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The Side Effect Of Brain Drain In Globalisation Economics Essay

In this paper we will describe one of the medial side effects of globalisation, more specific the effect on the individual capital of underdeveloped and growing countries who see their finest and most beneficial workers leave the united states to seek lot of money and profit the richer, the burkha. In an financial context "Globalisation" is the lowering or removal of barriers and borders to be able to facilitate moves of capital, goods, services and also labour. Globalisation is also the integration of economies and societies surrounding the world. This newspaper focuses on the labour flows and much more specific on the migration and flows of skilled labour. Globalisation is not something new, but the technological and politics evolutions after World Conflict II have hastened this technique. We won't go through the flows themselves, but rather at one of the side-effects of migration in a globalised world: the brain drain, and, sometimes the brain gain.

Brain drain is real human capital flight. It's the trend where skilled workers or young potentials : individuals with technological skills or knowledge; migrate and leave their country. While brain drain is not at all something new, it's results are much better in a globalised world where skilled staff can freely travel the earth. Many countries have constrained migration regulations; but high-skilled well trained staff are often more than pleasant and frequently even encouraged to come quickly to the girl.

There are multiple reasons for this skilled migration and the reasons to migrate may differ from region to region. Skilled staff surviving in Eastern Europe migrate to the USA or the EU because there are more profession opportunities, wages are higher and public security is better. African migrants sometimes flee assault, poverty, political instability or problem, . . . While there are also highly skilled European academics employed in the USA, the Far East or vice versa; we will focus on the skilled migration from under-developed or producing countries to the developed world.

In this paper we will need a deeper go through the brain drain. The first section summarises migration data, both skilled and unskilled Another section discusses the disadvantages of skilled migration from the point of view of the underdeveloped and growing countries. The subsequent section requires a go through the benefits of skilled migration, again from the idea of view of the underdeveloped and developing countries. Before jumping to the final outcome, we'll discuss a few advantages and disadvantages of the skilled migrants themselves. The final section sums up the conclusion and gives some moral point of views and my opinion relating to this theme.

Where possible, we can make a distinction between several groups of underdeveloped and developing countries: Eastern Europe, Middle East and North Africa, Sub-Saharan Africa and the Indian world and Pacific Islands. Every region has an alternative background and every region has different local characteristics. The effects of skilled migrations or the extent of every effect changes for each and every region with respect to the technology level, the political stability, the show of skilled employees, the structure of the populace, . . .

How big is the brain drain?

Before summarizing the advantages and disadvantages of skilled migration from the mailing countries perspective we first must know how big the mind drain is really. How many skilled employees leave the 3rd World and migrate to the developed countries? Responding to this question is not easy. Who are the very skilled? Should we also count number unskilled migrants who are informed in the developed world and thus become skilled? Do we depend illegitimate migrants as well? We won't handle these questions in this paper, but merely use the data provided by organisations like the IMF, the globe Loan company Group and the OECD. Corresponding to these organisations skilled migrants are migrants with at least tertiary educational attainment, wherever they completed their schooling.

Table 1 shows us some regional characteristics of the various regions in 2000. It provides us for each region the proportion of skilled in the resident population (Skill), the common emigration for the OECD countries (Aemig), the skilled migration rate (Semig) and the ratio of remittances to GDP (Rem/Y). The areas are grouped as follows: Eastern European countries (EAS), Middle East and North Africa (MEN), Sub-Saharan Africa (SSA) and the Indian world and Pacific Islands (IND).

