1

Introduction
This paper provides a critical overview of the existing body of literature on migration and
mobility of highly-skilled persons, commonly referred to as brain drain. It should be noted that
the phenomenon has taken on different connotations over time, which is testament to its fluid
nature. It intends to identify the lapses that economy on the wider range endures affecting
directly by this phenomenon and to explore if the phenomenon has only negative limitation or it
could impact positively in any manner. The nationalist and internationalist perspectives have
been exploredby looking through the lens of gain and loss for country as well as differentiated
effects of the phenomenon for developed and developing countries. It will become apparent that
migration of skilled persons, within the broader framework of the mobility of workers, is a
phenomenon which is not limited to social mobilization but it also has economic implications.

Literature Review
The first wave of economics papers on the brain drain dates back to the late 1960s and
mainly consists of welfare analyses in standard trade-theoretic frameworks.Grubel and Scott
identified that developed and developing country benefit in the field of science and
technology.PierpaoloGiannocolo1, found that with heavy outflow of qualified workers the
sending country effect socially as well as economically2.These early contributions generally
concluded that the impact of the brain drain on source countries was essentially neutral and
emphasized the benefits of free intellectual migration to the world economy. This was explained
and emphasized by the fact that high-skill emigrants often leave some of their assets in their
1Pierpaolo, Giannoccolo, The Brain Drain: A Survey of the Literature, Journal of Statistics, Working Series, University of
Bolonga, Paper series, (2004):5.

2 Ibid.

country of origin, which complements remaining high and low-skill labor 3as well as sending
home remittances. This and other positive feedbacks compensate sending countries for any real
loss the brain drain may cause. From a broader perspective, these studies emphasize high-skill
migrants contribution to knowledge, an international public good, and disregard "outdated"
claims on the alleged losses for developing countries.4The second wave appeared less than a
decade later. Under the leadership of JagdishBhagwati, a series of alternative models were
developed in the 1970s to explore the welfare consequences of the brain drain in various
institutional settings. Domestic labor markets rigidities, informational imperfections, as well as
fiscal and other types of externalities were introduced to emphasize the negative consequences of
the brain drain for those left behind. High-skill emigration was viewed as contributing to
increased inequality at the international level, with rich countries becoming richer at the
expenses of poor countries. Reviews of most of the scholars concluded that the term brain drain
is not beneficial for the native country, while host country gain benefits from the inflow of
qualified skilled workers.

Finally, there has been a third wave of interest since the late 1990s till date. However in
mid 1990s a new trend termed as new economics of brain drain emerged with rapid advancement
in globalization and growth in information and communications technologies.5 It argued that
under such circumstances, migration of professionals from developing countries may be blessing

3Berry, R A. & Soligo, R Some Welfare Aspects of International Migration," Journal of Political Economy, Volume 77, no.
5(1969):9.

4Docquier et.al, Globalization, Brain Drain and Development,Institute for the Study of LaborGermany, Volume 14 (2011):6.
5 Nadia Sajjad, Causes and Solutions to Intellectual Brain Drain in Pakistan,Dialogue , Vol. 6, Issue 1, (1992):31.

and the potential gains could be higher than costs. Based on the fact that the brain drain has both
detrimental and beneficial effects for origin countries, its objective was to characterize the
conditions under which the net effect on development and welfare is positive or
negative.Induction of the new researches has expanded the horizons for determining the impact
of brain drain focusing not only the negative implication of unjust economic system but also how
new school of thought perceive it as a global phenomenon in global economic system.

Globalization: Interpenetrating and Interdependency

Giddens defines globalization as the intensification of worldwide social relations which link
distant localities in such a way that Local happenings are shaped by events occurring many miles
away and vice versa.6 Thus, globalization simply reflects a growing interdependency of the
world society. The implication of such view of globalization as a process suggests the creation of
a world society in which the image of nation-state and national identity may give way to worldwide social interaction.
Appadurai, in his essay Disjunctive and Difference in the Global Cultural Economy
extensively detailed five frameworks under which idea of globalization could be discussed: (a)
Finance, (b) technology (c) ideas (d) people (e) information.

