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The Brain Drain as a Social Safety Valve

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
March 1970
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Deena R. Khatkhate

MIGRATION of highly educated and qualified people from the less developed countries to the developed world has generated a lively controversy in recent years among the cloistered circles of the academics and the more down-to-earth policymakers. The debate has been provoked particularly by the high rate of acceleration of the outflow of talent. During the period 1962-66 alone, for example, emigration of professional and technical workers from the less developed countries to two countries—the United States and Canada—was about 68,500.

At one extreme of this controversy are those who believe in the virtue of unrestricted mobility of the factors of production—including talent and skills—and whose faith in the maximization doctrine inclines them to conclude that absorption of the educated people from the developing countries into the production stream in the developed world will result in raising the world output and welfare. Countering these arguments are those who see the brain drain as an evil, threatening the stability and growth of the developing countries by the loss of their most useful citizens. Their argument is that the educated elite and their professional skills are a critical factor in the growth process and hence their transfer through migation, however beneficial for the immigrant countries, is bad for the countries at the losing end.

The Arguments Outlined

This wide divergence of views about the brain drain is a reflection of a difference that lies partly in assumptions and partly in value judgments underlying the analysis of the problem. Those who find little to worry about in the brain drain see it as a phenomenon closely related to a nationalistic concept of the world. For them nationalism is “one of the less pleasant mental vices in which mankind indulges itself or as one of the characteristics of childish immaturity.” 1 In this view the brain drain becomes no more than an aspect of labor mobility, which, if anything, should contribute to world output and welfare. It is then concluded that migration of educated and skilled personnel, being based on a free choice, is a beneficial process, as it helps to make labor available precisely where it is in short supply and where the potentiality of its marginal product is greater.

Such views, however, can hardly be acceptable, partly because of their unrealistic assumption and partly due to the underplaying of certain elements in underlying economic theory. In the unrealistic assumption, nationalism may indeed be for some a distasteful concept, but it is a fact of life, and policies and problems can usefully be discussed only in the setting of a still highly nationalistic world. One cannot argue that the brain drain does not exist in an international context. More specifically, it is inconsistent to postulate free mobility only of the educated and skilled personnel while ignoring the restrictions often imposed on immigration of unskilled labor in developed countries and also on the movement of other factors of production. As for the economic theory, the conclusion that migration of the educated people may contribute to world welfare and output minimizes, if it does not ignore, the importance of “externality” in the context of developing countries, externality being the contribution which an educated person makes to the productivity or welfare of others in his society, over and above what he is paid for doing his own job. It is reflected in such things as enterprise and the capacity for leadership. This implies that in the event of the migration of the skilled personnel the country of emigration would suffer more than the immigrant country would gain.

On the other hand, the assumption of the opponents of the brain drain is that the number of educated people is small in relation to the needs of the developing countries, and hence reduction of this number through migration removes one of the factors on which the growth of these countries most depends. Therefore they argue that such a migration not only sets back the growth of the less developed countries, but leads to a “back flow” of aid to the very countries normally considered as donors of aid.

Some Statistics Considered

Few participants in the debate accept this view in its pure form. While it is generally true that there is a smaller accumulation of human capital (meaning in this context the highly educated) in developing countries than in developed countries, it does not follow that it is inadequate in relation to their own requirements. Nor (a less committed observer might point out) has it been demonstrated that emigration of the educated personnel largely occurs in those developing countries where it is a critical factor in production; there are no comprehensive data on this point. Yet from such statistics as are available, one important fact seems to stand out. It is evident from the table that the bulk of the emigrating population comes from a relatively small group of countries, such as Argentina, India, Israel, Korea, and Pakistan, which collectively account for about 43 per cent of the total emigrating population. This might be disputed, however, on the ground that against the population of this small group of developing countries, which accounts for barely 57 per cent of the total population of the developing world, emigration of educated people from them may not appear to be large. But the relevant criterion for this is the proportion of the educated people from these countries in the total of educated people from all the developing countries. Such statistical information is unfortunately not available in order to reach a more definitive conclusion.