Table 1: local characteristics in 2000:

Region

Skill

Aemig

Semig

Rem/Y

EAS

12. 4%

6. 6%

11. 8%

1. 3%

MEN

8. 5%

3. 5%

8. 5%

2. 8%

SSA

2. 8%

0. 8%

12. 9%

2. 6%

IND

4. 5%

0. 4%

5. 2%

1. 8%

Data source: Luca Marchiori, I-lung Shen, Frederic Docquier (2009)

We can conclude from table 1 that Eastern Europe and the Middle East and North Africa have obtained a reasonable degree of education already. The situation in India is worse and alarming in Sub-Saharan Africa. In all four parts, the skilled migration rate is a lot higher than the common migration rate, hence the brain drain. Again, the problem in Sub-Saharan Africa is disturbing. Eastern Europe and to a lesser magnitude also the center East and North Africa likewise have a very high skilled migration rate. The skilled migration rate is lower in India, but the skilled and unskilled migration rates of bigger countries are always less impressive than those of smaller countries.

Disadvantages of skilled migration

Support rate diminishes

When the energetic part of the population diminishes, an inferior group of individuals can handle providing economic support to the number of the elderly, children and students who are materially reliant on the support of others. The burdens are taken by a shrinking group personnel and the area of the human population that creates an extra value becomes smaller and smaller. The support rate in European Europe and Japan for example, diminishes because of the aging of the population. Not only American Europe and Japan are strike by the ageing of the populace! There are producing countries in Eastern European countries and Asia that face the same problems.

The maturing of the population isn't the only cause for a diminishing support rate. Migration can have the same effect, particularly when young or high schooled employees leave the country: the group of active personnel shrinks when some of them search a better future far away all over the world. When developing countries who have to cope with a growing group of retired inactive people, also lose their trained and educated workers, they are hit double.

First of all, which means that the strain on the federal budget augments: pensions need to be paid, medical costs are higher while tax revenues decrease. One of the effects can be that countries will minimize in educational programs. This can even amplify the brain drain: not only do they lose their most successful workers, they also won't be in a position to teach enough new young high skilled staff to replace the retired staff.

This is a major problem for countries in Eastern European countries. African countries, the Middle East and India all employ a young people. The diminishing support rate doesn't really trouble them.

Human Capital goes down

The biggest & most notable disadvantage of schooled migration looking from the perspective of the mailing countries is the downswing of real human capital in these sending countries. Real human capital is the stock of competences, knowledge and personality features embodied in the capability to perform labour in order to produce economical value. It's the features gained by a worker through education and experience (Sullivan, Arthur; Steven M. Sheffrin (2003). ). It's evident that individual capital of your country is influenced by the migration of the high schooled and best trained staff. The human capital of any country determines amongst others the quantity and type of purchases a country appeals to, but has also a huge impact on another important factor of the development of an country: the technology degree of an overall economy.

Political unstable or unsafe countries are often faced with a huge stream out of both high schooled and unschooled staff. The stream out of the unstable countries is often a lot bigger than the stream out of more steady underdeveloped countries where staff leave for cost-effective reasons only. Countries with an unstable and violent history have as a result lost their skilled workers. This does mean that they need to invest in working out of new skilled personnel or that they need to attract foreign doctors, technicians, craftsmen, . . . As a result, a huge part of the established development assistance goes to the recruitment and or training of skilled personnel (doctors and other healthcare personnel, skilled craftsmen for rebuilding infrastructure, ) who are difficult to hold on to once trained. In this manner, american countries are indirectly committing their own future personnel. Especially Sub-Saharan Africa has this huge problem. The first step to maintain their skilled employees is off course, the much needed political and inexpensive stability.

As a result the development of "Technology" slows down

As explained above, there's another essential aspect affected when individual capital goes down: technology. When speaking about the mind drain, we talk about the most skilled workers who leave. Those skilled employees will be the first and most important people who use and/or develop new systems. The talents of these workers are vital when a country would like to advance to raised technology level. Technology is an important factor deciding the kind of (overseas) opportunities a country draws in. The mind drain can thus come with an immense effect on the development of a country. When foreign investors are only thinking about cheap workers or natural recourses, but not in the neighborhood talents; foreign purchases often don't help to develop a country. Companies who search a country with enough skilled workers are often eager to invest in training, but can look for countries with a much better starting position.

