Wednesday, June 4, 2008

Subsidizing the brain drain

Plenty of studies have documented the brain drain: Highly educated workers migrate to richer countries, thus reducing the domestic return of education in poor countries. This phenomenon applies to all levels, within developing economies, from developing to developed economies and within developed economies. But it turns out some are actually subsidizing the brain drain.

Indeed, many countries would provide grants to their best students to study in the best universities, knowing full well that many of them will not return. The hope is that at least some will return, and this is worthwhile enough. The same applies to the high tech sector. For example, Finland encourages through FinNode young Finnish entrepreneurs to set up shop in the Bay Area and find collaborations there. The hope again is that some will return to Finland, knowing full well that some will stay in the United States and would not have tried without this help.

Of course, the United States is a net beneficiary in this, as it get free human capital. But the moral here is that subsidizing the brain drain can be a win-win sutuation.


T-Bone said...

Is there a shortage of skilled workers in many places? Or is it that have having an oversupply of skilled workers means that productivity can improve due to the highest quality skilled workers getting the jobs? Or is it that high skill jobs come to areas with lots of skilled workers because employers know that's where they'll find sufficient talent?

Because I would think where the "brains" go depends at least partly on where the jobs are.

Economic Logician said...

There is a shortage of skilled workers in most places. They are costly to educate, so a government typically does not want them to slip into other countries.