The brain drain

Abstract

The term "brain drain" designates the international transfer of human resources and mainly applies to the migration of relatively highly educated individuals from developing to developed countries. While the brain drain has long been viewed as detrimental to poor country's growth potential, recent economic research has emphasized a number of positive feedback effects and shown that migration prospects may foster human capital formation at origin. The total effect is therefore uncertain. Empirically, the first studies to address this issue point to a strong negative total effect for most developing countries; however, a handful of large, middle-income developing countries seem to experience moderate gains.

Full text

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THE BRAIN DRAIN+
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Frédéric Docquiera and Hillel Rapoportb
a FNRS and IRES, Université Catholique de Louvain
b Department of Economics, Bar-Ilan University, EQUIPPE, Universités de Lille, and Center
for Research and Analysis of Migration (CReAM), University College London
October 2006
A new entry for the New Palgrave Dictionary of Economics (second edition)
Abstract. The term ”brain drain” designates the international transfer of human resources and mainly
applies to the migration of relatively highly educated individuals from developing to developed
countries. While the brain drain has long been viewed as detrimental to poor country’s growth
potential, recent economic research has emphasized a number of positive feedback effects and shown
that migration prospects may foster human capital formation at origin. The total effect is therefore
uncertain. Empirically, the first studies to address this issue point to a strong negative total effect for
most developing countries; however, a handful of large, middle-income developing countries seem to
experience moderate gains.
+ Addresses for correspondence: Frédéric Docquier, IRES, Department of Economics, Université Catholique de
Louvain, 3, Place Montesquieu, B-1348 Louvain-La-Neuve, Belgium. Email: docquier@ires.ucl.ac.be. Hillel
Rapoport: Department of Economics, Bar-Ilan University, 52900 Ramat Gan, Israel. Email:
hillel@mail.biu.ac.il.

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The term ”brain drain” designates the international transfer of resources in the form of human
capital and mainly applies to the migration of relatively highly educated individuals from
developing to developed countries. In the non-academic literature, the term is generally used
in a narrower sense and relates more specifically to the migration of engineers, physicians,
scientists and other very highly skilled professionals with university training. The brain drain
has long been viewed as a serious constraint on poor countries development and is also a
matter of concern for many European countries such as the U.-K., Germany or France, which
have recently seen a significant fraction of their talented workforce emigrate abroad. Recent
comparative data reveal that by 2000 there were 20 millions highly skilled immigrants (i.e.,
foreign-born workers with tertiary education) living in the OECD area, a 70% increase in ten
years against only a 30% increase for unskilled immigrants. These highly-skilled immigrants
come mainly (for two-thirds of them) from developing and transition countries and represent a
third of total immigration to the OECD. The causes of this growing brain drain are well
known. On the supply-side, the globalization of the world economy has strengthened the
tendency for human capital to agglomerate where it is already abundant and contributed to
increase positive self-selection among migrants. And on the demand side, host countries have
gradually introduced quality-selective immigration policies and are now engaged in what
appears as an international competition to attract global talent.
1. How big is the brain drain?
Extending and updating the work of Carrington and Detragiache (1998), Docquier and
Marfouk (2006) recently collected OECD immigration data to construct estimates of
emigration rates by educational attainment (primary, secondary and tertiary schooling) for all
the world countries in 1990 and 2000. Their estimates for the highest education level may be
taken as a brain drain measure. This may seem too broad a definition for the most advanced
countries where the highly educated typically represent about a third of the total workforce
but seems appropriate in the case of developing countries, where this share is on average just
about 5%. Note that due to data constraints, South-South migration is not taken into account
in the Docquier and Marfouk (2006) data set; this can lead to potential under-estimation of the
brain drain for some countries for which other developing countries are significant
destinations. On the other hand, the very definition of immigrants as foreign-born workers
does not account for whether education has been acquired in the home or in the host country;
this can lead to potential over-estimation of the brain drain as well as to possible spurious