The brain drain obviously decreases or even halts the introduction of underdeveloped or growing countries who are just attractive for their low wages or natural recourses. The regions principally damaged are again the least developed countries: Sub-Saharan Africa and unpredictable Asian countries. THE CENTER East or Eastern Europe is less infected. The recent trend even demonstrates there seem to be to many high schooled young people. They don't really find a job even after several years of academic schooling.

The Economic returns to investment on education in underdeveloped countries go directly to the developed countries.

The ventures in education done by underdeveloped countries and expanding countries partly vanish without a track. The investments rise in smoke cigarettes when the high skilled workers, informed in their own country, leave their country and migrate to the developed world. As stated before, the same can be said about big parts of the development help send to underdeveloped countries: parts of this help are reserved for educational tasks.

It can be at first vision be discouraging to purchase the training of academic employees when the most talented individuals imagine a career under western culture.

As expected, the negative aspects of the mind drain are numerous and can be devastating in the brief run. The human being capital of the country not only decides the number of skilled workers available for domestic development, but also impacts other important parameters of an economy: technology and the capacity to innovate! Both factors determine the quantity and type of incoming investments. Add to this the diminishing support rate and the low results on investment on education and the picture doesn't results don't look promising.

Advantages of skilled migration

Remittances   ventures?

More often than not, migrants send home large amounts of money to their family whom they left out in their home country. These sums are called remittances. They are sometimes even the only or at least the main reason behind migrants to travel to a richer and better developed country searching for career opportunities and riches. Initially, many migrants intend to work a few years until they have got obtained enough money to have the ability to return back home and maintain their family. It makes therefore perfect sense these migrants send home a lot of money even before going back home. Based on the World Bank, these remittances send back to the growing or underdeveloped countries are even 1, 5 times higher than the worldwide budget spend on development aid. For the producing countries, remittances symbolize about 2% of the Gross Household Product, for the underdeveloped countries approximately 6% and for a few of minimal developed countries of this world this percentages goes up to almost 20%!

There are certain experts who equate remittances with international investments, but opinions are divided on this subject matter. There are even experts who declare that remittances have mainly negative effects on the economies in underdeveloped countries. Remittances create and keep maintaining economic dependency and take away incentives to start local businesses and take the initiative to enhance living expectations.

While there are indeed unwanted effects, most economists believe that remittances to be always a good thing for growing and underdeveloped countries. Remittances can enhance the express of health, the level of education, the usage of information and technology and can reduce the need of child labour. While they indeed could possibly be the cause of dependency, the money send back can also create opportunities to invest in the local overall economy and begin up new businesses. One of the biggest features of remittances is the steadiness they bring. In times of food cravings, crop failure, drought, an economical or political crisis; remittances can make the difference for families struck by misfortune.

It 's important to make a critical be aware before jumping to another benefit. While there are numerous migrants, both low and high skilled, who send back large amounts of money, it is the small elite band of high skilled migrants who send back the smallest sum of money; if indeed they send something with their home land by any means. The skilled staff who kept their country that invested in them and who is able to produce, potentially, the best return on investment, are also the personnel that fail to achieve this task, not because they can 't fulfil their potential, but because they appear to neglect their roots, financially speaking.

The incentive effect of brain drain

Success can be contagious. A similar can be said about migration. When Young people in underdeveloped countries note that their countrymen who kept in search of better job opportunities, more steadiness and an increased living standard, they can be stimulated to study to improve their likelihood of also finding an improved future abroad. Initially, this seems to be another down sides of the mind drain. Underdeveloped countries seem to be getting rid of even more high-skilled staff. Not absolutely all these new made high skilled employees however will migrate. The permanent net effect will generally maintain positivity for the human being capital of an country.

Obviously this impact can only be positive in the long term: it takes time and money to invest in young people and to create a new technology of high skilled, well trained potentials. Furthermore, this won't stop the brain drain. Migrating continues to be the primary goal of several students in UNDER-DEVELOPED countries. The investment funds of underdeveloped countries are still very high when looking at the results, even if the web result is positive. Investing in education remains investing in the future of both your country and the future of the countries that entice skilled employees.

