The International Mobility of Talent: Types, Causes, and Development Impact (Unu Wider Studies in Development Economics)

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The International Mobility of Talent

UNU World Institute for Development Economics Research (UNUWIDER) was established by the United Nations University as its ﬁrst research and training centre and started work in Helsinki, Finland, in 1985. The purpose of the institute is to undertake applied research and policy analysis on structural changes affecting developing and transitional economies, to provide a forum for the advocacy of policies leading to robust, equitable, and environmentally sustainable growth, and to promote capacity strengthening and training in the ﬁeld of economic and social policymaking. Its work is carried out by staff researchers and visiting scholars in Helsinki and via networks of collaborating scholars and institutions around the world. World Institute for Development Economics Research (UNU-WIDER) Katajanokanlaituri 6 B, FIN-00160 Helsinki, Finland www.wider.unu.edu

The International Mobility of Talent Types, Causes, and Development Impact

Edited by

Andrés Solimano A study prepared for the World Institute for Development Economics Research of the United Nations University (UNU-WIDER)

1

3 Great Clarendon Street, Oxford OX2 6DP Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide in Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With ofﬁces in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore South Korea Switzerland Thailand Turkey Ukraine Vietnam Oxford is a registered trademark of Oxford University Press in the UK and in certain other countries Published in the United States by Oxford University Press Inc., New York © United Nations University—World Institute for Development Economics Research (UNU-WIDER), 2008 The moral rights of the authors have been asserted Database right Oxford University Press (maker) First published 2008 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this book in any other binding or cover and you must impose the same condition on any acquirer British Library Cataloguing in Publication Data Data available Library of Congress Cataloging in Publication Data The international mobility of talent: types, causes, and development impact / edited by Andres Solimano. p. cm. ISBN 978-0-19-953260-5 1. Migrant labor. 2. Economic development. 3. Brain drain. 4. Ability. I. Solimano, Andrés. II. World Institute for Development Economics Research. HD5855.I53 2008 2007039842 331.12 791–dc22 Typeset by SPI Publisher Services, Pondicherry, India Printed in Great Britain on acid-free paper by Biddles Ltd., King’s Lynn, Norfolk ISBN 978–0–19–953260–5 1 3 5 7 9 10 8 6 4 2

Contents

List of Figures List of Tables List of Boxes Notes on Contributors Foreword Acknowledgements List of Acronyms and Abbreviations

1

Causes and Consequences of Talent Mobility Andrés Solimano

vii ix xi xii xvii xix xx

1

Part I Analytical Perspectives 2

3

4

The International Mobility of Talent and Economic Development: An Overview of Selected Issues Andrés Solimano

21

The International Mobility of Technical Talent: Trends and Development Implications Anthony P. D’Costa

44

Global Mobility of Talent from a Perspective of New Industrial Policy: Open Migration Chains and Diaspora Networks Yevgeny Kuznetsov and Charles Sabel

84

Part II Case Studies: Entrepreneurs, Scientists, Students, Health Professionals, and Cultural Workers 5

The International Mobility of Entrepreneurs and Regional Upgrading in India and China AnnaLee Saxenian

117

v

Contents

6

7

8

9

International Mobility of Researchers and Scientists: Policy Options for Turning a Drain into a Gain Kristian Thorn and Lauritz B. Holm-Nielsen

145

Student Migration to the United States and Brain Circulation: Issues, Empirical Results, and Programmes in Latin America Diego F. Angel-Urdinola, Taizo Takeno, and Quentin Wodon

168

International Mobility of Health Professionals: Brain Drain or Brain Exchange? Stephen Bach

202

The International Mobility of Cultural Talent Tony Addison

236

Part III Additional Topics 10 International Organizations as a Profession: Professional Mobility and Power Distribution Jean-Marc Coicaud

263

11 Talent Mobility in the Global Economy: Europe as a Destination Mario Cervantes and Andrea Goldstein

298

Index

338

vi

List of Figures

3.1

The Effects of the International Mobility of Technical Talent

65

6.1

Percentage of Temporary Residents Receiving a PhD in Science and Engineering in the US in 1996 Who Had Left the US by 2001

150

6.2

Correlation between Return Rates and Income Differential with the US, 2001

151

7.1

F1 Visa Holders as a Share of All Students Enrolled in the US

177

7.2

Share of International F1 Students in the US by Region

178

7.3

Number of F1 Students by Selected Latin American Countries

179

7.4 Foreign F1 Students in the US by Region, Aggregate 1993–98

180

7.5

Number of Foreign Students Earning a PhD in the US

181

7.6

Share of H1 Visas in the US by Region

181

7.7 Status of H1 Visa Holders in the US, 1997–99

182

7.8

Repatriations by Year, Mexico, 1991–2001

188

7.9A

Repatriations by Field of Research, Mexico, 1991–2001

189

7.9B

Repatriations by Country of Origin, Mexico, 1991–2001

189

7.10 Repatriations by Year by SNI Status, Mexico, 1991–2001

190

11.1 Educational Attainment in OECD Countries, 2004

301

11.2 Trends in Filings of Triadic Patent Families

304

11.3 High-Technology Patents in OECD and Selected Non-member Economies

305

11.4 Distribution of Foreign Students in Europe by Continent of Origin, 2001

308

11.5 Increase of Foreign Tertiary Students in Europe by Continent of Origin, 1995–2001 (thousands)

309

11.6 Foreign PhD Students, 2002 or Nearest Years Available

312

vii

List of Figures 11.7

Comparison of Highly Skilled Foreign Immigrants From Developing Countries in OECD Countries, by Foreigner Status and Host Regions, 2000

314

11.8

Destination of the Highly Skilled Foreigners (i.e., All Foreign-Born) from Developing Countries Residing in the Main OECD Regions, by Country of Origin, 2000

316

viii

List of Tables

3.1

Inﬂows of Permanent Settlers by Selected Receiving and Sending Countries, 1992–2003 (Thousands)

53

3.2

Expatriates and Percentage Share of Highly Skilled Expatriates by Selected Country of Birth

54

3.3

Demographic Shifts in a Global Context

57

3.4

Stocks of Non-OECD Students in Selected OECD Economies (Thousands)

58

3.5

US Inﬂows of High-Skilled Workers, Including H-1B Visa Holders

61

3.6

The Distribution of H-1B Visas Among Leading Asian Countries (% Share of Total)

62

3.7

Remittances Received by Developing Countries, 2001 (US$ Billions)

69

6.1

Comparing Returnees and Domestically Trained Chinese Researchers, 2001 (%)

153

6.2

Return Rates of Chinese Graduate Students, 1957–99

160

7.1

Top 25 Countries with the Highest Number of F1 Visas in the US

180

7.2

Determinants of Student Migration and Tertiary Enrolment, World Panel

185

Yearly Cost of SNI Grants and Number of Beneﬁciaries, Mexico, 1990–99

193

8.1

Origins of Foreign-Trained Physicians in Selected OECD Countries

207

8.2

Country of Medical School of Sub-Saharan African International Medical Graduates (IMGs) in the US and Canada

211

Overseas-Trained Nurses Registered Per Annum in the UK 1998–2005 (Excluding the European Union)

212

10.1

Average Government Employee Wage in Sample Countries

271

10.2

UN Staff Motivations

274

10.3

UN Staff Work Environment

275

10.4

Distribution of Staff by Gender at the IMF

277

7.3

8.3

ix

List of Tables 11.1

Graduates at Tertiary-A and PhDs Levels in S&T Fields (2002 or Latest Year Available)

303

Distribution of Foreign Students Enrolled in OECD Countries by Region, 1998 and 2001 (%)

