Brain Drain Is Economic Development

It may be hard to see unless you shift your focus from places to people, but both destination and source can benefit from "brain drain."
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It may be hard to see unless you shift your focus from places to people, but both destination and source can benefit from "brain drain."
The Dublin skyline. (Photo: David Soanes/Shutterstock)

The Dublin skyline. (Photo: David Soanes/Shutterstock)

If one shifts focus from places to people, migration is economic development. In the United States, "Big cities Are Dominating the Recovery, Leaving the Rest of America Behind." Moving to a big city increases the chances of finding a job. Moving to a big city increases the wage earned at the job. For the migrant, income goes up. What about the place left behind? Much ado about Cuban doctor brain drain to the United States:

Cuba has been using its medical corps as the nation’s main source of revenue and soft power for many years. The country has one of the highest numbers of doctors per capita in the world and offers medical scholarships to hundreds of disadvantaged international students each year, and some have been from the United States. According to Cuban government figures, more than 440,000 of the island’s 11 million citizens are employed in the health sector.

Havana gets subsidized oil from Venezuela and money from several other countries in exchange for medical services. This year, according to the state-run newspaper Granma, the government expects to make $8.2 billion from its medical workers overseas. The vast majority, just under 46,000, are posted in Latin America and the Caribbean. A few thousand are in 32 African countries.

Medical professionals, like most Cubans, earn meager wages. Earlier this year, the government raised the salaries of medical workers. Doctors now earn about $60 per month, while nurses make nearly $40. Overseas postings allow these health care workers to earn significantly more. Doctors in Brazil, for example, are making about $1,200 per month.

Cuban doctors will make a lot more money in the United States. But Cuba can't benefit from such income gains. Cuban doctors working in the U.S. cannot be traded to Venezuela for oil. In a place-centric view, migration is a zero-sum game.

I disagree. Both destination and source can benefit from "brain drain." The move to improve (i.e. migration is economic development) connects two places. "Dublin: The Tiger’s Roaring Tech Hub":

You can read Dublin’s past in its tangled streets and dark pubs, alive with the sound of fiddles and tourists trailing the erudite alcoholism of James Joyce and Brendan Behan. The Pogues invoked it in a version of the folk song “Dirty Old Town”. But now a digital cluster is emerging, helped by the presence of big US tech groups and events such as the annual Web Summit, which drew more than 20,000 visitors this month. ...

... A history of emigration has forged strong ties to the US that are useful for wooing investors and customers. The presence of Google and Facebook’s European headquarters at the Grand Canal Dock, lured by the government’s light-touch approach to taxation, has been a boost for Dublin’s talent pool if not so much for the rest of Europe’s tax receipts. A bike-friendly city centre and vibrant pub scene are also big draws for a workforce mainly comprising millennials.

"A history of [brain drain] has forged strong ties to the U.S. are useful for wooing investors and customers." Since Ireland's tech tax break became news, I've been thinking about what is driving the "roaring tech hub" of Dublin. I'm skeptical of tax political geography driving the economic geography of talent. In Dublin, a tech company gets English speaking employees connected via historic migration to other English speaking talent markets as well as the geographic mobility dividend that is the European Union. Both a coder from Poland and a start-up in Australia can make the journey with very little visa hassle. All of this was made possible not by a tax break, but Ireland's history of massive brain drain.

Global migration patterns are a leading indicator of global trade patterns. Typically, migration is thought of as a lagging indicator. Unemployment is bad in one place and relatively good in another. That arbitrage explains a lot of migration. A professor at the University of Colorado helping me study for the migration section of my comprehensive exams told me that this variance explained about 80 percent of migration. The pressure for a doctor to move from Cuba to the United States is tremendous. Economic shift happens, people move. People move, trade happens:

Universities are known regional economic catalysts, spinning off jobs and ideas that can become businesses. Increasingly, they are also working directly with companies, including efforts related to exports.

A good example of this new role for universities can be found in Los Angeles where, as part of the Los Angeles Regional Export Council (LARExC), the USC Marshall School of Business and the UCLA Anderson School of Management have created the Export Champions program. This initiative connects MBA student teams with ready-to-export companies in the region during the semester. The students, who typically come to the table with relevant professional experience and foreign language skills, work on a $10,000 marketing strategy for the firm, helping select target markets and even traveling to evaluate potential distributors and clients.

I turn your attention to "The students, who typically come to the table with relevant professional experience and foreign language skills." A globally renowned MBA program will attract students from around the world. Such matriculation is understood as brain drain in the homeland. Upon graduation, many of the former students will leave the region. In Los Angeles, this is understood as brain drain. What's a place to do? Talent is making money hand over fist. Everyplace is dying.