This effect can only play in countries with enough infrastructure and stability. A country that lacks the required resources to train their high potentials will never be able to reap the benefits of this motivation. This effect therefore isn't big enough to be called an advantage in Sub-Saharan Africa. In Eastern Europe on the other hands is the amount of skilled staff already relatively high. That's why the incentive impact won't be very high in Eastern European countries. The incentive effect can be considered a real benefit in India and North Africa and the center East: both regions are reasonably secure and also have the infrastructure and methods to educate their employees.

Reduced Risk Premium

In an available economy, the chance High quality is one of the main factors that can determine the volume of (overseas) purchases in physical capital in a country. Countries with a minimal risk premium can more easily attract foreign assets than countries with a higher risk top quality. Financiers who spend money on parts or countries where the come back is less certain and with more uncertain circumstances will demand an increased return on investment than those who choose to purchase more stable areas. The risk high grade is determined by several factors: political stability in an area, economic stability of any country, . . . and also by the available understanding of a country or region.

Migrants can 't really influence the politics or economical stability of their house country, nevertheless they can spread the data of their country. When high skilled leave their country they can spread this knowledge in the companies and countries where they live and work. In this manner, they can straight and indirectly reduce the risk premium for his or her country and therefore attract more foreign investments. The effect is assumed to impact every region with similar magnitudes.

Diasporas is definitely an important way to obtain trade, capital, technology, and knowledge for origins countries.

We have just explained that the mind drain can indirectly enhance the physical capital of a country because of the reduced risk high grade. The extra foreign investment funds not only raise the physical capital of your country, they can also raise the human being capital and the technology of any country. The foreign investments may bring new technologies to a country.

There is however another system that can bring extra ventures, technology and knowledge to a country: networking or more specific diasporas. A human population of a country cast about the world can still keep in contact with the other person and with their home country. In this manner, new technology, ideas or ideas or moral standard can reach their home country. Each of them can impact the labour market or the human capital of the country. In case the position of women changes for example, the labour market can be opened for girls. If family principles change, contraceptive can become a discussable issue.

There's also a change a world-wide network is created when people retain in contact. This network can protect the interests of the country, can promote an area and can help to attract investment funds.

DDI: Diaspora Direct Investments

When an underdeveloped or a growing country is confronted with a sizable stream out of skilled staff or academic workers, the chances will expand that some of these migrants will invest in the united states they came from. They must have a great understanding of their home region plus they normally still have a lot of local connections. When some of these migrants are successful and search a good location to commit, there 's a large chance that they will choose their home country, if stable enough off course.

Migration can entice foreign investments because of the reduced risk high quality (foreign investment funds) and thanks to successful migrants who spend money on their house country (Diaspora purchases). There's however a notable difference between the two. Foreign assets are not always seen as a factor of growth and advancement. Some scholars claim that foreign traders only exploit personnel and that scientific spillover results are rare. Diaspora investment funds on the other hand will be durable ventures.

At first vision, the increased loss of skilled employees has mainly a poor effect on the economies of the sending countries. When we dive deeper in to the effects of the mind drain and when we also check out the long-term effects, we can be more optimistic. For a few countries the mind drain may be an edge. The economy and culture of countries confronted with a huge stream out of skilled workers can be more open, more globalised and more advanced because of the technology spillovers of diaspora purchases, the changed standards and ideals and the incentives effect of brain drain. At the top, Gross Domestic Product of the underdeveloped and expanding countries rises thanks to the remittances and the excess foreign opportunities they can draw in through the reduced risk top quality.

What about the immigrants themselves?