310

11.3

Statistics of the Main Demographic Variables

325

11.4

Distribution of Foreign Footballers in Main EU Leagues by Region, 2004/05 Season

327

11.2

x

List of Boxes

4.1 How the Search Network is Useful for Home Countries: Examples of GlobalScot

97

7.1 Conditions for Brain Gain

172

7.2 A Model of Brain Drain

175

7.3 Empirical Model to Test the Impact of Student Migration on Brain Drain

184

7.4 Does the Caldas Network Work? Three Experiences

197

xi

Notes on Contributors

Tony Addison is Executive Director of the Brooks World Poverty Institute (BWPI), Associate Director of the Chronic Poverty Research Centre (CPRC), and Professor of Development Studies at the University of Manchester. He was previously Deputy Director of UNU-WIDER, Helsinki, and has held positions at the University of Warwick, the School of Oriental and African Studies (SOAS, University of London), and the Overseas Development Institute (ODI, London). His publications include From Conﬂict to Recovery in Africa (Oxford University Press), Debt Relief for Poor Countries, and Fiscal Policy for Development (both Palgrave Macmillan), as well as papers in numerous academic journals. He is currently working on chronic poverty, post-conﬂict reconstruction, and development ﬁnance. Diego Angel-Urdinola holds a PhD in economics from Georgetown University, Washington, DC. He conducts applied research in the ﬁelds of poverty and inequality, gender, labour markets, international migration, and human development. He has contributed to policy dialogue in World Bank investment projects and operations as well as to the development of a series of academic and nonacademic publications in Latin America, Sub-Saharan Africa, and Central Asia. Dr Angel-Urdinola currently works as a poverty economist in the Latin America region at the World Bank. Stephen Bach is Reader in Employment Relations at the Department of Management, King’s College, University of London. His research interests include: work re-organization and the growth of assistant roles in the public services, human resource management in the health sector, the future of public service trade unions, and international migration of health workers. His most recent book is Employment Relations and the Health Service: The Management of Reforms (Routledge), and he is also editor of Managing Human Resources Personnel Management in Transition (4th edn, Blackwell).

xii

Notes on Contributors

Jean-Marc Coicaud heads the United Nations University Ofﬁce at the United Nations in New York. His recent work includes (co-edited with Daniel A. Bell) Ethics in Action: The Ethical Challenges of International Human Rights Non-Governmental Organizations (Cambridge University Press). Mario Cervantes is a senior economist and project manager at the Organization for Economic Co-operation and Development (OECD) Directorate for Science, Technology, and Industry. Since 2006, he is responsible for the Working Party on Innovation and Technology Policy. Current projects in his portfolio include: open innovation, commercialization of public research, and the evaluation and impact assessment of public R&D. Anthony P. D’Costa is a professor of Comparative International Development and South Asian Studies at the University of Washington, Tacoma, WA. His current research interests are the political economy of IT growth in India, talent migration to Japan, and Asian innovation systems. He recently edited The New Economy: ICT Challenges and Opportunities (Palgrave Macmillan) and is the series editor of Technology, Globalization, and Development. Andrea Goldstein is a senior economist at the OECD Development Centre; previously at the World Bank Group (Foreign Investment Advisory Services), the OECD Economics Department, and Consob—the Italian Securities and Exchange Commission—and has also been a consultant for the Inter-American Development Bank and the UK Department for International Development. His research interests include multinationals from emerging, transition, and developing countries, regulatory reform in network industries, the political economy of the global aerospace industry, and the impact of the emergence of China and India on other developing countries, in particular in Sub-Saharan Africa. His papers have been published in numerous academic journals and he is recently the author of Multinational Companies from Emerging Economies: Composition, Conceptualization and Direction in the Global Economy (Palgrave Macmillan). Lauritz B. Holm-Nielsen is Rector of the University of Aarhus in Denmark. He worked more than ten years in the World Bank as a lead specialist for tertiary education and science and technology, managing projects in Argentina, Brazil, Chile, Colombia, Indonesia, and Mexico. He has served as President of the Nordic Academy for Advanced Study in Oslo and Rector of the Danish Research Academy.

xiii

Notes on Contributors

Yevgeny Kuznetsov is a senior economist with the World Bank’s Knowledge for Development Program. Trained as a mathematical economist, he is a specialist in innovation policies and institutions. For the past ten years, he has held various operational positions at the World Bank, and was previously with the Brookings Institution. Charles Sabel is a professor of law and social science at the Columbia Law School. After receiving his doctorate in government from Harvard University in 1978, he joined the faculty of the Massachusetts Institute of Technology (MIT), where he became the Ford International Professor of Social Science in 1990. His recent research focuses on experimentalist regimes in the areas of education, labour, and environmental reform. AnnaLee Saxenian is Dean and Professor in the UC Berkeley School of Information. She has published widely on the relationship between the economic geography of technology workers and industry. Her recent books include The New Argonauts: Regional Advantage in a Global Economy and Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (both published by Harvard University Press). Andrés Solimano, a Chilean-Italian national, holds a PhD in Economics from the Massachusetts Institute of Technology (MIT). He is currently Regional Advisor at UN-ECLAC based in Santiago, Chile, formerly Country Director at the World Bank, and Executive Director at the InterAmerican Development Bank. He recently edited Vanishing Growth in Latin America and Political Crises, Social Conﬂict and Economic Development (both published by Edward Elgar), and is also the author of numerous articles and edited books on growth, development, international migration, income distribution, political economy, and macroeconomics. Taizo Takeno is an associate professor of economics at the University of Tokyo where he holds a joint appointment with the Graduate School of Arts and Sciences and the Graduate School of Economics. He received his BSc from the London School of Economics and Political Sciences and his MA and PhD degrees from Georgetown University. Professor Takeno specializes in the area of international trade and development, and teaches international trade and international ﬁnance at both graduate and undergraduate levels. Kristian Thorn is an advisor in the Danish Ministry of Science Technology and Innovation. He was formerly an education specialist in the World Bank’s Department of Human Development for the Latin American and

xiv

Notes on Contributors

Caribbean Region where he managed tertiary education and science, technology, and innovation projects in the Southern Cone countries. He has published on performance-based funding in tertiary education, the third mission of universities, and research and development in Latin America. Quentin Wodon is a lead economist and poverty specialist at the World Bank. After engineering and business management studies, he worked for two years with Procter & Gamble and for ﬁve years with an international NGO working with families in extreme poverty. He later completed a PhD in Economics from the University in Namur, and joined the World Bank in the Latin America Region in 1998. His current responsibilities consist in managing the Bank’s work on poverty in West and Central Africa.