Although, Appadurai in his

Eurocentric view heavily subsumed globalization under economic idea, inclusion of people and
information reveal how globalization could be an instrument of economic exploitation, cultural
imperialism, flight of human resources to an established ideal Euro-American society, and
underutilization of potentiality of un-integrated part of uneven global development. Where
6Giddens. (eds.) On The Edge. Living with global capitalism, (London: Vintage: 2000), 28.
7Olufemi, Globalization, Migration And Brain Drain (OlabisiOnabanjo University, Nigeria: 2007), 13.

time-space compression perspective of globalization aids in providing essential technological

requirement to perpetually subdue opposing forces tactfully, is based on the phenomenon of
interdependence, at the same time the imperialist perspective of globalization, interpenetration of
developing states by developed ones marks it as another phenomenon looking into it through the
aspect of brain drain.

Internationalist and Nationalist Approaches

The existing literature on brain drain examines the phenomenon through two major perspectives,
internationalist perspective and nationalist perspective. In the following year when the concept of
brain drain was first established, the prime emphasis of study was the mobility of labor from
underdeveloped to developed countries that focused the attention on the loss of resources that
developing countries endure as a result of intellectual emigration. In other words, this approach,
also known as nationalist8, focuses more on the needs of individual countries.
There is an alternate viewpoint of some economists of the Western world, who present an
internationalist approach to understand the phenomenon of brain drain.According to this
approach, there is nothing wrong with the migration of professionals and skilled manpower
among countries, and strengthen their viewpoint on the basis of three assumptions. First, the
world consists of nation states, where all people are paid on the basis of their contribution
towards the nations output. Second, there are no externalities from work so that a skilled person
provides no benefits to society other than for which payment is received. And, finally, all
educational expenses are borne privately by the parents only.9

8Levhari, D. and D. Patinkin, "The role of money in a simple growth model,"American Economic Review, vol. 58, no. 3
(1968):44.

Brain Circulation:Circulationist Perspective

The circulationalist approach positions itself as a major revision of the classical nationalist
perspective, and incorporates a greater segmentation of flows and a consequent redefinition of
their effects. Brain circulation cold be describes as the phenomenon that observes the
reciprocation of intellectuals through immigration that balances the emigration of intellectual
brains from the country
The works of Gaillard and Gaillard have focused on such circulatory flows, described as being
polycentric, temporary, subject to exchange phenomena, and characterized by return flows of
talent. The observations which strengthen this position are the emergence of new destinations for
skilled migration flows,the presence of brain exchange between countries; the actions of
multinationals in transferring personnel to various parts of the globe, the increase in temporary
migration flows; andthe increase in return migration flows. 10 Brain circulation in a globalized
political economic system is marked as the interdependence of states being part of international
globalized systems to avail the resources in return of emigration of intellectuals as cross cultural
flight of intellectual capital.

War for talent

We will see that the issue of the effects of brain drain has long been the subject of economics
literature; this is because, especially according to endogenous theories of growth, the endowment
of skilled human capital is one of the determinants of the economic growth and development of a
9JavedIqbalShah , Brain Drain: Why People Leave their Motherland,Journal of Managerial Sciences,
vol. 5, no.2 (2011):37.

10Emmanuel Gaillard, Berthold Goldman, John Savage (eds.),Fouchard, Gaillard, Goldman on International
Commercial Arbitration(Netherlands, Kluwer Law Internationa, 1999): 56.

country. It is apparent that intellectual capital flight, within the broader framework of the
mobility of workers, is not only linked to social aspects of migration but also linked to the
economic factor. It is no coincidence that the term war for talent has recently emerged,
referring to the contest for skilled human capital being fought between developed economies and
emerging economies in the realization that, within a knowledge-based society, the presence of
talent becomes a primary factor of competitiveness.
Economic approach and impact of brain drain
Studies under the auspices of the nationalist perspective or standard view do not confine
themselves to describing and analyzing migration phenomena as movements that are
unidirectional, permanent and directed away from the periphery to the core, but also tend to
formulate precise hypotheses on the effects of brain drain, often perceived as being negative.
Docquier and Rapoport revisit 40 years of economic research in a study conducted in 2011 and
identified identifying three generations of studies based on the different economic frameworks.
The overview of which is conclude below through the economic approach.

