Brain Drain in Developed and Developing Economies

Introduction to Brain Drain

Brain drain is defined as the migration of personnel in search of better standards of living and an improved quality of life, which includes access to advanced technologies, better-paid jobs, and sometimes a more stable political environment in other parts of the world. The professionals who migrate for better work opportunities — both locally and internationally — are, in many respects, victims of the growing instability of economic systems in most developing countries. Why do talented people choose to move abroad? What areas are affected by such migrations, especially the educational sector? Which policies can stem such movements from developing countries to developed countries? (Samuelson, 2004).

Economic drain is experienced when there is a migration of skilled resources for education, trade, and related purposes. Trained human capital is in demand everywhere in the world. However, better living standards, attractive salaries, access to modern technology, and a more stable governmental environment are what draw people across international borders. The dominant trend is movement from developing to developed countries, because developed nations have invested heavily in education and professional training for graduates. This translates into a significant loss of human capital for the countries these professionals leave, with the direct benefits accruing to receiving countries that have not invested in their education (Amiti & Wei, 2004). The key point here is that the highly trained professionals and intellectuals of any country represent some of its most valuable resources, in terms of financial cost, time, and — most importantly — the lost opportunity their departure represents.

In 2000 alone, approximately 175 million people — roughly 2.9% of the world's population — were living outside their birth country for more than five years. Of this figure, 65 million were the most economically active. This type of migration has historically involved many health professionals, including nurses and physicians. The primary reason for seeking employment abroad is the combination of inadequate benefits and high unemployment in one's home country.

The concept of international professional migration first emerged as a major economic concern in the 1940s, when many trained Europeans moved to the United Kingdom and the United States. Later, in the 1970s, the United Nations published a detailed 40-country study on the magnitude and flow of trained professional emigrants. According to that report, ninety percent of migrating professionals were moving to just five countries: Australia, Canada, Germany, the UK, and the USA. In 1972, 6% of the world's doctors — approximately 140,000 — were living outside their home countries, with over three quarters located in the UK, the USA, and Canada (Romer, 1990). The countries from which these professionals emigrated reflected colonial and linguistic ties, with a majority originating from Asian countries: India, Pakistan, and Sri Lanka.

The following table illustrates productivity growth and unit labor cost trends in the United States since the 1950s, providing economic context for the pressures that drive both emigration and the demand for skilled labor in developed countries.

Historical Context and Scale of Professional Migration

Productivity Growth and Unit Labor Costs Since 1950

Decade / Average Quarterly Productivity Growth / Average Quarterly Unit Labor Cost Growth (%)
1950s: 2.6 / 2.4
1960s: 2.6 / 2.2
1970s: 1.9 / 6.1
1980s: 1.5 / 3.6

Source: Contrary Investor (2004). "The Moment of Truth for Productivity?"

If proper calculations are made by linking the number of skilled resources per 10,000 population to GDP, the countries with the most notable professional emigration and subsequent growth in their fields were Egypt, India, Pakistan, the Philippines, and South Korea. However, the lack of reliable data and the difficulty of defining whether a migrant is "permanent" or "temporary" remain ongoing challenges (Romer, 1990). Some economists suggest that migration from developing countries to more prosperous ones is, in many cases, useful, important, and even unavoidable. While there are permanent advantages — most notably the experience migrants gain abroad — governments face a troubling paradox: the same developed countries that maintain relatively low emigration rates of their own professionals also attract the highest rates of immigration from elsewhere.

The implications for poor sending countries are stark. According to the African Capacity Building Foundation, the continent of Africa loses 20,000 skilled workers every year to developed countries offering better opportunities. Every year, this means 20,000 fewer people available to contribute to national economic growth, public services, and democratic development. G8 leaders have raised this issue on various occasions, and the UK's Commission on Developing Countries has called for stronger responses from development agencies, unions, and civil society organizations (Agrawal, Vivek & Farrell, 2003).

Is Brain Drain Always Negative?

Once the various ways in which brain drain can harm an economy have been identified, that alone is not sufficient — because there are credible arguments suggesting that "brain drain" may not be entirely negative, and may in some cases produce positive effects. Recognizing and accounting for the positive results of highly skilled emigration is an important first step toward addressing the brain drain issue in its full complexity.

To begin with, some of the most simplistic claims about brain drain may not hold up under scrutiny. One common belief is that a portion of those who migrate eventually return to their homeland with greater skills (Carrington & Detragiache, 1999). Some studies also show that students from developing nations who receive education abroad — financed by the receiving country or through other legal means — sometimes choose not to return, thereby failing to contribute their potential to their countries of origin. Yet this is not universally the case.

In many instances, those who leave their home countries do so because they were unemployed or underpaid, meaning their departure may be of limited economic significance to their country of origin. For example, the Philippine government's program supporting temporary contract workers remains active, enabling unemployed but skilled professionals to seek employment in developed countries. Moreover, the departure of skilled workers is sometimes offset by the arrival of skilled workers from other countries. As described in a special chapter of the OECD's 2004 Trends in International Migration, "the classic case of this domino effect is South African doctors moving to developed countries while being replaced by Cuban doctors" (William & Detragiache, 1999).

From a research-oriented perspective, economists argue that brain drain can, under certain conditions, have positive effects. Even in the poorest countries, employment prospects and incentives may improve when reforms are introduced that motivate people to acquire education and skills. When this domestic "brain gain" exceeds the "brain drain," the overall impact on sociological and economic growth may prove promising (Bhardan & Kroll, 2003). Therefore, if individuals choose to remain in their home countries — whether at the educational or professional level — standards at each level have the potential to improve without emigration. Brain drain does not necessarily carry only negative consequences for a country's educational system or professional training capacity.

Furthermore, the economic brain drain phenomenon captures only some of the factors relevant to international migration's impact on economies and societies. When remittances, inward investment, technology transfer, increased trade flows, and charitable activities are all factored in, the net calculated effect may prove more favorable than initially anticipated. There is an urgent need for comprehensive research and analysis that accounts for all of these factors in producing practical policy recommendations.