
Mr DeVoretz claims, between 15% and 40% of each year's graduating class has
headed across the border. Once again, it is the stars who are most likely to
leave.
Losing the
best
Does it matter if clever people leave in such numbers? For the
world as a whole, it makes sense for the cleverest to exercise their skills
where they earn the greatest reward. But what holds for the world may not hold
for individual countries that lose large swathes of their educated middle
class.
Some economists would argue that, overall, the impact of
emigration on a sending country may be beneficial. Back in 1882, Knut Wicksell,
a Swedish economist, argued that emigration would eventually rid his country of
paupers, because poverty was an effect of excess labour and insufficient land.
And the behaviour of wages in the main sending and receiving countries in the
late 19th century suggests he may have been right. In Ireland, for example,
though industrialisation was slow, the economic condition of Irish labourers
rapidly improved as the migrants left, both in absolute terms and relative to
those in Britain and the United States.
An exodus of the skilled may
also raise pay for those left behind. In the mid-1990s, half the graduating
physics class at Bucharest University left the country, says Ioan Mihailescu,
the university's rector and co-author of a UNESCO study of the impact of the
brain drain on the academic labour market in south-east Europe. Last year, that
was down to 10%. The reason, he thinks, is that jobs for the highly skilled
have grown as Romania's economy has expanded, and so have the wages of people
with scientific and technological skills.
However, the loss of the
skilled and educated may do more harm than emigration in general. These
particular people create new jobs for others. Their departure removes the
stabilising political influence of a middle class. And the exodus of scientists
and academics wreaks particular havoc, especially if it happens quickly.
Albania lost one-third of its qualified people in the decade after the fall of
communism. The sheer speed of the exodus left no time for an orderly
transition. Moreover, adds Ilir Gedeshi of the Centre for Economic and Social
Studies, scientific research projects that take time to conduct fall apart when
people leave because, as he puts it, “there is no inherited memory.”
To the loss of productive
potential, add the fiscal losses from migration. Taxpayers in developing
countries have paid to educate many of those who leave (and who may well end up
working in jobs below the level their qualifications would justify at home). And
emigration leaves behind fewer workers to pay the cost of looking after the
old. Although migrants boost the ranks of taxpayers in the countries they go
to, they deplete them in their home country. A recent study of the fiscal
effects of the Indian brain drain, by Mihir Desai of Harvard University and two
colleagues, points out that the 1m Indians in the United States accounted for a
mere 0.1% of India's population but earned the equivalent of a staggering 10%
of India's national income. At home, of course, they would have earned far
less. But they would still have been among the largest taxpayers.
How far does an outflow of
skilled workers bring a reward in the form of remittances? Overall, the sums
that migrants send home to developing countries each year are astonishing: some
$60 billion through official channels and more—perhaps another $15 billion—in
various unreported ways. The inflow to developing countries doubled between
1989 and 2000. Officially reported remittances alone were about 20% more than
official development aid over that period. And the gap is widening: official
aid is dwindling, whereas remittances are still growing.
Remittances
as stimulus
Until quite recently,
development experts used to ignore these large flows, or worry that their
impacts were mainly negative. Philip Martin of the University of California at
Davis, who studied remittances to Turkey in the 1980s, found that they drove up
the going rate for dowries, caused inflation of land prices and propped up an
overvalued exchange rate. But even if they are spent on consumer goods,
remittances may stimulate development, especially if they are spent locally.
One study of Mexico suggests that each dollar of remittance generates three
dollars of spending power.
In general, though, remittance
multipliers have the greatest impact in country districts, which tend to send
the unskilled, not the skilled, abroad. And because the most educated are more
likely to emigrate with their families and to integrate quickly into their new
homeland, they seem less likely to send money back. One of the few attempts to
estimate whether remittances by the skilled offset the loss of intellectual
capital to the sending country concluded that they did not.
On the other hand, emigration
may bring other benefits to the sending country. The possibility of leaving and
the higher income to be earned abroad may encourage more people to go into
higher education. As not everyone will leave, the result will be a bigger pool
of skills than would otherwise be the case. In some countries, the education
system is adapting to teach skills needed abroad: in Mexico, for example, the
Monterrey Technological Institute has offered for two decades a curriculum and
style of teaching designed to meet the demands of American multinationals. But,
as Mr Escobar observes, these skills are also useful for their big Mexican
competitors.
If those who go abroad
subsequently return—a big “if”—they may import useful skills and contacts. And
there are also signs that international trade flourishes between countries that
export people and countries that import them. One Canadian study found that,
during the 1980s, a 10% increase in the number of immigrants from a given
country went with a 1% rise in exports to and a 3% increase in imports from
that country. Increasingly, too, entrepreneurs from some Asian countries seem
to travel back and forth. Of the 312 companies in the Hsinchu industrial park
near Taipei, 113 have been started by American-educated Taiwanese engineers
with professional experience in Silicon Valley, where 70 of the park's
companies have offices to pick up new recruits and ideas.