These are precisely the countries which have a large potential capacity to produce more educated manpower—that is, to make good their losses. The Harbison-Myers Index is taken as indicative of a country’s capacity to produce graduates of all types. It is an arithmetical summation of, first, the enrollment in secondary education as a percentage of the age group, 15-19, adjusted for length of schooling; and second, of enrollment in third level education as a percentage of the age group multiplied by a weight of five.2 It is not a very refined index and does not reflect differences in the quality of education, but it is the best that is available. Considering that some of the developed countries, such as Germany and Italy, score as high as 55-85, a score of 20 or above may be taken—of course somewhat arbitrarily—as demonstrating an adequate capacity to produce the educated personnel for the developing countries. That emigration takes place mainly from the developing countries with a high capacity to produce graduates implies that the educated personnel are not as crucial a factor in the less developed countries from which the trained personnel are leaving as is suggested by the critics of the brain drain, and indeed that emigration from these countries takes place because of the excess supply of the professional and educated personnel.3

The Main Question

Now the main question may be raised. Why is it that some of the less developed countries tend to generate an output of graduates in many areas of knowledge far in excess of their own requirements? Ideally, it should be possible for the authorities of these countries to spend that amount on education which would generate the number and types of graduates required by the desired level and pattern of investment in a wider sense of the term. Guidance to this is often obtained from the experience of countries that are now highly developed during the periods when they were reaching this goal; it may also emerge during the technological appraisal of investment projects. Despite this guidance, however, the educational output has been far greater than is needed. There are many complex factors responsible for this phenomenon, and it is to these that one must turn to seek the causes of the brain drain from the less developed countries.

Migration of Educated Manpower to the United States and Canada from Selected Less Developed Countries and Their Potential Capacity to Replace This Manpower
Index of
MigrationPotential
During 1962-66Capacity1
Greece1,51448.5
India4,57135.2
Iraq46031.2
Israel1,25484.9
Korea, Republic of1,06555.0
Thailand35.1
Costa Rica77447.3
Mexico3,00533.0
Argentina3,83482.0
Peru1,12730.2
Uruguay1069.8
Venezuela40247.7
United Arab Republic1,60040.1
Turkey1,40527.2
Lebanon65824.3
Malaysia17723.65
Pakistan68225.2
Brazil1,47521.0
Chile82351.2
Colombia3,57222.6
Ecuador1,49524.4
Paraguay1,12222.7
Ghana23.15
Total30,025
Total migration from
the developing
countries68,5902
Source: This table is based on Tables I and IV from the article “The Brain Drain from Developing Countries to Developed Countries,” by S. Watanabe, International Labor Review (April 1969).

Harbison and Myers Index.

The coverage of immigrants into Canada is not full. The figures, therefore, should be taken as indicative of broad trends.

Source: This table is based on Tables I and IV from the article “The Brain Drain from Developing Countries to Developed Countries,” by S. Watanabe, International Labor Review (April 1969).

Harbison and Myers Index.

The coverage of immigrants into Canada is not full. The figures, therefore, should be taken as indicative of broad trends.

If a tendency to overproduce highly educated people is characteristic of those less developed countries that constitute the “emigration group,” this tendency must be viewed in the contemporary political setting in which they plan their economic growth. In these countries political awakening preceded economic development, and one of the important consequences of this has been the part played by public opinion in the formation of government policies. Partly for historical reasons, and partly due to the belief held by many that a college education means more lucrative employment in a modernizing economy, the voting populace has come to associate higher education with a higher standard of living. This national urge for expansion of university education is fortified by the effects demonstrated by the achievements in the developed countries by the use of modern technology. On the other side it is strengthened by the failure of young people with high school education to secure employment.

The demand for more education has been further reinforced by certain attitudes formed in many of the developing countries either because of the traditional society where certain tribes or castes are associated with the privilege of higher education, or because of the hierarchical structure of authority based on the level of university education which originated from the former colonial powers. For instance, in India and Pakistan a university degree is notionally linked to a job with a high status and if it happens to be a degree from a university in the United Kingdom its value tends to increase even further. As a result of this and since the advent of political freedom, the vocal public opinion in these countries has propelled their governments into ambitious projects—they might be called crash programs—of educational development. For instance, in some countries a typical rate of expansion in the number of university graduates is as high as 10-20 per cent annually. As one perceptive observer has noted: “The driving force behind educational expansion in the underdeveloped countries is very similar to that behind inflation in these countries. As with inflation, few governments of the underdeveloped countries are politically strong enough to check educational expansion once it has got under way.” 4

Waste ful Expenditure?