xv

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Foreword

The analysis of globalization has traditionally focused on trade and capital mobility. However, a large part of the story of globalization is concerned with the international transfer of knowledge, ideas, and people, rather than commodities and money. New ideas and knowledge are often generated by talented people who have a gift for intellectual, productive, and scientiﬁc creation. This book seeks to understand the main characteristics, determinants, and developmental effects of the international mobility of talent, looking in particular at the mobility of entrepreneurs and technical experts, of international students, and of professionals of various kinds in an increasingly interdependent world economy. Since the 1960s and 1970s, much of the literature on the international mobility of human capital has concerned brain drain and the permanent exit of qualiﬁed human resources from developing countries. This volume takes a fresh look at international migration in the context of the global realities that exist in the early twenty-ﬁrst century. While recognizing that brain drain is a serious problem in some areas, such as the health sector, entrepreneurial circulation between rich nations and emerging economies can create win–win situations for developing and developed regions—witness the examples of Taiwan and India that have developed dynamic hardware and software industries largely based on expatriate technological entrepreneurs. In addition, the ﬂow of students, scientists, engineers, and technicians across international borders is a powerful vehicle for enhancing the knowledge base of developing countries. The creation of links between the productive sectors and knowledge centres of different countries facilitates the transmission of best practices and fresh knowledge, and helps boost international development. This book makes a valuable contribution to a relatively new area of study. The topics will be of interest to a broad spectrum of the development community, including policymakers in national governments and international organizations, academics, and members of the public that

xvii

Foreword

follow development issues. The beneﬁts of international collaboration are also well illustrated in the production of the volume, which is the outcome of a project organized jointly by UNU-WIDER in Helsinki, Finland, and UN-ECLAC in Santiago, Chile. Although these two agencies of the United Nations are located far apart, they are close in their determination to undertake research that promotes international development and addresses the complex problems of our time. Anthony Shorrocks Director, UNU-WIDER

xviii

Acknowledgements

This volume is an output of a research project on the International Mobility of Talent. The project was a collaborative effort of the United Nations University—World Institute for Development Economics Research (UNUWIDER) in Helsinki, and the United Nations Economic Commission for Latin America and the Caribbean (UN-ECLAC) in Santiago, Chile. Dr Andrés Solimano, Regional Advisor, UN-ECLAC, was Project Director and Visiting Fellow at UNU-WIDER for the execution of this project. We thank the Organization for Economic Co-operation and Development (OECD) and World Bank for their intellectual contribution to this project. UNU-WIDER gratefully acknowledges the ﬁnancial contributions to its research programme by the governments of Denmark (Royal Ministry of Foreign Affairs), Finland (Ministry for Foreign Affairs), Norway (Royal Ministry of Foreign Affairs), Sweden (Swedish International Development Cooperation Agency—Sida), and the United Kingdom (Department for International Development).

xix

List of Acronyms and Abbreviations

ADHA

Additional Duty Hours Allowance (Ghana)

CGFNS

Commission on Graduates of Foreign Nursing Schools (US)

CNY

Chinese yuan

CONACYT Consejo Nacional de Ciencia y Tecnologia (Mexico) EC

European Commission

ECLAC

United Nations Economic Commission for Latin America and the Caribbean

EU

European Union

FDI

foreign direct investment

GATS

General Agreement on Trade in Services

HRST

human resources in science and technology

HSIP

Hsinchu Science-based Industrial Park

ICT

information and communications technology

IIE

Institute of International Education

INIFAP

Instituto Nacional de Investigaciones Forestales, Agrícolas y Pecuarias (Mexico)

INS

Immigration and Naturalization Services (US)

IOM

International Organization for Migration

IPRs

intellectual property rights

IT

information technology

ITESM

Instituto Tecnológico y de Estudios Superiores de Monterrey (Mexico)

MCA

Masters in Computer Applications

NAFTA

North American Free Trade Agreement

NHS

National Health Service (UK)

NMC

Nursing and Midwifery Council

NSF

National Science Foundation (US)

xx

List of Acronyms and Abbreviations NSST

National System of Science and Technology (Colombia)

OECD

Organization for Economic Co-operation and Development

PCT

Patent Cooperation Treaty

PECX

Association of Colombian Students and Professionals Abroad

POEA

Philippine Overseas Employment Administration

RCN

Royal College of Nursing (UK)

SAS

Silicon Automation Systems

SMEs

small manufacturing enterprises

SNI

Sistema Nacional de Investigadores (Mexico)

SOAS

School of Oriental and African Studies (University of London)

SSA

Sub-Saharan Africa

TSMC

Taiwan Semiconductor Manufacturing Company

UAM

Universidad Autónoma Metropolitana (Mexico)

UNAM

Universidad Nacional Autónoma de México

UNFPA

United Nations Population Fund

WIDER

World Institute for Development Economics Research of the United Nations University

WIIG

Walden International Investment Group

WHO

World Health Organization

WTO

World Trade Organization

xxi

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1 Causes and Consequences of Talent Mobility Andrés Solimano

1.1 Introduction Economic development is about mobilizing valuable resources for improving living standards and producing meaningful welfare. Besides the classical resources of labour, capital, and land, there is growing recognition of the importance for economic growth of ‘intangibles’ such as technology, ideas, creativity, and innovation. In turn, behind these intangibles, there is ‘human talent’: an inner capacity of individuals to develop ideas and objects (new software, a vaccine, a work of ﬁction, or art installation) some of them with a high economic value. The interest in the globalization process has focused largely on the international mobility of goods, capital, unskilled workers, and technology but comparatively less attention has been devoted to the international movement of highly qualiﬁed people—what we call ‘talent’. This is a curious feature since ultimately international transactions and investments are done by (often talented) people who explore new possibilities made available by the global age. The purpose of this book is to examine the international mobility of human talent and its development implications both on source nations (often developing countries) as well as on recipient nations, (often developed countries), considering also intra-OECD mobility. The topics of ‘brain drain’ and ‘brain circulation’—more colloquial names for the international mobility of talent—is now reviving after being largely dormant for a few decades. In the 1960s and 1970s there were interesting polemics among economists between the ‘nationalists’ (represented by Don Patinkin) and the ‘internationalists’ (represented by 1

The International Mobility of Talent

Harry Johnson) that also affected the views of policymakers at the time. The internationalist view stressed that the mobility of talent was the result of better economic and professional opportunities found abroad than in the home country and that this mobility leads to clear gains for those who move and also for the world economy as resources moved from places with lower productivity to places with higher productivity, thereby raising world income and global welfare. The nationalist school, in turn, questioned the practical meaning of the concept of ‘world welfare’ and pointed out the asymmetric distribution of gains from mobility between receiving and sending countries associated with the mobility of qualiﬁed human resources. At that time the topic was strongly inﬂuenced by the notion of brain drain, say a one-way ﬂow of qualiﬁed human resources from poor to rich countries (or from the periphery to the core nations in the world economy) that entailed a net permanent loss for the source country. These ﬂows were often viewed as having a negative effect on source countries that made an educational investment in qualiﬁed human resources that ultimately left their home nations. These views are evolving and at the start of the twenty-ﬁrst century we think more in terms of brain circulation, a two-way (or multiple directional) movement of talented individuals such as students, professionals, information technology experts, entrepreneurs, cultural workers, and others in the world economy in response to new opportunities open to them by globalization in different cities and countries around the world. This trend has been reinforced by the now greater information ﬂows on economic opportunities and lifestyles across the globe and by lower transportation costs. New literature on the topic, distancing itself from the old emphasis on the costs of talent emigration, is highlighting mechanisms through which there can be a ‘beneﬁcial brain drain’ emphasizing some possible positive effects for source countries of the emigration ‘knowledge workers’. These effects are in terms of ﬂows of remittances, production of goods of superior technological content that can beneﬁt consumers and producers in the home country, transfer of new technologies and ideas. In turn, this new literature more than lamenting the ﬁscal cost of talent emigration poses that higher mobility of human capital can be a good thing as it ties the hands of governments seeking further taxes on human capital, a much needed ingredient for economic development. The story now is of a world in which Indian and Chinese nationals after graduating in the US become successful entrepreneurs (in Silicon Valley, for instance) and who are uniquely positioned to serve as bridges between Asian and American markets given their contacts, access to technology 2

