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When Leaving Home Is Good for the Hometown

Brain drain benefits India.
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Mumbai, India. (Photo: KishoreJ/Shutterstock)

Mumbai, India. (Photo: KishoreJ/Shutterstock)

Brain drain is economic development. Wherever you find residential retention, you find poverty. I take a polemic position on out-migration. For the migrant, leaving home is unequivocally good. Thus, I advocate for the geographically mobile. How could the place left behind also benefit? Celebrating brain drain for domestic firms:

The international growth of emerging market firms benefits emerging economies by improving their balance of trade, increasing foreign exchange reserves, and strengthening the home currency. These benefits suggest several implications of our findings for policy makers. First, policy makers in emerging economies often believe that allowing citizens to study and work in developed markets results in brain drain and is thus to be discouraged. Exit restrictions and emigration controls have been mooted as potential policy instruments. For instance, the Migration Information Source (2005) states: “That something needs to be done about brain drain is not in question. G8 leaders have discussed the issue, the UK's Commission on Africa calls for better responses, and unions, development agencies, and other civil-society groups are demanding action.” Our findings, however, suggest that there can be benefits to allowing, and even encouraging, citizens from emerging economies to study and work in developed markets. Specifically, we show that citizens with education and work experience from developed markets offer emerging market firms access to a pool of leaders with developed market knowledge that these firms can learn from and who can drive their growth in developed markets. Accordingly, we argue that policy makers in emerging economies should be careful about placing obstacles in the paths of their citizens who seek to study or work in developed markets. Indeed, they might even encourage their citizens to study in developed markets, for instance, by providing them with scholarships, increasing the availability of loans, and removing foreign exchange restrictions on spending in developed markets.

From the perspective of place (i.e. India) self-interest, the authors discourage the impediment of out-migration. In some cases, encouraging brain drain might be good policy. Via this exodus, Indian firms gain knowledge of developed markets. Exports increase. Both migrants and home country reap economic development.

The paper offers a few caveats. Perhaps India is a special case. Not all diasporas network with the same efficacy. More eye-opening to me, "Conversely, we show that direct learning is more important than indirect learning for the international growth of developed market firms in other developed markets." The benefits of brain drain appear to run in one direction. At least, losing talent isn't the only way to gain knowledge about a new market.

Looking at only the domestic market of the United States, a developed country, two brain drain scenarios exist. For a developed tech market such as Boston, little would be gained from losing talent to Silicon Valley. For a developing tech market such as Minneapolis, much could be gained from losing talent to Silicon Valley or Boston.

Similarly, talent just graduating from college is relatively undeveloped. The migration from a place of talent production to a talent refinery such as New York City could benefit both migrant and source town, as well as the destination. Regardless, the hometown girl gains knowledge in a global city that she was unable to glean where she grew up. For the place left behind, it must figure out how to tap that experience and promote its own economic development.