When taking a look at the advantages or drawbacks of the high schooled immigrants who head to the developed world, we mainly see advantages. That may seem apparent, there 's after all often a justification why they choose to migrate. Many unschooled migrants who reach the Western World after an extended and touch trip don't wrap up in paradise, but frequently have to invest at least a couple of years as an illegitimate. For individuals who are finally accepted, a good job is often unreachable. The situation for most high-skilled migrants is of course very different. Most of them can perfectly lawfully and without much problems choose the country they choose. The girl even positively recruits in many producing countries when searching scarce personnel. You will find for example many healthcare employees from the Philippines employed in European countries and many IT-specialists from India work in the USA or Canada.

One might even say that high schooled employees in underdeveloped countries are crazy if they do not leave their country and search a much better future under western culture where the career opportunities are better and wages are much higher. Nevertheless, there are many critical feedback to make. Even for high schooled migrants, live is not roses all the way.

Brain waste products: high skilled immigrants recognize jobs way under their level of schooling

The training, education and experience of migrants isn't always appreciated under western culture. There are plenty of examples of high schooled Asians, Africans or Eastern Europeans who've to accept jobs why under their degree of schooling. That doesn't have to mean that their quality lifestyle has lowered after migrating, but we would say that their intellectual capacities are misused. The Western World doesn't always take full good thing about their schooling, experience and abilities and they aren't gratifying their potential. A question we might ask is whether these high skilled employees would offer their skills to a country where they might be more treasured and where they could fulfil their potential, like their home country. They might be happier, even when working for less salary.

Conclusion

There are both negative and positive aspects on the mind drain, on the migration of skilled employees from underdeveloped and producing countries to the developed world. The brain drain has appropriately increased many questions, particularly when looking from the point of view of the sending countries. There are however scholars who claim that the mind drain has more advantages than down sides when looking at the big picture.

On the main one side we see the direct impact of the brain drain: countries lose their schooled employees and their individual capital falls by description. The decline of human capital has an effect on the technology degree of a country and on the opportunities it can get. In addition a major part of the assets on education done by the sending countries go up in smoke cigarettes: the schooled personnel leave the country and take their skills with them. Countries who lose their skilled staff and who face another problem, the maturity of the populace, are hit double. They not only have to face all the issues mentioned above. They also have to cope with a shrinking support rate. The productive part of the population who contributes to the economy and pays taxes grows smaller and smaller as the variety of pensioners who need to be supported by the federal government and therefore by the lively part of the people expands.

On the other side recent studies have come to the final outcome that there are also many benefits to the brain drain, particularly when considering the long term effects of skilled migration on the overall economy of the mailing countries. The creation of individual capital in the sending countries is activated by the motivation impact and the migration of staff, both skilled and unskilled creates flows of cash to the developing and underdeveloped countries. These flows of cash, the so-called remittances, often represent an important talk about in the Gross Local Product of the sending countries, especially in the Gross Home Product of the least developed countries. Furthermore, a mailing country can get additional foreign investment funds thanks to the brain drain. Firstly thanks to a lower life expectancy risk high quality and second of all the migrants themselves can, when they are successful overseas, invest in their home country.

We can for certain say that the short-term effects of the loss of schooled staff on the underdeveloped and expanding countries are negative. Furthermore the inexpensive progress of countries confronted with a brain drain can stagnate. Individuals capital is an important economical factor for expansion and evolution not to be underestimated.

Looking at the permanent effects, the email address details are less clear and ambiguous. Future opportunities can be higher because of the diaspora investment funds and the additional foreign investments. The remittances tend to be indispensable for many undeveloped countries, specifically in occasions of crisis: famine, an economical crisis or natural disasters. Finally, we should also mention the effect migrants can have on the technology level of underdeveloped countries, but also on benchmarks and values. The effects of contraceptive on poverty can't be underestimated.

When we make a variation between the various regions, the least developed countries are not the ones that are influenced the most by the loss of skilled workers. Whenever we say least developed countries, we are discussing the countries of Sub-Saharan Africa. This region benefits the most from the brain drain over time. We may even conclude that Sub-Saharan Africa will reap the benefits of a brain gain thanks to the increased loss of skilled personnel. Sub-Saharan Africa however will not benefit from this brain gain as long as the spot isn't politically and armed service firm. The African countries won't attract enough purchases without anywhere near this much needed stability.