Causes and Consequences of Talent Mobility

and capital in both markets and societies. In the 1990s and early 2000s these people started new productive ventures in their home countries transferring technology and market knowledge. In the Latin American context, Chilean, Mexican, and Bolivian entrepreneurs are making successful inroads in biotechnology and mobile phone companies in North America. Some of those investments have also created new links and encouraged new investments in their home countries. The international mobility of talent is not only restricted to the business sector but it is also present in the cultural sector. 1 However, not all talent mobility is as glamorous as these examples suggest. A particularly dramatic case is the massive and persistent emigration of medical doctors, nurses, and other workers in the health sector coming from poor nations in Sub-Saharan Africa, from the Philippines and other developing countries who go to work to the UK, US, Canada, Australia, and other developed countries. The negative side effect of this mobility of health professionals is the weakening of the health sector in the source countries. This is particularly serious in the case of Africa, suffering from an AIDS epidemic, malaria, and other diseases that cause loss of human life and impair countries’ development potential. This poses conﬂicts between the private interests of health professionals and the social needs of the health sector in the home countries. The empirical evidence on the size and direction of the mobility of highly skilled individuals is still scant. However, current trends show that the mobility of people with tertiary education (a proxy of talent) is higher than the mobility of people with lower levels of education. The empirical evidence shows that the US and Canada are the main countries of destination of individuals with tertiary education followed by a group of countries formed by Australia, New Zealand, Sweden, UK, and other developed countries. Certainly the richest countries, when open to immigration, are magnets for qualiﬁed human resources. The evidence shows also that a substantial part of this mobility is within developed countries (or OECD economies). For developing countries, Russia and India stand as main source countries for emigrants with tertiary education. The extent of south–south migration of skilled and highly educated people is still substantially unrecorded statistically but the phenomenon certainly exists. As in south–north migration, south–south migration is related to differences in living standards and opportunities within developing countries. In 1 International celebrities in the world of literature and painting such as Isabel Allende, Mario Vargas Llosa, Fernando Botero, and others, are succeeding in Europe. Likewise famous soccer players from Africa who succeed in rich countries.

3

The International Mobility of Talent

other cases, regional integration schemes foster south–south mobility of qualiﬁed human resources. The topic needs, clearly, more research.

1.2 Types of Talent Most of the treatments of brain drain and talent mobility in the literature consider an aggregate of ‘human capital’. This analytic simpliﬁcation masks a reality in which there is a variety of different types of talent with different motivations to move and with varied development impact. This volume highlights this heterogeneity of talent and devotes separate chapters to analyse the characteristics, determinants, and economic effects of the international mobility of various types of talent such as engineers and technical experts, entrepreneurs, students, health professionals, and cultural workers. This volume is organized around the analysis of three broad types of talent mobility: 1. Directly productive talent. This includes the mobility of entrepreneurs, engineers and other technical talent, technology innovators, and business creators. These are people who are engaged directly in activities that lead to the actual production of goods and services. 2. Academic talent. This includes the mobility of scientists, scholars, and international students. These are individuals that often work or study in universities, research centres, and think tanks and are devoted to the production and/or acquisition of scientiﬁc and scholarly knowledge that may be eventually translated in commercially valuable products and inputs. 3. Talent in social and cultural sectors. This encompasses the mobility of medical doctors and nurses in the health sector. This talent is engaged directly in the provision of critical social service such as health. In turn, ‘cultural workers’—such as writers, painters, musicians, etc.—are engaged in artistic and cultural creative activities that have a value of aesthetic enjoyment and personal development. These are people who write books, produce movies, paintings, handicrafts and other cultural goods. Now we turn to the various determinants of the mobility of talent. It is important to recognize that most of these determinants apply to different types of talent although the relative importance and speciﬁc importance vary from one type of talent to another. 4

Causes and Consequences of Talent Mobility

1.3 Conceptual Framework: Determinants of Talent Mobility Our own research and the literature on the topic (reviewed selectively in Chapter 2) have identiﬁed several factors that affect the mobility of different types of talent. These elements can be summarized as follows: 1. 2. 3. 4. 5. 6. 7.

International differences in earnings and development gaps. Non-pecuniary motivations. The demand for capital and talent. Technology and the demand for talent. Agglomeration and concentration effects. Linguistic compatibility, networks, and sociocultural afﬁnity. Policy regimes and immigration policies.

Let us brieﬂy review each of these determinants. International differences in earnings and development gaps. The literature on the economic determinants of talent mobility stresses the importance of differences in wage levels and earning opportunities across countries and regions in driving people to move from one country/region to another. In general people are not neutral to large differences in income generating capacities across cities, sectors of economic activity, and countries, driving international migration ﬂows. This is particularly relevant for talent engaged in directly productive activities such as entrepreneurs, (a classic proﬁt driven segment of the population), engineers, technical experts, and others. This income motivation is also valid (with some modiﬁcations though) for other categories of course such as scientists, medical doctors, and other professionals. If a software developer in Russia makes in their home country an income that is just a fraction of what he or she can earn elsewhere as a software developer (or performing another job) then we can expect that they will move to the country with higher pay. More generally, the international mobility of talent depends on the (expected) income differential between what can be earned abroad with respect to the earnings at home in a given activity. The earnings we refer to may be a salary of a professional, the honoraria of a technical expert, the proﬁts for entrepreneurs, the royalties of a writer, or the sales income of a painter. At an aggregate level international income per capita differentials across countries are substantial and part of this is often reﬂected at the level of earnings of individual occupations and activities. Large net income differentials certainly prompt emigration to higher paying 5

The International Mobility of Talent

countries. This leads us to make a connection between development gaps (the difference in living standards and productive potential among countries) and the size and direction of the ﬂow of talented individuals. Talent is expected to ﬂow from countries with a lower level of development to countries with a higher level of development. The development gaps reﬂect various factors at work such as differentials in growth rates across countries over time that led to differences in per capita income and living standards across nations. In this context, poor and middle income countries are more likely to experience an outﬂow of their professionals, experts and entrepreneurs if earnings and living conditions and possibilities of professional development are less attractive at home than abroad. In addition, the outﬂow of scarce human capital can, by itself, amplify the development gaps as the departure of human capital and talent can be negative for domestic economic growth in the short run at least. There is an array of factors that contribute to explain the exodus of human capital from certain countries. Economic volatility, weak institutions, political instability, lack of respect for property rights and civil rights, are also likely to prompt emigration of skilled, talented, and more educated people that are often more internationally mobile than less educated and less skilled people. Non-pecuniary motivations. Clearly, there are other considerations, besides earnings differentials, in the decision of talent to move internationally. People may refrain to leave their home country because they do not want to sever ties with family, friends, and colleagues. There is also a personal history behind people in their home country and people are attached to those personal experiences that are tied to their home country. Other considerations, besides salaries and earnings, that matter for speciﬁc types of talent when the option to migrate is open are the following: a scientist may have an overriding interest also in the quality of the research centres and universities, the research facilities, the availability of budgets, and the quality of peer interaction in the destination country. All these factors fundamentally affect the research environment and thereby the potential of professional realization of academic talent. Another case is that of engineers and innovators living in technologically advanced economies that may derive high personal satisfaction from contributing to the technological development of their home country. The lure of being in places where innovation and creativity takes place can be very important for the decision to locate of technical talent. In 6

Causes and Consequences of Talent Mobility

the political realm, national leaders in the diasporas are motivated to join in nation-building within their home countries for various personal and political reasons. The case of the former Prime Minister of Israel, Golda Meir, is telling in this regard. As described in Chapter 4, when interviewed long ago on her motivations to move she stated that she could not miss what was going on in the newly formed state of Israel, even at the cost of leaving behind the comfort and security of their home to engage in a tumultuous process of nation-building abroad. An apparently opposite case, in terms of motivation to emigrate is the case of health professionals leaving their home countries at the time of serious shortages of medical personnel or downright health crises in their home nations. The demand for capital and talent. The demand for directly productive talent is interrelated with the demand for other factors of production such as capital and, to some extent, unskilled workers. A country that offers interesting economic opportunities and good living conditions will attract, jointly, several productive factors of production: capital, workers, and talent. Historically, Argentina at the end of the nineteenth and early twentieth century (a period of prosperity for Argentina, often referred to as the belle époque), attracted workers and people with entrepreneurial capabilities from Italy and Spain, and capital from Britain. In more recent years, India, China, Ireland, and other dynamic economies attract both capital, workers, and human capital from abroad. Usually there are complementarities between these factors of production: new machines and more sophisticated equipment require good professionals, technical experts, and managers for their successful operation. Also capital needs talent and this can be located in other countries. Firms face several choices in the decision of where (location) and how to conduct production: in a world of international mobility of factors of production capital (ﬁrms) face various possibilities regarding the use of talent:

r r r r r

hire domestic talent for production and/or marketing; import talent from foreign countries (engineers, ICT experts, etc.); relocate operations to low-wage countries to tap talent there; outsource talent services in foreign countries; and outsource talent in the home market.