Is this avidity for education irrational and is the expenditure incurred on it wasteful? Not necessarily. What might be construed as wasteful expenditure, looking at it in narrow terms, might well be a desirable investment in the development of the countries con-cerned when seen in a wider social context. Accumulation of capital does not, by itself, vouch for its efficient utilization, unless a culture appropriate to the industrial society is created. New capital embodies new technology and knowledge, which can be properly harnessed only if they are accompanied by appropriate orientation in the mental attitudes of men who come in contact with them. For this to be possible, a sort of “educational density,” meaning a depth of various layers of educated manpower, needs to be developed. Expansion of education without an adequate number of trained teachers and necessary equipment, which are limiting factors in developing countries, may perhaps lead to deterioration in the quality of the graduates. While this is true in the short run, over a longer period quality emerges over quantity. With the spread of education and literacy, a new scientific spirit is promoted, and this, in turn, is bound to create a fitting social, economic, and political milieu for innovating and enterprising classes of people.

All this means that it is often necessary to judge the level of educational expenditure not by what it yields in terms of direct output, but by what it contributes to the social productivity of the entire economy. A close parallel to it can be found in the investment in some developing countries, such as India, on the development of atomic energy. The cost per unit of energy produced by alternative techniques—thermal or hydroelectric projects—has proven to be lower than the corresponding cost of atomic energy, and if these costs had been correctly estimated in advance, nuclear plants would never have been set up in India. But their social returns have in fact been immense. They have created a large cadre of scientific personnel and their “fall out” effects have been wide and pervasive. They sparked off research in a variety of related fields at the Atomic Energy Commission and at the universities. The volume of research undertaken by the atomic scientists, already impressive, is still growing, and it will not be long before its results are fruitfully employed in several other sectors of the Indian economy.

By analogy, the educational expenditure directed at raising the number of graduates may be justified on the larger social-benefit criterion even though the private returns are small, and the impact on social return delayed. Since the educational expenditure generates more educated manpower than the domestic economy can absorb, it results in a falling marginal product or, if the limit of existing capacity is reached, in open unemployment. The social return on the other hand takes a great deal of time to be realized. Formation of scientific attitudes and innovating spirits is a slow process and the transmission of their effects to the productivity of physical capital in the various branches of industry is even slower.

The overproduction of skilled manpower as a result of crash educational programs, however rational, is accentuated further by the artificially created surplus of educated personnel. Even when the supply of university graduates matches the demands of industry, trade, and government in the social and economic systems prevailing in many of the less developed countries, trained manpower is not employed. Whether due to social inertia, prejudice, or conservatism, employers in these countries frequently prefer untrained personnel to the trained ones.

A Safety Valve

It is then arguable that the brain drain provides a safety valve for the less developed countries which possess surplus university graduates. So long as the tendency to produce these persists—and it is likely to persist for the variety of factors mentioned above—the brain drain is inevitable. And this may not be without advantages. Higher personal incomes are assured when the excess supply of the educated personnel spills over to the developed countries where their marginal product is higher. But their product is not totally lost to the country of emigration. A fairly substantial income flows back from the migrants to the country of origin as invisible earnings, and when it does not take that form, it is spent indirectly on the nationals of the country when the migrants support the education of their relatives abroad or take their families with them.

Even within the emigrating countries, this migration tends to bring about, after a time, a certain desirable social, political, and economic transformation, which not only helps to raise the social product of the educated but also facilitates its quicker realization. First, when the excess supply of graduates leaves, the tensions begin to ease and a more congenial social and political atmosphere is created. Second, the migration becomes instrumental in breaking the monopsony in the labor market. The employment possibilities within the national boundaries limit the opportunity cost of graduates, but once the employers in the outside world are free to absorb them, the opportunity cost of the educated tends not to be determined only by domestic circumstances but by international ones, and is, therefore, higher than before. This has certain side effects, for once the employers realize that the movement of professional skills is not hampered by lack of alternative avenues of employment, they no longer remain wedded to their traditional modes of operation. The competitive urge begins to seize them. This urge is transmitted to management practices and attitudes toward production, thereby facilitating the institutional transformation of the traditional society which is essential for better use of the educated manpower. The importance of the institutional and social change has been well illustrated by the experience of India, where, despite a large number of excellent statisticians, the statistical organization is relatively weak. As Prof. B. C. Mahalabnobis has pointed out, the productivity of statisticians in Indian conditions is low because they operate in a social, political, and institutional environment which has stultified their initiative and creativity.

Setting the Valve Correctly

The foregoing analysis should not be taken to mean, however, that the emigrating countries should passively wait, without taking any concrete action to stem the migration of their educated people; the safety valve must be regulated. There are two obvious ways in which this might be done. First, the developed countries might tighten up their immigration laws to make it difficult for the migrants to enter. Even with the best of intentions, this is a course with very limited possibilities. Barring some measures, such as terminating the closed-shop policies in medical education in the United States, there is a point beyond which developed countries will not willingly go in order to enforce their strict immigration laws. The shortage of some kinds of skilled labor is chronic in these economies, which means that curtailment of immigrants would react adversely on their own rate of growth.