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cross-country variation in skilled emigration rates (Rosenzweig, 2005). In an attempt to solve
this problem, Beine et al. (2006a) used age of entry as a proxy for where education has been
acquired and proposed alternative brain drain estimates excluding people who immigrated
before a given age (12, 18 and 22); their results show country rankings by degree of brain
drain intensity only mildly affected by the correction and extremely high correlations between
corrected and uncorrected estimates.
Keeping this in mind, one can use a simple multiplicative decomposition of the brain drain:
Skilled emigration rate = Average emigration rate x Schooling gap. The first component is
the ratio of emigrants to natives (residents + emigrants) and reflects the sending country’s
openness to emigration; the second component is the ratio of skilled to average emigration
rate. Table 1 summarizes the data for different country groups in 2000. Countries are grouped
according to demographic size, income per capita (using the World Bank classification), and
region. Unsurprisingly, we observe a decreasing relationship between emigration rates and
country size, with average skilled emigration rates about seven times higher in small countries
than in large countries. Regarding income groups, the highest emigration rates are observed in
middle-income countries, where people have both the incentives and means to emigrate.
Regarding the regional distribution of the brain drain, the most affected regions are the
Caribbean and the Pacific islands, Sub-Saharan Africa (where the schooling gap is
exceptionally high), and Central America.

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Table 1. Data by country group in 2000
Skilled emig. rate Average emig. rate Schooling gap
By country size
Large countries (Pop>25 million) 4.1% 1.3% 3.144
Upper-Middle (25>Pop>10) 8.8% 3.1% 2.839
Lower-Middle (10>Pop>2.5) 13.5% 5.8% 2.338
Small countries (Pop<2.5) 27.5% 10.3% 2.666
By income group
High Income countries 3.5% 2.8% 1.238
Upper-Middle Income countries 7.9% 4.2% 1.867
Lower-Middle Income countries 7.6% 3.2% 2.383
Low Income countries 6.1% 0.5% 12.120
By region
AMERICA 3.3% 3.3% 1.002
USA and Canada 0.9% 0.8% 1.127
Caribbean 42.8% 15.3% 2.807
Central America 16.9% 11.9% 1.418
South America 5.1% 1.6% 3.219
EUROPE 7.0% 4.1% 1.717
Eastern Europe 4.3% 2.2% 1.930
Rest of Europe 8.6% 5.2% 1.637
incl. EU15 8.1% 4.8% 1.685
AFRICA 10.4% 1.5% 7.031
Northern Africa 7.3% 2.9% 2.489
Sub-Saharan Africa 13.1% 1.0% 13.287
ASIA 5.5% 0.8% 7.123
Eastern Asia 3.9% 0.5% 8.544
South-central Asia 5.3% 0.5% 10.030
South-eastern Asia 9.8% 1.6% 5.980
Near and Middle East 6.9% 3.5% 1.937
OCEANIA 6.8% 4.3% 1.578
Australia and New Zealand 5.4% 3.7% 1.479
Other Pacific countries 48.7% 7.6% 6.391
Source: Docquier and Marfouk (2006)
It is clear that the magnitude of the brain drain has increased dramatically over the last few
decades. However, in terms of intensity (or emigration rates), the picture is less clear as one
must factor in the general progress in educational attainments observed all over the world.
Figure 1 presents the skilled emigration rates by region computed by Defoort (2006) using a
long run perspective. Focusing on the six major destination countries (USA, Canada,
Australia, Germany, UK and France), she computed skilled emigration rates from 1975 to
2000 (one observation every 5 years). One can see that some regions experienced an increase
in the intensity of the brain drain (especially Central America and Sub Saharan Africa) while
significant decreases were observed in others (notably the Middle East and Northern Africa).

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Figure 1. Long-run trends in skilled emigration
2. From brain drain to brain gain?
It is certainly a good thing for rich countries to integrate a skilled and talented workforce, and
the move is also worthwhile (at least ex ante) from the perspective of the individual migrant.
However, the social return to human capital is likely to exceed its private return given the
many externalities (fiscal, technological, and Lucas-type) involved. This externality argument
is central in the early brain drain economic literature (Bhagwati and Hamada, 1974), which
emphasized that the brain drain entails significant losses for those left behind and contributes
to increase inequality at the world level. Another negative aspect of the brain drain is that it
can induce shortages of manpower in certain activities, for example when engineers or health
professionals emigrate in disproportionately large numbers, thus undermining the ability of
the origin country to adopt new technologies or deal with health crises. This can be reinforced
by governments distorting the provision of public education away from general (portable)
skills when the graduates leave the country, with the country ending up educating too few
nurses, doctors, or engineers, and too many lawyers (Poutvaara, 2004). The argument,
however, can be reversed as the prospect for migration may create a bias in the opposite
direction (see Lucas (2005) for an illuminating analysis of Philippines high education market).
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
1975 1980 1985 1990 1995 2000
Central America
Sub-Saharan Africa
Northern Africa
Eastern Europe
South America
Middle East
South-Cent Asia
Eastern Asia
South-East Asia