Various conﬁgurations of outsourcing, location of production, and use of national and foreign talent are possible. 7

The International Mobility of Talent

Technology and the demand for talent. The revolution of information and communications technology (ICT) of the last two to three decades has spurred an increase in the demand for talent that specializes in these areas. Engineers, mathematical programmers, scientists, and others whose knowledge can be used in the development of software and hardware are especially valuable. As mentioned before, when talent is imported from abroad, the supply of talent comes from a few developing countries such as Russia, India, China, Poland, South Africa, Mexico, and Brazil. The supply of technical talent from Latin American countries for some important markets such as the US is still small in contrast with the talent coming from Asia. However, the Caribbean is an important source of nurses and other professionals of the health sector that go to the US. Another point to be made is that ICT technology today allows that services be rendered to the client without a permanent physical presence of the provider (consultancy reports can be sent through the Internet, accounting services can be carried out overseas and be sent electronically, a medical doctor can oversee a surgical operation in another country through video, etc.). Travel and electronic communication make connection and economic exchange feasible without the residence, or the migration, of the individual service provider in another country. Agglomeration and concentration effects. In general, talent is attracted by the availability of other talented people as creative processes (a new idea, a new product, and a new productive process, research and development activities) are rarely done in isolation. As indicated before, technical experts, engineers, and scientists may leave their native countries attracted not only by better pay abroad, but also by the allure of interacting with well qualiﬁed peers. Knowledge workers often like to locate in areas in which there are sufﬁcient resources to do research and to develop new technologies and products. In contrast, the talented individuals that stay at home may ﬁnd a lack of recognition, poor career prospects, modest salaries, and the absence of a critical mass of professional peers. Also scholars and scientists will place a high value to the quality of faculty in the universities they work, a feature that underscores that concentration effects is important for productivity within the scientiﬁc realm and also for signalling reasons. In the same vein, writers and painters are often drawn to cities with vibrant and dynamic cultural life such as Paris, New York, London, Madrid, and other centres in which there is a substantial concentration of artists and cultural workers. Linguistic compatibility, networks, and sociocultural afﬁnity. The traditional cultural obstacles for the mobility of people across nations such 8

Causes and Consequences of Talent Mobility

as differences in language, cultural traits, and codes of social behaviour are often less important for people with higher education levels. In fact, the well educated and cultivated migrant often has knowledge of more than one language and displays a great awareness of the cultural differences across nations. This marks a difference from the poor migrants and less skilled workers that move across national boundaries. These traits facilitate the international mobility of talent and make it easier for adjustment to other countries and realities. There is an ‘international elite of talent’ composed of people who have studied abroad, who belong to professional and alumni networks of prestigious universities, and who have developed a dense network of contacts with well placed individuals around the world. This talent may move in the academic, business, or public policy circuits, nationally and internationally. In the business sector this elite is composed of executives and professionals of multinational corporations and international organizations. Sometimes these elites, when motivated to connect with and help their home countries, constitute diaspora organizations of the sort analysed in this book. In other cases individuals develop and maintain individual contacts without belonging to any organization. Policy regimes and immigration policies. Economists lay great emphasis on policy regimes in affecting the international mobility of people. This goes beyond immigration policies although the literature on migration often focuses chieﬂy on that. In fact it is the array of economic and public policies that ultimately matter in affecting the mobility of talent across nations. The broad policy regime, in the home and host country, can crucially affect the decision of the talented to stay, leave, or return to their home countries. If policies are such that countries grow slowly, offer poor business opportunities and low salaries in universities, bringing macroeconomic volatility and other kinds of malaise, then we can expect that the talented elite (from entrepreneurs and innovators to professionals and bright students) will resent these conditions and try to leave their home countries. Bureaucracy, volatility, and instability that ‘tax’ foreign direct investment will also ‘tax’ human capital. As a result the level of human and physical capital in the home country will be lower than otherwise. Conversely, if countries set up more liberal and open policy regimes that create interesting returns for business and the well educated, bringing positive effects for the economy and society at large, then the policy regime will encourage less outﬂows and more inﬂows of talent. Migration policies, particularly in receiving countries, affect directly the international ﬂows of people as they regulate the actual entry and 9

The International Mobility of Talent

exit of foreigners (and nationals) from a certain country. Of course these regulations are far from complete as a substantial number of immigrants, particularly the less skilled, remain undocumented in the host country. These regimes are not exogenously given but are shaped by many factors. One of them is the shortage of certain skilled professionals in local labour markets such as information technology experts and computer science specialists, engineers, nurses, and medical doctors. This is another important factor behind the increase in demand for talent in the world economy and the greater liberalization, in rich countries, of immigration policies for qualiﬁed human resources compared to the restrictions facing unskilled immigrants. In fact, many countries now actively search for global talent. Examples of this are Ireland, Singapore, and Scotland who are offering economic conditions that are favourable to the admission of people with higher education, specialist knowledge, as well as investors bringing capital and technology. Mature advanced economies such as Australia, Canada, Germany, the UK, and the US have created special visa programmes for information technology (IT) experts, nurses and medical doctors, international scientists, and graduate students. From a global perspective, these policies of attracting talent into afﬂuent economies is in competition with the efforts of developing countries and poor economies to retain internal talent or attract it from other nations to cover internal skills shortages.

1.4 The Impact of Talent Mobility on Economic Development There are various developmental and global effects of the mobility of qualiﬁed human resources: the outﬂows and inﬂows of talent affect the production and transfer of knowledge, the level of productivity, and the international competitiveness of a country, its ﬁscal revenues base (as human capital affects revenue from taxation), the size of the middle class, and other effects. Analytically, the emigration of human capital reduces the stock of human capital and output in the source country and increases it in the receiving one, at least in the short run. 2 In addition, there can be a reduction of welfare services for the remaining population in the home country because of externalities due to a loss of 2 The emigration of talented and educated people reduces the supply of human capital in the source country and, therefore, increases the remuneration of this factor of production. In the medium run this may increase the supply of educated people in the source country creating a ‘brain gain effect’.

