Countries that export skilled staff do not always lose out

When I left South Africa almost 10 years ago I took my education and skills with me.     Family, friends and business associates lamented how I was adding to the ‘brain drain’, the flow of skilled individuals to foreign climes.   Around the world you will hear similar stories of woe – from Europe to America, China to Australia, Africa to New Zealand – developed and developing countries all worry about losing their valuable skills. How damaging is the brain drain and how concerned should New Zealand be about dipping into the skill coffers of the developing world?

While we are painfully aware of the flow of Kiwis to Australia, our country is the destination for far more graduates than leave our shores.   Indeed, New Zealand enjoys a net brain gain from the international flows of migrants. During the 2000s the inflow of graduates to New Zealand exceeded the outflow by an average of 13,000 each year.   This equates to adding few more Auckland Universities to our tertiary education system.

New Zealand is heavily dependent on graduates from the developing world to fill skilled roles.   Indeed, five of the six top source countries for New Zealand’s skilled migrant category are developing countries. Together South Africa, India, Philippines, China and Fiji account for more than half of New Zealand’s skilled migrants.

Poorer countries invest huge amounts of their painfully scarce resources into each university graduate – only to watch many of them emigrate to richer places. In parts of sub-Saharan Africa and Central America more than half of all university graduates migrate to developed countries.

However, the perception that the brain drain is a simple transaction in which the receiving country gains and the donor country loses is incomplete, if not wrong.   There is a growing school of thought that the flow of benefits is not solely in one direction. Studies from many parts of the world have shown that donor countries on balance actually benefit from the so-called brain drain.

The most obvious way in which migrants compensate the donor country is through remittances.   Workers from developing countries remitted a total of $325 billion in 2010, according to the World Bank. Remittances are a vital source of income to households in the Pacific countries with remittances accounting for more than a third of GDP in Tonga and a quarter in Samoa.   Workers' remittances in Latin America and the Caribbean are three times as large as aggregate foreign aid and larger than export proceeds. Worldwide remittances are larger than all foreign aid combined.

The Economist newspaper reports on a study that shows that Ghanaian migrants transfer enough back to their home country to cover the amount spent on educating them several times over.     

Exports from the source country also tend to increase following the departure of migrants.   New migrants create a demand for products produced in their home country which they miss in their new country.   They are also open up new trade channels with the connections they make in their new home.

There are also less obvious benefits of the brain drain.   The prospect of being accepted into a wealthy country encourages people in poor countries to acquire higher qualifications. Some then decide not to migrate after all.

Others spend several years abroad but then return home with new skills and new contacts. The OECD notes that partnerships between sending and receiving countries encourage repatriation of skills and knowledge which results in a brain circulation. Diaspora networks play a crucial role, as shown by the start-up of IT companies in India by migrants that have returned from Silicon Valley.

The OECD observes that the impact of skilled individuals leaving their home country is not always as damaging in the short run as may appear. Poor infrastructure in the home country often discourages people from working in the sectors for which they have been trained: nurses that leave a poor country, for example, are often networking in the health sector when they emigrate.

The World Bank estimates that an increase in migrants that would raise the work force in high-income countries by three percent by 2025 could increase global real income by 0.6percent, or $356 billion. Oxford migration experts Professor Ian Golden and Geoffrey Cameron believe that ‘migration is the most effective tool yet devised for reducing global poverty.’   It is up to us to ensure that source countries in the developing world get the maximum benefit from their skill exports to New Zealand by creating strong trade and cultural linkages with those countries.

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