The benefits of globalisation flowed primarily to the developed world and its principal trading partners, among them Brazil, China, and India. As we enter the newer age of mobility, people will move across borders in ever-greater numbers. In their pursuit of opportunity and a better life, they have the potential to chip away at the vast inequalities that characterise our time — and accelerate progress throughout the developing world.

One central question that has caused a lot of controversy has been whether brain drain has positive or negative impact on developing economies.  Migration studies conducted in different parts of the world to assess the impact of intellectual migration have produced quite contradictory results. One divergent school of thought examines brain drain from the perspective of the highly detrimental effects arising from the loss of the brightest minds from developing countries, thus weakening capacity for development.  On the other hand, representatives of the convergence school of thought argue that the problem of brain drain is over dramatized and is less critical than it is usually portrayed.  They tend to emphasize the beneficial consequences of migration for both the receiving country and the sending country. For example, there are about 200 million potential immigrants in the world out of which ten million Africans in the Diaspora working for the betterment. These migrants sent home $264 billion in 2006. According to the Aljazeera English TV channel recently, in 2006, Asia as the biggest continent receives $115 billion through remittances; Africa and Latin America receive 40 and 70 billion dollars respectively in a year. It is also reported that the remittance money sent home is found to be more than that of international assistance.

Some authors hold that brain drain represents a major development constraint both in terms of development opportunities and lost investment and that it drains sending areas of their human capital that took enormous resources to nurture and produce. The country with outflow of emigrants, it is argued, loses critical human capital in which it has invested resources through education and specialized training and for which it is not compensated by the recipient country.  It is in this view that brain drain is often referred to as “an international transfer of resources in the form of human capital that is not recorded in any official balance of payments statistics.” For example, UNCTAD has estimated that one highly trained African migrant between 25 – 35 years, the age group into which most of the Africans going abroad fall – represents a cash value of US$184,000 at 1997 prices.

The views aired by proponents of the divergent school of thought are that, the country of origin suffers a net loss because it funds the education and training of professionals who, precisely at the moment they start producing, decide to emigrate. Conversely, the receiving country obtains qualified workers without having to bear the costs of training them, and therefore makes a net gain. Africa’s education budget becomes nothing but a supplement to the education budgets for the West. For instance, the annual budget of some of the universities in America is more than that of the annual budget of big countries (let alone small countries) in Africa. Hence, giving developmental assistance to the wealthier western nations, which makes the rich nations richer and the poor nations poorer?

There is a general belief that brain drain tends to pull the ‘best and the brightest from their home countries, the very people most equipped to help improve living conditions at home. This means a slow death for Africa. 

 Africa needs a large middle class to build a large tax base which, in turn, will enable the continent to build good schools and hospitals and provide constant electricity. What few people do not realize is that Africans who immigrate to the United States contribute 40 times more wealth to the America than to the African economy.  According to the United Nations, an African professional working in the United States contributes about US$150,000 per year to the US economy. It will be impossible to achieve an African renaissance without the contributions of the talented Africans residing outside Africa.

The proponents of the convergence school of thought look at brain drain from a functionalist perspective. They argue that the human capital investment made in the high-level migrants is partly recovered through remittances. Although not many economy-wide studies have been conducted on the effects of migrant remittances on African countries, it is often emphasized that while emigration countries lose manpower and particularly the “best and brightest”, they also get something in return.  Migrants who work abroad usually send part of their income to their families in the home country.  They also contend that remittances promote development by improving income distribution and quality of life by loosening production and investment constraints faced by households in the sending countries; after all, migration decisions are part of family strategies to raise income, obtain funds to invest in new activities, and insure against income and production risks.

The economic impact of remittances has been considered beneficial at both the micro and macro levels. The value of migrant remittances can significantly exceed that of national export earnings for instance, Eritrea receives about 40 % of its GDP through remittances, whereas exports contribute about 4% to the GDP. Available estimates indicate that there has been rapid growth in the volume of global remittances in recent decades, from less than US$2 billion in 1970 to US$70 billion in 1995, surpassing official development assistance. 

Some economists tout remittances as the developing world’s most reliable and broadly based source of financing, making it effectively a new form of foreign aid. A report states that a beneficial aspect of the brain drain, if properly managed, is that it enables emigrants to send a part of their earnings home in the form of remittances, thus providing the home country with a source of valuable foreign currency. It has also been observed that the remittances can have a multiplier effect on the economy as a whole.  For example, in Mexico, the USD2 billion that were arriving in the country in the early 1990s are estimated to have increased overall annual production by USD6.5 billion.

Those who argue against the issue of remittances often emphasize their unproductive nature. They say, not only are remittances insufficient to compensate for human capital losses, they, increase dependency, contribute to political instability, engender economic distortions, and hinder development because they are unpredictable and undependable and encourage the consumption of goods with high import content. The remittances fail to enhance development because they are not spent on investment goods but mostly spent on unproductive purposes – housing, land purchase, transport, repayment of debt, or to a smaller degree wasted on conspicuous consumption, or simply saved as insurance and old age pension funds.

It is to note that there is a need to eliminate poverty in Africa, and not merely reducing it by sending money to relatives.  Indeed, in any country of Africa, human capital is much more valuable than financial capital because it is only a nation’s human capital that can be converted into real wealth.  Under the status quo, Africa would still remain poor even if we were to send all the money in the world there.  When we give our money to a doctor, that physician helps us to convert our money into health – or rather wealth.  Money cannot teach our children, but teachers can.  Money cannot bring electricity to our home, but engineers can.  Money cannot cure sick people, doctors can. When the medical doctors immigrate to the United States, the poor are forced to seek medical treatment from traditional healers while the elite fly to London or New York for their routine medical checkups.

Ravinder Rena is currently at the Eritrea Institute of Technology. His two most recent books published by New Africa Press in December 2006 are: A Handbook on the Eritrean Economy: Problems and Prospects for Development, and, Financial Institutions in Eritrea. Author can be contacted for feedback comments via: ravieritrea2007@gmail.com

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