10

Causes and Consequences of Talent Mobility

scarce skills. The externality occurs when the social marginal product of a highly skilled emigrant is greater than their private marginal product. Usually this is due to spillover effects from knowledge and human capital to labour and capital productivity. From a global perspective, world income should be higher with more mobile human capital (talent), as the marginal productivity of human capital in the world economy increases when talent moves from countries with lower marginal productivity to countries with higher marginal productivity. As a result, there are global efﬁciency gains associated with an increased international mobility of talent. This analysis, however, has to be qualiﬁed as it does not consider the international distributional impact of the costs and beneﬁts of such migration ﬂows between sending and receiving nations. The gains and losses from the mobility of talent for sending and receiving countries depend on whether, for example, the international ﬂow of people is temporary or more permanent. When the ‘brightest and best’ go abroad for good (permanent migration) the outﬂow of talent can retard economic development in the sending nations by adversely affecting the development of local science and technology, thereby affecting productivity, comparative advantages, and growth. In turn, the receiving countries can beneﬁt from increased knowledge gained from the immigration of talent, creating a virtuous circle in which foreign talent combines with domestic talent and capital, strengthening the overall human capital base in the host country. For example, the US beneﬁted greatly through the twentieth century in its development of science and consequently technologies from the inﬂows of foreign talent in the 1930s and 1940s when leading scientists, coming from Europe to escape Nazism and war, moved to America. Later, in the 1990s and 2000s the US is beneﬁting by the inﬂow of talent, particularly in the ICT sector, from developing countries and post-socialist nations.

1.4.1 Who Stays and Who Returns From the viewpoint of international development, a permanent emigration of the highly qualiﬁed may amplify international disparities in the endowments of human resources between source and recipient countries, widening development gaps and per capita income levels among countries. In fact, the evidence suggests a considerable concentration of the world stock of qualiﬁed human resources, measured as people with tertiary education, in a few high per capita income countries such as the US, Canada, the UK, and Australia. In fact, the OECD is the main 11

The International Mobility of Talent

destination region for talent such as information technology experts, health professionals, scientists, and students coming from developing countries. However, the emigration of talent is not a complete loss for the source country. This volume underscores that talent mobility can also have potentially positive effects for the source countries in terms of remittances ﬂows and by the potential of mobilization of fresh capital accumulated by emigrants who may want to invest in their home countries. In the case of return migration, these migrants may bring home new technologies and managerial techniques, contacts, and new ideas that can be very useful for national development. In this book we analyse the case for international mobility to their home countries of ‘technology entrepreneurs’ who have previously studied then set up companies in the host countries but who also have decided to invest in their home country bringing capital, technology, and market knowledge to the home nation, generating often win–win situations for both source and home countries and, of course, for the individual who invest in both markets. In addition, ‘knowledge workers’ engage abroad in the production of high quality, technologically advanced goods that can also beneﬁt the source country. In the case of scientists, international students, and scholars we see south–north movement, but then not all who study in the north (North America is the largest recipient within the OECD of international students, scientists, and other foreign professionals) remain there after graduation. The evidence shows large cross-country variation in the return rates of post-doctorates graduated in the US: high for students coming from countries such as Indonesia, Korea, Brazil, and Chile, but low for Chinese and Indian students who tend to stay in the US after graduation. 3 Again for some countries sending students abroad can be a high return investment from a national point of view.

1.4.2 Economic Growth in Receiving Countries The relation between growth and international migration of talent in the country that receives the migrants can reﬂect a mutual causality: rapid growth, expanding opportunities, technological discoveries, and land/natural resource availability in the host country generates a demand for unskilled labour and for talent as the domestic supply of those human 3 Regarding medical doctors and nurses the negative side effect of the mobility of health professionals is the weakening of the health sector in the source countries. This is particularly serious in the case of some Caribbean countries in which a high percentage of their health professionals reside abroad. Another serious case is Sub-Saharan Africa where AIDS, malaria, and other diseases impair the development potential through great loss of human lives.

12

Causes and Consequences of Talent Mobility

resources may be insufﬁcient to meet the increased demand. Then, growth and opportunities may precede the mobility of talent. In turn, the inﬂow of talent, capital, and technology reinforces and sustains growth dynamics. Historically, the immigration of people with entrepreneurial capacities and a favourable attitude towards risk-taking contributed to business creation, resource mobilization, colonization, and innovation—all factors that supported rapid economic growth—in the New World countries in the ﬁrst era of globalization (pre-1914). 4 More recently in the 1990s, entrepreneurial immigrants from India, Taiwan, and China into Silicon Valley in the US have provided a valuable human resource in the creation of high technology industries, both in hardware and software, in the recipient country. They have engaged in business creation and output growth in the high-tech sector contributing to economy-wide growth. In turn, the return migration of technology entrepreneurs has helped to drive the acceleration in growth in recent years in India, China, and Taiwan.

1.4.3 Economic Growth and Welfare in Source Countries In the source countries an outﬂow of entrepreneurs and technical talent may depress business creation, innovation, and growth. Likewise an outﬂow of people with high educational levels also reduces the stock of human capital with a potentially negative effect on domestic growth. Human capital may leave the home country because of poor opportunities, barriers to business creation, excessive bureaucracy, poor career advancement prospects for professionals, and the like. This is the ‘brain drain effect’. However, this is not the end of the story as emigration raises the returns on investment in human capital (under decreasing returns as the stock of human capital is lower) thereby inviting more investment in education with future positive growth effects. In this case, the brain drain effect of emigration of talent has to be counter-balanced with the ‘brain gain effect’. At the same time, if emigration follows a cycle and the emigrant returns home bringing fresh capital, contacts, and knowledge 4 Historically, this was the case of Argentina, the US, Canada, Australia, and other New World countries at the end of the nineteenth century, which received large contingents of European migration—both of workers but also of people with entrepreneurial capacities. Argentina experienced rapid rates of output growth and net immigration, mainly from Spain and Italy. Much of the economic expansion was ﬁnanced, largely with British foreign capital. In turn, massive immigration allowed the mobilization of the signiﬁcant levels of natural resources of the receiving countries and was the key engine in their growth process, sustaining and reinforcing the dynamics of growth and prosperity.

13

The International Mobility of Talent

we have a positive development effect for the home country. In Taiwan in the last two decades or so, the formation and development of the Hsinchu Science-based Industrial Park (HSIP) beneﬁted greatly from return immigrant Taiwanese entrepreneurs and engineers from Silicon Valley. In fact, several successful Indians and Taiwanese in the high-tech industry in the US also set up hardware and software companies in their home countries contributing to growth in the source countries.

1.5 Policy Issues and Conclusions The international mobility of talent affects the level of economic development and the technical capabilities of both sending and receiving countries. In some cases talent migration can lead to a win–win situation such as in the case of entrepreneurs who invest in both the host and the home countries creating valuable transfers of technology, market contacts, ideas, and capital. In contrast, countries facing adverse economic or political conditions may see their bright students and medical doctors and nurses leave, with little subsequent return migration, remittances, or other beneﬁts from talent migration. Clearly emigration of talent under these circumstances creates a development problem for the home country. A message of this book is that in evaluating the costs and beneﬁts of the mobility of talent it is important to distinguish which type of qualiﬁed human resource and the context under which they are moving. Another conclusion of our work is that the emigration of talent can be both a cause and a consequence of underdevelopment and of the development gaps that we observe nowadays in the world economy. There is clearly a double causality here. The exit of talent can amplify international disparities in living standards across countries and adversely affect the capacity of lower income countries to catch up with richer nations. The causality here goes from the exit of talent to low development levels and persistent development gaps across economies. Valuable human resources with high productivity leave the home country and this, for a while, can retard economic development in the home nation. At the same time the emigration of human capital is a consequence of low development levels, lack of opportunities, stagnation, and failed policy regimes in the source country, prompting the talented, well educated, and skilled to leave the home country. This is the other side of the causality: one going from differences in development levels across nations to talent mobility among countries. 14