Both the short-term and the permanent effects for Eastern Europe are most likely negative. The amount of education in this area is already too much to profit from the positive effects on the human being capital of a country. Next, this region is hit by the same big problem European countries and Japan have to handle: the aging of the population. When a huge part of the most productive part of the population leaves the united states, those who stay will have to double their work.

When looking at the two other areas, India and the Pacific and The Middle East and North Africa, sketching the right conclusion is less obvious. Will the positive effects outweigh the negative ones or not? Both parts already have a comparatively large group of schooled personnel and the technology level in both areas is sufficient. The huge benefits for those aspects will be negligible. Both areas need to draw in extra investment funds. Tunisia for example, has many young educational schooled workers who are aware of the new systems, but not enough jobs. If the high-schooled, but unemployed young staff migrate to the GIRL, the center East and North Africa can only benefit.

My Opinion

The effects of skilled migration on the growing and underdeveloped countries, both the long term effects and the short term results, are analysed in detail. But how to deal with the unwanted effects of the brain drain or the way the unwanted effects can be limited is nearly never discussed. Only the paperwork discussing Diaspora Direct Investments give advice on getting more out of and appeal to these investments. It's difficult to provide an thoughts and opinions on a subject when it isn't clear how to counter the negative effects or getting the most out of the positive effects to be able to look from a brain drain to a brain gain.

Before going for a position on the brain drain, it could be useful to clarify the situations of the several parties involved. First of all, there will be the underdeveloped and developing countries faced with a sizable stream out of schooled personnel. They seem to be powerless to avoid this since scholars only describe their problems, but don't propose a remedy. As stated above, the consequences of the brain drain are mainly negative. A couple of indeed also positive effects when looking at the long term, but it's miles from sure that the results will outweigh the negative ones for most countries. The question remains: can the underdeveloped and growing countries change their precarious situation? Can they encourage the schooled employees in which to stay a country where in fact the future is often uncertain, salary are low and profession opportunities scarce? This seems impossible to be. That however doesn't mean that nothing can be done. Taking away some of the reason why to migrate will reduce the migration and its own effects: politics and military stability, safety, less problem, . . . are only a several multiple reasons to flee a country and also to built a new life abroad. What's more, if these problems are in least partially fixed the economical profits to investment on education will be higher. To summarize, there appears to be no real solution for this problem when looking at the mailing countries. The only thing they can do is shutting the gap with the developed world. The enchanting formula to do so though, do not seem to are present.

It's even more difficult to discover a solution whenever we analyse the brain drain from the average person migrants perspective. It appears that the decision to migrate, when possible, reaches first sight easily made. Can we blame the high skilled workers living in an underdeveloped country to imagine a better paid job in a safer and much more stable environment with more career opportunities? Are they wrong to do so and could it be incorrect to leave a country that invested in them? There's another aspect we should look at whenever we analyse the mind drain from the migrants point of view: remittances and ventures. Do these migrants have moral work to send back again large sums of money? Do they have the moral work to get, when possible, in the united states that educated them? It's easier to leave the response to the migrants themselves.

Finally, we've the Western governments and companies who fight their battle for talent. The United States of America, European countries and Japan all need new skilled workers to replace the baby-boom personnel who will retire and the BRIC-countries need skilled employees to close the distance with the developed countries. Many countries and companies try to catch the attention of the same highly skilled talents and count on international labour moves to fill in future gaps. The global competition doesn't give them a choice. If they don't attract enough talented employees, economic development might slow down. In my opinion, we can not blame the developed countries for the brain drain. Every country tries to prosper. But should the Western World compensate the developing and underdeveloped countries for the mind drain? Should they make good the loss of skilled employees in under-developed countries? I don't believe that's a necessity. The effects for the producing countries is ambiguous, but is most likely positive for the least developed countries. The mind drain may be considered a brain gain to them.

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