Friday, May 27, 2011

Brain Drain Issue Overblown?

I didn’t comment on the World Bank report on the issue of Brain Drain in Malaysia because it didn’t seem necessary. Apart from the weaknesses in the methodology used, it really didn’t say anything more than what most all know or suspect. That brain drain can be a problem everyone knows or think they know, and the causes aren’t all that hard to figure out anyway.

Now here comes a dissenting view from, of all people, a World Bank economist:

Worrying Too Much about Brain Drain?

Brain drain worries policymakers around the world. For example, a search today in Google News gives a host of stories in the past month alone concerning efforts by universities in Vietnam to stop brain drain, demands for wage increases to stop the brain drain of doctors in Pakistan, claims that Malaysia’s brain drain hinders its economic progress, efforts to stem brain drain in Jamaica, a plea to “stop the brain drain” in Cyprus, and even fears of massive brain drain from the state of New York.

But does high-skilled emigration really pose such a threat? The last five years has seen a surge in empirical research on the subject, which John Gibson and I use to answer eight key questions about brain drain in a paper forthcoming in the Journal of Economic Perspectives and now out in the World Bank working paper series...

...Recent evidence should counteract many of the myths and common concerns about brain drain. Brain drain rates are not skyrocketing. Africa is not the most affected region for brain drain; small island states are. Skilled migrants enjoy massive increases in their living standards as a result of emigrating, and skilled migrants end up remitting back as much as the fiscal cost of their absence.

Ultimately then, given the massive individual gains from migration, any belief that brain drain is detrimental for development must rely on large externalities of high-skilled individuals. This is the area where the existing empirical literature is weakest, but the estimates that do exist suggest that the production externalities of brain drain (at the margin at least) are quite small.

The paper suggests then that worries about brain drain are likely to be overblown, but also that there are still large knowledge gaps on certain impacts, and almost no rigorous evidence as to the impacts of policy actions in this area. Given how prevalent brain drain concerns are, there seems to be plenty of fruitful avenues for future research and policy experimentation going forward – with the paper ending with some ideas on directions for these.

So, on the face of it, the loss from brain drain appears small – which is really counterintuitive. Maybe its the global perspective of the paper, which averages over losses to individual countries. The paper does point out some cool data trends that are worth noting – like the ratio of skilled immigration globally hasn’t increased at all, and in fact may have fallen in the past decade.

Technical Notes:

Gibson, John & David McKenzie, "Eight questions about brain drain", The World Bank, Policy Research working paper no. WPS 5668, May 2011


  1. The consultants and Jala actually scared Najib to create Talent Corp without substantive evidence.Now,braindrain is assumed to be because of lack of meritocracy;whereas reasons are much more varied.
    And there is nothing to fear from brain drain.Its about supply and demand and the global free market.
    When there is a need for specific skills,the search will be globalised.
    We have employed Engineers from every part of the world including a few "returning" braindrained Msians > that was in the late 90s.Since then the same Engineers have moved to Mid East cos thats little demand here.
    The ones who stays are the core group who is the necessary foundation of any organisations.
    So,if the branding is that any one working locally is inferior I guess consultants with half baked data have actually fooled PM.
    That sums the sad story of our country now..outsourced thinking and a public relations centric leadership.
    Disastrous recipe.

  2. Here is my 2 Questions on Brain Drain

    1. Had there been any projects (big or small) that any GLC or any MNC had to cancel or defer or transfer to another country because they could not could hire any local or group of locals with the requisite skills. The answer is probably be NO.

    2. Had there been local graduates who had to migrate or are contemplating to migrate because could not get jobs here in Malaysia that are commensurate with the fields or courses they had studied eg. biotechnology, bio-informatics, etc., etc. The answer is probably - there are MANY.

    These two questions reflect the real problems in Malaysia -- that our companies are not offering highly skilled/science and technology based jobs. The so called brain drain may actually be brain surplus.

    BUT is is good and popular to talk about brain drain. It is playing to the political gallery.

    And so we have the plug-the-brain-drain corporation called the Talent Corporation. Let us say we manage to attract 10 to 20 top notch scientists/technologist to return to Malaysia from wherever they are stationed now.

    What would they be doing in Malaysia?. Start new companies?? These people are employees albeit very very highly paid employees.

    Within a few weeks these high fliers would realize they are better off where they are now. They are making a few million US dollars a year working for some international companies. How much could we pay them??

    At the same time - I hope Talent Corp would also realize we not only could not afford to match their handsome incomes, but also we could not find any productive use for their knowledge and talents. We need to avoid talent corporation becoming WASTE TALENT Corporation.

    With the US economy on a lack-luster recovery at best, the Euro-zone economies and countries battling huge public debt crisis, and having to face much larger countries and problems to fix after Greece and Ireland, the so-called Brain Drain is abut to change directions.

    Please visit the work done by Karen Ward, HSBC's Global Economist. Her comments on this emerging trend is highly refreshing.

    Already Malaysia is hiring 300 English teachers from he US. And many more could follow these American teachers, particularly from the UK.

    Talent Corporation - time to rethink.

    Economist Kampong

  3. @Economist Kampong: Where can find the work of Karen Ward. Any website u can recommend?