Causes and Consequences of Talent Mobility

The existence of large development gaps between countries should not necessarily lead to a ‘fatalistic’ or ‘fundamentalist’ position in which brain drain from poor countries to rich countries is unavoidable unless there is a full turn-around in the whole development path and policies of source countries. As this turn-around is unlikely to take place in the short run in many countries we should also consider the possibility for useful policies and initiatives to make talent mobility a forcer of international development. The views in the volume are that public policies and speciﬁc initiatives do play a role in attracting and mobilizing talent for development. Things can be done at the global policy level (as this is a global issue) as well as at the level of national policies in the source as well as the receiving countries. Certain types of talent mobility require global attention and cooperation. A case in hand is the international mobility of health professionals from poor to rich countries an area in which the need for cooperative policy responses are needed. The cooperation probably should be centred on principles that balance the health needs of the population in home and host countries, the human resource needs of the health sector of receiving and source nations, and the economic and professional interest of health professionals and health workers. Ethical standards for recruitment and compensation schemes are possible tools to deal with this phenomenon. South–south cooperation is possible too: for example Cuba today is a main source of medical personnel for developing countries in Latin America and Africa experiencing shortages of health sector professionals. Mobility of talent from north–south is also possible if properly mobilized and rewarded by countries of the ﬁrst world. Policies that encourage the reconnection and return of talent to the home countries to support national development hold promise. In this volume we show that business networks and scientiﬁc and cultural networks oriented to mobilize expatriate diasporas have proved to be useful in several countries for contacting and mobilizing expatriate diasporas with nationals of their home country. At a more conceptual level it is important to recognize that speciﬁc programmes (which are more microeconomic and sector-based) to attract talent have to be accompanied by adequate macroeconomic and development policies that avoid major distortions in incentives and opportunities that are at the root of the emigration of talent. Effective policies must recognize that talent, to be economically and developmentally effective, comes in a package with technology, capital, contacts, and market connections. If we want to attract talent to productive activities we have to make sure to provide access to credit, technology, markets, infrastructure, and facilitation of business creation. To attract 15

The International Mobility of Talent

scientiﬁc talent and outstanding students, source countries should revise their salary structures in university and research centres. The creation of ﬁnancially sustainable ‘centres of excellence’ for the advancement of science and technology in the source countries can be a worthy initiative that helps to concentrate scarce talent creating synergies and boost motivation among peers. This, in turn, can be an important factor for retaining scientists in the home country and/or encouraging their repatriation. The Latin America experience offers some encouraging examples in which top class scientists have been attracted and retained after these centres were created. This is, for example, the case of the Center of Scientiﬁc Research in Valdivia, Chile (created after a grant from the World Bank), which later became (ﬁnancially) almost completely autonomous. Similar initiatives could be developed also for cultural talent. Finally, the public sector in the developing world should align salary scales, promotion rules, and career possibilities to retain scarce and valuable professional staff. Practices that lead to promotion of the more militant supporters of government in the different echelons of the public sector as a way to gain political inﬂuence and power is unfortunately widespread in many countries. They have to be avoided as they will certainly be at odds with human resources policies that seek to attract talent on the basis of merit and commitment to economic development.

1.6 Organization of the Book This book comprises 11 chapters, organized around three parts. This chapter has provided an introduction to the book and set out the main conceptual framework. Part I, Chapter 2, by Andrés Solimano is an overview of selected topics in the ﬁeld. Chapter 3 by Anthony D’Costa reviews the mobility of technical talent in the global economy during the information technology revolution from the perspective of international development. The chapter deals with measurement issues, documenting magnitude, and direction of ﬂows of technical talent (scientists, engineers, IT experts) in the knowledge economy around the world. Chapter 4 by Yevgeny Kuznetsov and Charles Sabel undertakes an analytical discussion of the rising role of open migration chains, networks, and diasporas as spontaneous organizations that link individuals residing in various countries with individuals and ﬁrms in the home country in a world of increasingly ﬂat organization and multidirection ﬂows of information in which traditional top–down state intervention is of limited use. 16

Causes and Consequences of Talent Mobility

The authors elaborate on the dynamics between talent, information, and evolving information. Part II is devoted to the case of studies of mobility of different types of talent. It includes Chapter 5 by AnnaLee Saxenian which documents and analyses emerging two-way ﬂows of skill, capital, and technology between differently specialized regional economies—a trend that is changing the old one-way resource ﬂows from the core and periphery in the international economy. The author focuses on the experience of Chinese and Indian migrant entrepreneurs in Silicon Valley, besides exploring the case of Israel and others. Chapter 6 by Kristian Thorn and Lauritz HolmNielsen looks at the determinants of return migration of researchers and scientists and the role of economic incentives (international salary differentials) versus other attributes such as quality of research centres, facilities and budgets for research, and ability to interact with peers in the decision of researchers and scientists to move internationally. The authors also review the international experience, mainly focusing on Latin America, of various public initiatives to attract scientists and researchers to return home and conduct their professional activities there. Chapter 7 by Diego Angel Urdinola, Taizo Takeno, and Quentin Wodon studies analytically and empirically the issue of student migration and brain drain. They review theoretical models of brain drain and brain gain and then analyse trends of international students, particularly coming from Latin America, going to the US as a main destination. Then the chapter tests the effects of student migration on brain drain using panel data for 50 countries for the period 1990–2000 using a database of students coming to the US to pursue tertiary and post-tertiary education. Chapter 8 by Stephen Bach looks at the direction, magnitude, and determinants of the international mobility of health professionals such as nurses and medical doctors between poor and rich countries and also within OECD nations. Bach examines the impact of the mobility of health workers on the health sector in source and destination countries, and policy response to avoid the weakening of the health sector in poor sending nations, several of which are subject to heath crises. These policies may include the use of ethical standards in international recruitment and eventually compensation schemes for sending nations. Chapter 9 by Tony Addison looks at the international mobility in the cultural sector. It discusses the speciﬁc features of cultural talent and creative industries distinguishing between upstream (high level) and downstream (low level and subject to technical reproduction). The chapter considers issues of spatial distribution of cultural production and the segmentation of cultural markets between 17

The International Mobility of Talent

highly paid, winner-takes-all artists and low-pay artisans or lesser known artists. The chapter also looks at the links between political upheavals and the mobility of cultural talent both in history and recent past as well as policy implications of mobility in the cultural sector. Finally, Part III considers two special case studies of international talent mobility. Chapter 10 by Jean-Marc Coicaud discusses issues of mobility of professionals, managers, and other highly qualiﬁed human resources in international organizations such as the United Nations, national governments in Europe, and the OECD. Chapter 11 by Mario Cervantes and Andrea Goldstein examines in great detail the nature, magnitude, and characteristics of the mobility of professionals, entrepreneurs, international students, and others to Europe as compared to North America. The speciﬁc rigidities of European labour markets and regulations on business creations are analysed in terms of their effects on inﬂows of foreign talent. Finally, the chapter provides short case studies of talent mobility: the movement of South Africans to European countries, the inﬂows of economists and of soccer players coming from developing countries to Europe.

18

Part I Analytical Perspectives

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2 The International Mobility of Talent and Economic Development: An Overview of Selected Issues∗ Andrés Solimano

2.1 Introduction Human talent is a key economic resource and a source of creative power in science, technology, business, arts, and culture. Talent has a large economic value and its mobility has increased with globalization, the spread of new information technologies and lower transportation costs. Well educated and/or talented people are often more internationally mobile than unskilled workers and face more favourable immigration policies in receiving countries, typically high per capita income economies which are short of information technology experts, scientists, medical doctors, and so on. Individuals from developing countries are increasingly meeting the global demand for talent. This is the case of medical doctors from, say, Sub-Saharan African countries or the Philippines, information technology experts from India, Taiwan, and China, mathematicians from the former Soviet Union, indigenous singers from Africa, and professionals and writers from Latin America. The economic value of talent stems from its various uses. Talent can be a productive resource for current production, as in the case of information ∗ This chapter was prepared for the research project International Mobility of Talent conducted by UNU-WIDER with the co-operation of UN-ECLAC. Very useful conversations with Anthony Shorrocks and Tony Addison held in Helsinki on an earlier version of this chapter are greatly appreciated.

