Immigration and “Brain Drain”

What should be the response of governments to intellectuals leaving their country of origin? Should this be seen as brain drain: a problem to be solved? Detractors claim that intellectuals leaving results in large fiscal losses, reduces human capital and creates occupational distortions.  They believe that loose immigration systems facilitate human suffering. These critics are misguided. Blaming skilled emigrants for wanting to leave assumes that closed immigration systems would be beneficial for the countries of origin; this may not be the case.

Brain drain is a phenomenon where individuals with technical skills or knowledge end up leaving their place of origin because of conflict, lack of opportunity, political instability, health risks, etc. This concept makes its way into discussions about economic development, as demonstrated by concern about Indian brain drain, and worries from other countries about the West poaching their best and brightest.

The economic justification for being worried about brain drain is straightforward: in order to extract rents from their citizens, their home countries need to boost human capital. This is often done through state-run education to make their citizens more productive. However, if this initial investment is not likely to provide a solid return, governments may become less likely to sponsor education in the first place, resulting in lower human capital overall. When developed countries “poach” graduates by offering them advanced educational opportunities, higher salaries, or both, they in effect slow down modernization and create poorer countries.

However, the argument for ‘brain drain’ relies on several dubious assumptions. First, absent immigration, countries would be able to efficiently use these graduates. Second, home countries prefer keeping talented their most talented people in unpleasant jobs or situations. Third, that this supposed ‘brain drain’ acts mostly in a vacuum.

The first assumption often unspoken is that countries would be good at employing these talents. Iran’s strategy, for example, is locking up their best and brightest, rather than giving them work that would develop the country. Unfortunately, there’s little reason to think that any amount of genius would create economic growth if it is unable to be utilized. Economist Bogdan Glavan thinks that the binding constraint is not ‘human capital’ on countries’ development, but rather physical capital. In the same way that Robinson Crusoe, despite being brilliant, cannot do much on an island, neither can skilled labor in an environment without tools to make good use of it.

The second dubious assumption, that the common good requires keeping people in unpleasant jobs or situations, is also wrong. This assumption is undermined by aggregation problems and feedback effects. First, problems of aggregation challenge this notion of a common good absent political freedom. It is difficult to determine how much weight political freedom deserves, but the revealed preferences of people to move away from their countries of origin suggests that its value is high. After all, if it were not, Coasian bargaining could take place to make the person stay. The other issue, feedback effects, changes the paradigm because failing to include remittances, gains to trade, and GDP paints an incomplete picture of economic development. Remittances can be an important part of an economic strategy. As more emigrants leave a country, the amount of money per person remaining increases because of the money brought into the country through money sent back home. Since physical capital can be scarce in underdeveloped countries, remittances can provide the resources to drastically increase productivity. Instead of viewing emigration as a loss to the home country, it would be better described as a substitute. Different combinations of factors of production may well increase productivity.

The third and final assumption is that brain drain occurs  in a vacuum. It doesn’t. First, being able to leave one’s home country entices many to become educated in the first place, because they think education would be a worthwhile investment. Absent the ability to pursue better lives, people are less likely to invest in themselves. Increasing the barriers to immigration and emigration may tear down the interdependent relationship between education and reward. Viewing immigration over a longer period may undermine some of the supposed negative effects of a lax immigration policy. Circular migration exists to some extent, and giving people access to better-run governments can improve political norms. If people are a valuable resource, and people express that they would be willing to return if violence or corruption decreases, this becomes a powerful incentive to reform and improve governments. Frederic Docquier and Hillel Rapoport summarize their research on the development, “the conditions under which a country is gaining or losing are not a matter of fate; to a large extent, they depend on the public policies adopted in the receiving and sending countries.” The existence of migration does not mean that not-yet-developed countries will be losers. Cape Verde, as an example, is open to international migration, yet much of their human capital creation takes place because of open migration. Closing immigration to combat brain drain may end up creating the exact opposite of its intended effect.

The term brain drain, often when used in conversation, assumes too much. It isn’t tenable to assume that countries that prevent emigration, or the people stuck within, would primarily benefit from restricting peoples’ options. The intellectual short-cut assumed by those against immigration imagines a tension between collective and individual good that may not exist. Instead of blaming people for leaving, one should wonder why people want to.