The first generation: The first generation analysis correspond to the early pioneering research
of Grubel and Scott, according to which skilled migration flows do not have negative effects
because the negative externalities produced by the emigration of skilled personnel are limited
and more than compensated for by migrants remittances. Underlying these studies is the
neoclassical theory of growth, according to which the labor force is a factor of production
withdiminishing marginal productivity.11As a result of which the loss of units of labor force does
11Mankiw, et al., A Contribution to the Empirics of Economic Growth, Quarterly Journal of Economics, vol 107, no. 407,
(1992):137.

not affect the constant return to scale of the production function, but rather, reduces
unemployment and increases the capital labor ratio.12

The second generation:The second generation of studies, which developed from the
1970sonwards, argued that skilled migration produces adverse effects for the countries from
which theflows originate, generating a reduction in the level of human capital, and a gap in social
andprivate returns to education, as well as negative fiscal externalities. The economy of the
country oforigin thus suffers a failed return on investment in education and is not able to benefit
from thepositive externalities generated by the presence of a skilled labor force.13

The third generation: The third generation of studies is based on endogenous growth theory,
according to which technology and knowledge are endogenous variables that determine the
functions of productivity and hence growth. More specifically, human capital is considered a
form of built-in, excludable and rival knowledge that determines the possibility of obtaining an
edge over the competition. The importance of human capital is thus widely recognized, even if in
this current of studies there is no agreement on the nature of the effects of brain drain. Some
authors argue that brain drain causes a reduction in the rate of growth of per capita income, and,
thus, in levels of prosperity. Others, as previously noted, identify benefits in the prospect of
migration, such as an increase in the number of educated people in the population remaining in
their home country and a rise in investment in education14. However, the latter may contribute to
a reduction of investment in other areas, such as infrastructure, thereby negating the beneficial
12 Becker et al., "How Large is the Brain Drain from Italy," CESifo Working Paper Seriesvol. 839, (2003):14.
13Commander et al., The brain drain: curse or boon? A survey of the literature, in Challenges to Globalization, (Chicago,
Chicago University Press, 2004):128.

effect of a better skilled workforce. This is one of the forms of brain waste caused by
migration.

Summarizing, all three approaches targeting the human capital have not come to any consensus
regarding the impact of brain drain on economic activity although they are more likely to
identify negative outcomes of the phenomenon.

Implications and Policies

I: Implications for Developing Countries
As a result of intellectual flight from the home country to the host country for greener pastures in
the developed countries, the output in those areas of work and sectors from where these people
left, decreases. According to Dr. Fitzhugh Mullan of George Washington University every doctor
who leaves a poor nation leaves a hole that cannot be filled. He says, That creates enormous
problems for the source country and the educational and health leaders in the country who are
attempting to provide healers.Brain drain does not remain confined to decline in output in
quantitative terms; it also results into production of poor quality of goods and services. In most
of the developing countries, citizens are under obligation to pay taxes to finance the skill
building courses and produce hi-tech and highly educated human resources. It is envisaged that
when these people would work in factories, laboratories, offices and fields, they would improve
and enhance the productivity. However as a result of human capital flight of skilled workers to
more developed systems impacts the productivity growth rate of the respective sectors. This
phenomenon results into a great loss for the developing country. This loss of dream for economic
14Beine et al. Brain drain and economic growth: theory and evidence, in the Journal of Development Economics, vol. 64, no.
1,(2001): 275-289.

development and loss of national and collective faith in their youth becomes even more
heartrending, when it is realized that the highly skilled and educated lot who migrated to a
developed country for better future for them were those, whose education and skill-building
efforts were financed by taxing the meager earnings of common people. The overall financial
effects of such brain drain are calculated by measuring the value of the income earned by the
migrants in their new country. This amount is considered to be the inequitable transfer of the
third world resources to the first world rich countries.