The other means of curtailing the brain drain is in the hands of the emigrating countries. They might by law or administrative arrangement stop people from emigrating. But measures of purely preventative nature only compound the difficulties. The growth of modern knowledge and technology needs cross fertilization of ideas, which is facilitated through constant contact with the more advanced centers of study in developed countries. It is precisely this, however, that would be denied to the scientists and educationalists in the developing countries through negative measures. Imposition of a total ban on the migration of educated manpower is as inefficient a policy as rigid import controls with all their harmful consequences.

There is a strong case for removing all existing restrictions—such as permit cards—on the movement of nationals of the less developed countries toward the developed centers of knowledge. Those who desire to pursue their studies abroad would be then left free to do so. As domestic expenditure on education is allowed to exceed what is immediately needed, the same might be done in respect of training and education abroad. As it is, the amount of foreign exchange expended on the education abroad of nationals of the less developed countries is not large.

If, however, the countries could not make enough foreign exchange available for study abroad, they might at least permit their students to travel abroad without it. It is conceivable that the intending student migrant in this case would draw, while abroad, on the earnings of his relatives which otherwise would have accrued to the home country. But by preventing this type of migration, this outflow is far from checked, as is evident from the experience of many less developed countries which have tried it. This is because what is not spent on education is diverted in a variety of ways toward other goods. It is then a choice between the use of potential foreign exchange earnings on education or on other less essential goods, and there is little doubt about where the choice should eventually fall.

It might also be rewarding for these countries to permit those highly trained personnel in domestic universities and industries to go abroad periodically—say, every three or four years—to acquaint themselves with new developments in their fields of specialization. Here such visits would constitute a sort of “inducement goods” for the consumption of the intelligentsia, and their fruits would accrue to their countries on their return. It would also tend to remove the fear that if those who might emigrate do not in fact settle abroad the opportunities of intellectual advancement would be permanently denied to them.

A policy that may be profitably followed is that the country losing educated people should create such conditions domestically as would facilitate temporary reflux of its existing emigrants for a year or two. A great deal of talent from the developing countries has been employed in the universities and industry in the developed countries. If some of these are induced to come back for a short period, even if it means preferential emoluments in their own country, it might eventually help to create a proper atmosphere for a later permanent return. On returning to their home country, some of their prejudices might be discarded and a hearty welcome might be accorded to them from within once their usefulness is driven home to their employers.

In addition to all this, a determined attempt could be made in developing countries to institutionalize the arrangements for broadening the base of the educational program. It is possible, for instance, for the governments of the developing countries to set aside a foreign exchange fund to send abroad for educating their most talented young people. Conversely, the program should permit the import of high-quality foreign personnel for building up the centers of knowledge and training for those people who do not receive the benefits of foreign education. In this way intellectual development would receive a much needed impetus and a body of research-oriented personnel and institutions would be built up. There is good precedent for such a course. It is what Japan did during the last decade of the nineteenth century and the early years of the present century in order to stem the outflow of its educated personnel without denying to them the advantage of the advanced knowledge and technological development in the richer countries. A more recent example of this can be found in Pakistan, where a fine research institute—the Pakistan Development Institute—was built up through the importation of foreign economists; it has been instrumental in creating a young, energetic, and highly creative cadre of economists. As a consequence, the Institute has now become self-reliant and the economists on its staff have remained with it even though they take occasional visits to foreign universities in order to refresh their knowledge.

The phenomenon of brain drain is a consequence partly of the prevailing tendency in some of the less developed countries to overproduce graduates and partly of the social inertia in these societies preventing a full use of the available trained manpower. Unavoidable though it is, it may not—in the view I have suggested—be harmful, at any rate in the long run, as it hastens the social, psychological, and attitudinal changes in the economies of the emigrating countries which can be conducive to more productive use of skilled manpower and other resources.

1Johnson, H. G., “An—Internationalist Model,—” included in The Brain Drain, edited by W. Adams (New York, 1968).
2Harbison, F. and C. Myers, Education, Manpower and Economic Growth: Strategies of Human Resource Development (New York, 1964).
3Some other countries, such as the Philippines, Hong Kong, and Taiwan, have educated people emigrating, and presumably they too have a high capacity to produce them. However, these countries do not figure in the table as there is no Harbison-Myers Index for them.

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