Reverse Brain Drain
By Abigail Paris | February 13, 2008
Ever since humans set a dusty foot outside Olduvai Gorge they have been migrating vast distances. Yet with new technologies, a modified form of migration has emerged.
Brain drain, also known as human capital flight, tends to occur in developing countries where skilled and educated workers are lured to prosperous nations abroad. The temptation of greater wealth, better living conditions, political stability, and intellectual freedom strips many poor economies of their best and brightest.
At a lecture recently hosted by Policy Innovations, Marcus Noland of the Peterson Institute for International Economics and Michele Wucker of the World Policy Institute discussed this problem vis-a-vis the Middle East.
In The Arab Economies in a Changing World, coauthors Marcus Noland and Howard Pack estimate that 5 percent economic growth rates are needed to adequately employ the region's rapidly growing labor force. But with the exception of tourism and natural resource extraction, the Middle East tends to be weakly linked to the world economy. Although foreign direct investment has risen along with the recent surge in energy prices, much of that investment has gone into internationally nontraded sectors such as real estate. Even the recent increase in manufactured exports has been confined largely to energy-intensive products such as petrochemicals, which do not generate large numbers of new jobs.
With nearly all recent growth reliant on high oil prices, the production potential of these countries is low given their lack of infrastructure and weak "synaptic link" to the outside world, said Noland. He discussed ways to combat these problems, including an increase in local entrepreneurship, foreign investors, and returnees. Trade agreements and foreign investment stimulus could spark development in the region, but they are not a substitute for internal reforms that would promote the return of entrepreneurs and educated workers. The focus of Noland and Wucker's discussion was how to reverse brain drain for the Arab economies.
Brain drain is widespread. In the Philippines, healthcare professionals sometimes seek foreign jobs below their level of education and training. Faced with poor working conditions, Kenyan doctors and nurses also leave for better prospects. Healthcare brain drain is particularly devastating when it occurs concurrently with HIV/AIDS and endemic diseases like measles and malaria.
Meanwhile, the International Monetary Fund cites Iran as having the highest rate of brain drain among countries it measured. Lebanon is also experiencing brain drain, due partly to the 2006 war with Israel. In Egypt, human capital may even be one of the biggest exports, Noland said.
According to the Arab League, unemployment in the region could rise from 15 million to 50 million in the next 15 years. The unemployment rate in the Middle East and North Africa is estimated above 13 percent, regionally the highest in the world. Thailand exports more manufactures to the rest of the world than the Arab countries combined, Noland said, despite having only one quarter the population.
In the United States, the education level and economic status of Arab Americans is higher than the national level. "Median Arab American income is roughly $52,000, compared with the national average of $50,000," Noland noted. Earning power is typically linked to educational achievement, and in Canada, where the share of Arabs with a bachelor's degree (30 percent) is more than twice the national rate (12 percent), Arab Canadians are doing disproportionately well, Noland continued.
The consequences of brain drain have attracted the attention of international agencies, legislators, and academics. For countries on the receiving end, it is partly a question of whether to limit the migration of educated and skilled workers. The United States, Canada, and the United Kingdom actively seek educated and skilled professionals to improve international competitiveness.
To reverse brain drain, countries must reduce the incentives gap between them and the industrialized nations, and provide adequate well-paying jobs to move their economies forward. One disincentive to returning is fear. Noland argued that "brain drain will not be reversed unless returnees are confident that they will not be subject to economic predation and that their families will be safe."
Wucker, the author of Lockout: Why America Keeps Getting Immigration Wrong When Our Prosperity Depends on Getting It Right, added that better overall standards of living must be achieved in countries of origin before brain drain can be reversed. "Countries must make themselves more attractive," she said, by improving property rights, political stability, and living conditions.
The reversal of brain drain in most cases is beneficial to the countries of origin, but what about to the individuals involved?
Noland addressed the notion of happiness in the context of brain drain. He indicated that self-reported well-being is strongly correlated with personal health status, employment status, which provides a sense of self-respect and dignity, and a sense of voice or influence in decision-making and governance. When asked about what restrictions should be placed on outward migration, he argued that "an individual has a right to do as well as they can do." When migrants no longer fear predation or repression, Noland argued, brain drain reversal will be advantageous for the individual as well as for the nation.
Noland said that Egypt is less repressive today than Taiwan and South Korea were in the 1970s when they attempted to reverse brain drain with some success.
Wucker continued by asking how it would be possible to develop a system that allows for people to return home at the best time in terms of their own development, benefiting both host and sending countries. She described polices that provide incentives for returnees. In India, rules of citizenship have been changed, creating a new class of overseas citizens. The Chinese government has created venture capital funds to finance returning entrepreneurs who launch businesses. A program has been developed and implemented in Mexico in which the Mexican government provides 3-to-1 matching funds for donations raised by American hometown associations to support social projects in Mexico.
Once brain drain begins to reverse, according to Noland, the link between the Arab countries and the rest of the world will begin to open. Returnees will not only bring back their experience, education, and skills, but also their international connections or "social capital." The timely reversal of brain drain may help countries escape a downward cycle of reduced growth, rising unemployment, low foreign investment, and political instability.
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