I spend a little time now and then surfing economics discussion forums. Yesterday I contributed to an interesting thread about the brain drain. The original post was lamenting the awful impact of the brain drain on developing countries. Normally I would have responded to point out the weaknesses in that argument, and to try and show why the movement of skilled labor does not have negative effects on developing countries. However, I was distracted. I was more intrigued by the set of policies proposed by the original poster. These policies were:
Grants to pay the cost of return for skilled workers.
Top-up pay to make salaries more attractive and draw skilled workers back.
Subsidized loans for returning workers to start a business or build a home.
I hope the original poster did not see these policies in any list of pending legislation somewhere. My guess is that such legislation would be ineffective at best and destructive at worst. A quick analysis of each exposes the shortcomings.
1-Grants to pay the cost of return for skilled workers.
This implies that the cost of moving is what stops skilled workers from returning. It ignores the factors that caused workers to leave in the first place. If someone chooses to emigrate, it is strange to think that they would opt to return merely because their moving expenses will be covered. It is a safe assumption that moving expenses are the least of the reasons a skilled emigre would not return to their country of origin.
2-Top-up pay to make salaries more attractive.
Where would the funds for this policy come from? What reason is there to think that returning workers would create enough value to justify such top-ups? The fact that they left in the first place is strong evidence that the ability to create value in their home country is limited. Also, this policy is ripe for abuse. Many a corrupt, authoritarian ruler would love to be able to hand out top-up pay to "skilled workers". A better sounding program for gaining political support could nary be found.
3-Subsidized loans for returning workers to start a business or build a home.
Again, this ignores a fairly obvious question. Why didn't these workers decide to emigrate instead of starting a business and building a home? What caused them to think a business in their country of origin was a bad idea, and how does this policy do anything to address those causes? A cheap loan is no good if infrastructure is lacking, red tape is stifling, corruption is rampant, or property rights are insecure. Additionally, much like the proposal above, this is a kleptocrats dream policy. What better way to increase personal power than to hand out cheap money? Prospective supporters would line up at the trough.
Another proposal I've seen is to limit migration from developed countries to developing countries. The argument for this is that citizens of wealthy countries should not take work away from locals in poorer countries. This is another example of the lump of labor fallacy. There is not a fixed number of jobs. A talented Canadian architect who moves to Laos creates opportunities for many Laotians. An expert electrical engineer from Belgium who moves to Congo creates benefits and opportunities for many Congolese. Finally, this policy assumes that it is morally acceptable to deny liberties to one person that are available to another. When put this way, it is predictably hard to find anyone who defends such a proposal.
What's the take-away? The brain drain isn't a problem. Even if it was, drawing people back is not the solution. Developing countries do not dysfunctional institutions because skilled workers leave. Skilled workers leave because there are dysfunctional institutions.
Grants to pay the cost of return for skilled workers.
Top-up pay to make salaries more attractive and draw skilled workers back.
Subsidized loans for returning workers to start a business or build a home.
I hope the original poster did not see these policies in any list of pending legislation somewhere. My guess is that such legislation would be ineffective at best and destructive at worst. A quick analysis of each exposes the shortcomings.
1-Grants to pay the cost of return for skilled workers.
This implies that the cost of moving is what stops skilled workers from returning. It ignores the factors that caused workers to leave in the first place. If someone chooses to emigrate, it is strange to think that they would opt to return merely because their moving expenses will be covered. It is a safe assumption that moving expenses are the least of the reasons a skilled emigre would not return to their country of origin.
2-Top-up pay to make salaries more attractive.
Where would the funds for this policy come from? What reason is there to think that returning workers would create enough value to justify such top-ups? The fact that they left in the first place is strong evidence that the ability to create value in their home country is limited. Also, this policy is ripe for abuse. Many a corrupt, authoritarian ruler would love to be able to hand out top-up pay to "skilled workers". A better sounding program for gaining political support could nary be found.
3-Subsidized loans for returning workers to start a business or build a home.
Again, this ignores a fairly obvious question. Why didn't these workers decide to emigrate instead of starting a business and building a home? What caused them to think a business in their country of origin was a bad idea, and how does this policy do anything to address those causes? A cheap loan is no good if infrastructure is lacking, red tape is stifling, corruption is rampant, or property rights are insecure. Additionally, much like the proposal above, this is a kleptocrats dream policy. What better way to increase personal power than to hand out cheap money? Prospective supporters would line up at the trough.
Another proposal I've seen is to limit migration from developed countries to developing countries. The argument for this is that citizens of wealthy countries should not take work away from locals in poorer countries. This is another example of the lump of labor fallacy. There is not a fixed number of jobs. A talented Canadian architect who moves to Laos creates opportunities for many Laotians. An expert electrical engineer from Belgium who moves to Congo creates benefits and opportunities for many Congolese. Finally, this policy assumes that it is morally acceptable to deny liberties to one person that are available to another. When put this way, it is predictably hard to find anyone who defends such a proposal.
What's the take-away? The brain drain isn't a problem. Even if it was, drawing people back is not the solution. Developing countries do not dysfunctional institutions because skilled workers leave. Skilled workers leave because there are dysfunctional institutions.
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