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The prospect of migration can also impact on the very decision as to whether to study. When
education is a passport to emigration, migration prospects create additional incentives to
invest in human capital; if migration is probabilistic in that people are uncertain about their
chances of future migration when they make education decisions, then under certain
circumstances described in a series of recent theoretical papers (e.g., Mountford, 1997, Beine
et al., 2001), this can be turned into a gain for the source country. This has been confirmed
empirically by Beine et al. (2006b), who found a positive and significant effect of migration
prospects on human capital formation in a cross-section of 127 developing countries. From
the latter’s perspective, however, what matters is not how many of their native-born engage in
higher education, but how many remain at home. To estimate country-specific net effects,
Beine et al. (2006b) used counterfactual simulations and found that countries combining
relatively low levels of human capital and low skilled emigration rates are likely to experience
a net gain. There appears to be more losers than winners; more importantly, the former incur
substantial losses while the latter exhibit only small gains. The situation of many small
African and Central American countries appears extremely worrisome. In contrast, the largest
developing countries all seem to experience moderate gains.
3. Feedback effects
Remittances. The literature on migrants’ remittances shows that the two main motivations to
remit are altruism, on the one hand, and exchange, on the other hand (Rapoport and Docquier,
2006). Altruism is primarily directed towards one's immediate family, while remittances
motivated by exchange pay for services such as taking care of the migrant's assets or relatives
at home. Such transfers are typically observed in case of a temporary migration and signal the
migrants' intention to return. It is therefore a priori unclear whether educated migrants remit
more than their uneducated compatriots; the former may remit more to meet their implicit
commitment to reimburse the family for funding of education investments (and, in addition,
they have a higher income potential), but on the other hand, they tend to emigrate with family,
and on a more permanent basis. Indeed, at an aggregate level, Faini (2006) finds that brain
drain migration (as measured by the proportion of skilled among emigrants) is associated to
lower remittance inflows.
Return migration and brain circulation. Return migration is seldom among the highly
educated unless sustained growth precedes return. For example, less than a fifth of Taiwanese
and Korean PhDs who graduated from US universities in the 1970s in the fields of Science

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and Engineering returned to Taiwan or Korea, a proportion that rose to two-thirds in the
course of the 1990s, after two decades of impressive growth in these countries. The figures for
Chinese and Indian PhDs graduating from US universities in the same fields during the 1990s
are fairly identical to what they were for Taiwan or Korea 20 years ago (OECD, 2002). These
numbers suggest that return skilled migration is more a consequence than a trigger of growth.
However, a recent survey conducted among 225 Indian software firms showed clear signs of
brain circulation, with 30-40 per cent of the higher-level employees have relevant work
experience in a developed country (Commander et al., 2004).
Diaspora externalities. A large sociological literature emphasizes the potential for skilled
migrants to reduce transaction and other types of information costs and thus facilitate trade,
FDI and technology transfers between their host and home countries. This has first been
confirmed in the field of international trade (Gould, 1994, Head and Ries, 1998, Rauch and
Casella, 2003). Regarding FDI, Kugler and Rapoport (2006) used U.S. data on immigration
and FDI outflows and found that past skilled immigration significantly increases a country’s
chances to attract FDI in the subsequent period. These results complement recent case-studies
of the software industry showing that skilled migrants take an active part in the creation of
business networks which lead to FDI deployment in their home country (Arora and
Gambardella, 2005).
4. Conclusion
The number of skilled migrants from poor to rich countries has increased dramatically over
the last decades. In the face of rising wage differentials and of diverging demographic
structures between rich and poor countries, this tendency is likely to be confirmed in the
future. While the brain drain has long been viewed as detrimental to poor country’s growth
potential, recent economic research has emphasized that alongside positive feedback effects
arising from skilled migrants’ participation to business networks, one also has to consider the
effect of migration prospects on human capital building in source countries. This new
literature suggests that a limited degree of skilled emigration could be beneficial for growth
and development. Empirical research shows that this is indeed the case for a limited number
of large, intermediate-income developing countries. For the vast majority of poor and small
developing countries, however, current skilled emigration rates are most certainly well
beyond any sustainable threshold level of brain drain.

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