II- Implications for Developed Countries

Most of the effects and implications of brain drain for the developed countries have been
positive, especially in the area of economic development. Developed countries get hold of highly
skilled and educated emigrants free of any sizeable expenditure on their education. Mostly, it has
been observed that the educated emigrants from the developing countries prove to be more lawabiding, disciplined and productive. All these attributes benefit the developed countries in the
field of economic development as well. When developed and economically strong country
encourages brain drain of highly skilled and educated people from the developing countries,
these emigrants also pay back to the economy of the host country in form of increased receipts of
taxes, higher output in factories, organizations and farms, and smoother adjustment of these
people in their adopted country. The only way to deal to deal with the situation is to frame out
the policies to encounter the harmful aspects of brain drain and design a policy tool that could
even out the incoming and outgoing capital flights. Also, the fact that the effects of brain drain
vary according to the field of activity and level of human capital considered within a certain
professional category, requires the channelizing of human capital into requires outgoing and

10

incoming slots so that it could benefit the economic system of the country which has become the
part of globalized economic system.

Policy framework:
The phenomenon of brain drain is heavily influenced by two policy-related aspects. The first
consists of the various policies put in place by various actors in respect of the migration of
skilled persons. The second is the ideological as it were, vision which in some cases underlies
such policies.15In terms of the various actors and policy responses, Lindsay Lowell proposed a
classification scheme which identifies following six types of policies:
Return policies: This group of policies aims to bring about the adoption of measures to
encourage the return of native talent that has fled abroad. It presumes that migrants will have
acquired skills that could be very useful in the country of origin. Incentives can vary in nature,
but tend to involve tax breaks, relaxed citizenship requirements for foreign spouses and children,
or discounted schooling for children of returnees.
Restriction policies: These are measures which involve putting in place barriers to migration,
adopted predominantly by destination countries to control the influx of immigrants. These can be
based on a system of annual quotas, or on special temporary entry programs. One such example
is the J visa system in the US, which allows students and professionals to study or work in the
US for a maximum period of five years.

15SimonaMilioet al., Brain Drain, Brain Exchange and Brain Circulation, (Italy, Aspen Institute Italia, 2013): 227.

11

Recruitment policies: These are policies aimed at attracting expertise, predominantly for two
reasons: on the one hand, they may be policies geared towards filling labor shortages in certain
sectors, whilst on the other they may seek to offset losses in skilled personnel. An example is the
German Green Card, introduced to help attract ICT experts.
Reparation for loss policies: this group of policies aims to compensate countries of origin for
the loss of human capital they have suffered. They are fiscal-type policies that propose the
introduction of taxes to recoup the investment lost through emigration. Such taxes may be levied
on emigrants incomes or on destination countries, as in the case of the tax on brains and other
policy proposals that have never been implemented.
Policies for the resourcing of expatriates: These are policies associated with the so-called
diaspora option and which represent a fundamental shift in perspective in the management of
skilled migration. In this type of policy, brain drain is no longer seen as a necessarily negative
phenomenon, but as a pool of potential that can be tapped into.
Retention policies: These are a set of policies aimed at giving a boost to certain sectors so as to
counteract losses or increase productivity, notwithstanding the flight of talent. Countries can
do this by increasing investment and salary levels and/or improving infrastructure. Indeed, these
strengthening measures can make tapping into emigrant resources through networks more
effective, as illustrated by the example of Bangalore discussed by Saxenian.

In general a mix of these policies are tend to be applied to resolve the scenario of brain
drain, although particular policies seem to characterize certain geographical areas. Indeed, in
Asian countries, measures that link retention policies with industrial development policies tend
to predominate, whilst in South America, there is a greater focus on tapping into the pool of

12

resources abroad with a view to organizing networks of migrants. Finally, in Africa, Central
America and the Caribbean, where there is a considerable shortage of human capital, policies are
aimed at reversing or curbing the brain drain.16
Conclusion
The international and nationalists perspectives analyzing through the trends of three generations
that followed the emergence of phenomenon of brain drain do not reach to the consensus
regarding the negative or positive impact of brain drain in a global system constituted by
different economic systems that include both developed and developing countries. However the
phenomenon of Brain circulation leaps to take over the phenomenon of brain drain in the voyage
of globalized economy. Apart from that, the effects of brain drain vary according to the field of
activity and level of human capital considered within a certain professional category and in a
specific geographic area.
This means that although it may be arguable that brain drain has beneficial effects (both having
regard to advantageous brain drain and to offsetting effects ex post), the main political and
economic actors that manage the processes of development and growth view brain drain as a
problem for the creation of a knowledge-based society and act accordingly. This entails that
certain policies may be brought into play with a view to evening out the numbers of incoming
and outgoing talent.

16 Ibid., 5

13

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