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Monday, 25 August 2008

Is the brain drain good for Africa?

A recent paper by William Easterly and Yaw Nyarko argues that the brain drain may have a positive impact on Africa through significant remittances and skills transfer. As the writers admit, shaky data and assumptions all round. I would also add the counterfactual probably needs a second look. That said, this is an important topic which warrants further study, and the authors should be commended for beginning to put together an empirical framework on this. Here are the key conclusions:

We build upon recent literature to do several exercises to assess benefits and costs of the brain drain to Africa. Contrary to a lot of the worries expressed in the media and in aid agencies, the brain drain is probably a net benefi t to the source countries. We make several arguments:

  1. The African brain drain is not large enough to have much effect on Africa’s skill gap relative to the rest of the world. Since other regions had a larger brain drain, the skill gap between Africa and the rest would actually be larger in a counterfactual world of no brain drain with the same amount of skill creation.
  2. The gains to the migrants themselves and their families who receive indirect utility and remittances more than offset the losses of the brain drain. According to one of our calculations, the present value of remittances more than covers the cost of educating a brain drainer in the source country.
  3. Brain drain has a positive effect on skill accumulation that appears to offset one for one the loss of skills to the brain drain. Hence it is not surprising that we fail to identify any negative growth effect of the brain drain.

Although some of our exercises are reliant on special assumptions and shaky data that require further investigation, we conclude based on what we can know in this paper that the brain drain is on balance good for Africa.


Update:

Readers interested in these issues, might also want to cast their eyes on a previous blog on
Benefits of Foreign Education?

2 comments:

  1. ah !

    I understand your answer in the other thread now.

    ReplyDelete
  2. lol!

    By the way...I have now updated with a link to a previous blog..

    ReplyDelete

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