Losses and Gains to Developing Countries from the Migration of Educated Workers: An Overview of Recent Research, and New Reflections

This paper synthesizes and extends recent research on “The New Economics of the Brain Drain.” In a unified framework, the paper shows that while recently identified adverse repercussions of the brain drain exacerbate the long-recognized negative impact of the brain drain, longer-term consequences turn the brain drain into the harbinger of powerful gains. These gains have been studied already in recent research, or merit attention in future research. Labor migration has long been a topic of intense interest in population research in general and in development economics in particular. The topic has been gaining added appeal in the era of globalization. Until recently, the received literature has taken a simple view on the consequences of the migration of educated people from developing countries: it results in a “brain drain” (for a systematic review see Bhagwati and Wilson 1989). A recent and growing literature, notably Stark, Helmenstein, and Prskawetz (1997, 1998), Mountford (1997), and Stark and Wang (2002), argues that the brain drain is accompanied by a beneficial brain gain. The new writings contend that compared to a closed economy, an economy open to migration differs not only in the opportunities workers face but also in the structure of * Oded Stark: Universities of Bonn, Klagenfurt, and Vienna; Warsaw University; ESCE Economic and Social Research Center, Cologne and Eisenstadt; mailing address: ZEF, University of Bonn, Walter-Flex-Strasse 3, D-53113 Bonn, Germany. E-Mail Address: [email protected] + C. Simon Fan: Department of Economics, Lingnan University