Hanging on
What should developing
countries do about the loss of skilled workers? Retention is the first line of
defence. No country (North Korea and Cuba apart) now tries to stop its people
from leaving. A few, such as China, lean heavily on the families of students
studying abroad to ensure that they return. But most need to consider ways to
make it more attractive to stay at home.
Top of the list should be
making a country a good place to work. “I am always struck by how African
leaders say they need the return of talent,” says Mr Martin, “and yet my own
students try every trick to stay, saying that they are in the wrong tribe, or
do not have the right connections to get ahead.” A culture where advancement
depends on political affiliation rather than merit will lose bright people to
societies where talent is what counts. This is particularly true in the public
sector, including the universities, where professionals will stay only if
professionalism counts. And countries need other attractions: Tirana's Mr Rama
points out that his city did not even have a cinema until two years ago, and
donors could not grasp why the lack of one was important.
Pay is vital too. But in order
to compete for the brightest, poor countries need to pay them a much larger
multiple of the average wage than would be true in the rich world. So global
competition for this group will widen income disparities in developing countries.
Again, that is a particular problem in the public sector. George Soros's Open
Society programme offers one modest solution: it tops up the pay of a small
group of elite public-sector workers who have returned to countries in Central
and Eastern Europe after being educated abroad. But even that brings problems:
graduates who never went abroad to study resent the implication that their
degree is worth less.
The way education is financed
may have an effect on emigration. Mr DeVoretz calculates that the rate of
return for a doctor who gets an education at a first-rate Canadian university
and then goes to work in the United States is around 45% on the direct costs of
his or her education. University education in Canada is heavily subsidised. If
a would-be doctor had to pay the full cost of Canadian medical training, the
return on a career south of the border would fall to 15%. Removing such
subsidies, or replacing them with loans, would at least partly reduce the
incentive to leave.
So, perhaps, might a tax on the
diaspora. Jagdish Bhagwati, an economics professor at Columbia University,
wants developing countries everywhere to extend their powers to tax their
expatriates, in order to reclaim some of the value created abroad by highly
skilled emigrants. But the omens are poor. Eritrea is a rare instance of a
country that has, since 1993, imposed a tax of 2% of annual income on its
expatriates. Apart from the sanction of social disapproval in the diaspora,
those who do not pay find it hard to buy or keep land back home, or to get
their passports renewed. The impost causes much friction.
But skilled people will
continue to leave, and poor countries therefore need to devise ways to draw on
their experience abroad. One way to encourage a sense of participating in two
cultures, rather than one, is to extend the availability of dual citizenship,
something that developing countries have sometimes been reluctant to do.
Another is to use the Internet to draw on expat skills and contacts. Jean-Baptiste
Meyer, of the French Institute of Research for Development, has traced a
growing number of virtual networks that link together a country's expatriate
researchers, scientists, students or business folk. Some, such as the Global
Korean Network or the Tunisian Scientific Consortium, organise annual
conferences to discuss issues of interest to the members and the country of
origin. Others undertake joint scientific projects.
A two-way
trade
A different approach is to
bring back expatriates for short periods, with the guarantee that they will be
able to return to their adopted country when their tour of duty is over. The
United Nations Development Programme runs one such scheme, called Transfer of
Knowledge Through Expatriate Nationals, or TOKTEN, helping skilled expatriates
return to work on specific projects. The International Organisation for
Migration runs a special project to bring back educated expatriate Afghanis to
help with rebuilding their country. So far, fewer than 300 have returned, but
more than 4,000 have registered to do so.
What can the rich countries do?
Already, some try not to recruit scarce health workers from poorer
lands—although they cannot easily turn workers away who want to come. More
usefully, they could put more money into tertiary education in poorer
countries, aiming specifically to pay to train the people whom they are going
to employ. One modest example: Bucharest university is talking to the Dutch
government about teaching the language and other necessary skills to information-technology
workers, teachers, nurses and police that the Dutch hope to recruit.
They should also make migration
simple, but temporary. The tougher it is for migrants to enter a country, the
more reluctant they will be to risk leaving to go home. However, the longer
they stay abroad, the more likely their stay is to become permanent. The old
contacts go, and it becomes harder to fit in. Mobility, which fits in
comfortably with today's employment patterns, is more likely to benefit both
sending and receiving countries than the old idea of migrating for good.
Once a developing country
starts to grow rich, a return flow will build up of its own accord. Taiwan,
South Korea and China all now receive considerable return migration. Ireland,
once a land of emigrants, has become a country of net immigration. Given
opportunities and political stability, good leadership and the rule of law,
many of those who would otherwise leave a developing country will stay—and some
of those who left will return.
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