21

Analytical Perspectives

technology experts; a source of wealth creation via entrepreneurs; a source of knowledge through scientists; nurses and physicians provide a social service; and artists produce cultural work. The sociology of talent is interesting; talents constitute an international elite in economic, ﬁnancial, and cultural areas. These international elites can work in transnational corporations, in the bureaucracy of international organizations, in international banks, universities, or government. Talented individuals usually have considerable inﬂuence at national and international levels as they are often well connected, shape ideas, values, and beliefs. In turn, many of them are decision makers. As discussed in Chapter 1, the international mobility of talent can have important development effects on the source and destination nations, affecting their human capital base and their development potential. From the perspective of the international distribution of the beneﬁts (and costs) of talent mobility it is worth considering that, in terms of destination countries, most of this talent is concentrated in a few OECD economies (Dumont and Lemaitre 2005; Abella 2006). This chapter will review selected analytical and policy issues in the ﬁeld of talent mobility, highlighting relevant literature, identifying open topics, and complementing the discussion of Chapter 1.

2.2 Types of Talent The classiﬁcation of types of talent of Chapter 1 (devoted to productive, academic, or sociocultural activities) can be further disaggregated into:

r r r r r r

technical talent; scientists and academics; professionals in the health sector—medical doctors and nurses; entrepreneurs and managers; professionals in international organizations; and cultural talent.

2.2.1 Technical Talent (TT) By ‘technical talent’ we mean people who are experts in information technology (IT), telecommunications, and computer science. These people often hold a university or advanced technical institute degree in mathematics, engineering, or computer science. They can be developers 22

Overview of Selected Issues

of new software and hardware in the information industry or be engaged in applications in industry, services, the banking sector, government, etc. These people are sometimes referred to as ‘knowledge workers’ or owners of ‘intellectual capital’ (see Drucker 2000; D’Costa 2004; Kuhn and McAusland 2006). They often face a favourable visa system in developed countries. 1 A main exporter of technical talent in the world economy is India, the country that accounts for the largest number of scientiﬁc and engineering degrees in the US and 30,000 science and engineering (S&E) doctorates in 1999 (see D’Costa 2004). 2 The mobility of technical talent depends on the way IT services are delivered. For example in the US, IT services are delivered in two main forms: on-site services (which require the physical presence of the expert) and off-shore development (which may be delivered from the home country of the IT ﬁrm although some travelling of the expert may be involved as well; see for example McKinsey Global Institute 2005). The diaspora of technical talent is often referred to as a ‘brain bank’ whose ‘(human) capital’ is formed by the stock of talent abroad. Russia became another main source of engineers after the collapse of the Soviet system—likewise Poland and other former socialist countries. Most go to OECD countries, Israel (mainly for Russians), among other destinations (Abella 2006).

2.2.2 Scientists, Academics, and International Students Scientists and academics compose another brand of talent. They may belong to physical and life sciences such as physics, math, chemistry, biology, or social sciences such as anthropology, sociology, political science, and economics. These people are internationally mobile, particularly those who have good qualiﬁcations, are well published, and have international contacts. Scientists leave their home countries attracted by higher salaries abroad, by the possibility of increasing their knowledge base and to transmit their own, to interact with peers of international recognition, and to pursue a successful career. This set of factors can be considered as ‘pulling factors’. In Chapter 1 we also identiﬁed a set of ‘pushing factors’ that induce scientists and academics to emigrate from their home countries such as low salaries, limited professional recognition, poor career prospects, and the absence of a critical mass of peers. A 1 It is estimated that of the 331,206 HB1 visas approved in the US in 2001, 49 per cent went to Indians and 92 per cent to IT experts; see D’Costa (2004) and Kapur and McHale (2005: ch. 3). 2 It is estimated that half that number planned to stay in the US after graduation.

23

Analytical Perspectives

vehicle through which future academics and scientists move to foreign countries is as graduate students to gain a masters degree, a PhD, or to pursue a post-doctoral fellowship. The number of international students is large: according to Freeman (2006) in 2004 there were approximately two million foreign students. The US is the largest single destination, receiving around 573,000 overseas students, one-fourth from China and India. Some of those students return back home after graduating abroad while others remain in the host country to work in universities, research centres, and industry. Empirical evidence on foreign students studying and working after graduation in the US, provided by the US National Science Foundation (NSF 1998) and Regets (2001), seems to show a pattern that combines elements of ‘brain circulation’ and ‘brain drain’. 3 In a recent study Freeman (2005) shows that changes in global job markets for S&E have started to erode the traditional dominance of the US in hightech sectors; part of it is shifting now to large-size, low-income developing countries such as China and India. Concerning the effect of foreign graduates on native labour markets Borjas (2006) shows that the inﬂux of foreign students in doctoral ﬁelds has depressed the earnings of natives in these areas. He estimates that a 10 per cent immigration-induced increase in the supply of doctorates pushes down the wages of competitive professionals by about 3 to 4 per cent. This is due to both an increase in the supply of doctoral graduates and the fact that often foreign post-doctorates accept low pay post-doctoral jobs appointments in the host country. These labour market effects on native scientists and scholars are important in shaping attitudes and policies on the immigration of talent to developed countries.

2.2.3 Health Sector Professionals A speciﬁc form of talent outﬂow that is worrisome for developing countries—particularly for the poor ones—is the international mobility of professionals in the health sector, mainly medical doctors and nurses (Abella 2006). Main importing countries of medical doctors and nurses are the UK, the US, Australia, and Canada. Important suppliers of health 3 A National Science Foundation (1998) study shows that about 47 per cent of foreign students on temporary visas, who earned doctorates in 1990 and 1991, were working in the US in 1995. In turn, the majority of the foreign doctoral recipients in 1990–91 coming from India (79 per cent) and China (88 per cent) were still working in the US in 1995. In contrast, only 11 per cent of South Koreans who completed science and engineering doctorates from US universities in 1990–91 were working in the US in 1995. The NSF study reports that foreign doctoral recipients in science and engineering that were working in the US after 10 or 20 years tended to remain in the country (no signiﬁcant net return migration).

24

Overview of Selected Issues

professionals from developing countries are the Philippines, India, and several African and Latin American countries. In 2002–03 the three main source countries of overseas trained nurses in the UK were the Philippines, India, and South Africa (see Bach, Chapter 8 of this volume). The demand for foreign professionals of the health sector seems to be associated with a supply shortage of native health sector professionals. As the incidence of various diseases such as malaria and HIV-AIDS is much higher in developing countries, particularly in Sub-Saharan Africa countries, the paradox from a social point of view is that much needed medical personnel leave their home countries where they are in high social demand looking for better salaries and enhanced possibilities of career development abroad. The ﬂow of talent is not always from developing countries to industrial nations, in other words south–north. Some developing countries with a high supply of medical personnel (Cuba and China, for example) tend to send medical doctors to other developing countries (south–south ﬂows) suffering from health crises, natural disasters, and to help set up national health systems in which these professionals can make a valuable contribution. It is estimated that close to 20,000 Cuban doctors are servicing in other developing countries following government policies of a solidarity and internationalist bent. There is also a considerable movement of medical doctors and nurses within industrialized countries. For example, between 1990 and 2000 of the almost 7,000 Canadian physicians that left the country, mainly going to the US, less than 3,000 returned home (Bach 2003). Foreign health professionals are often subject to licensing requirements. These are often lengthy, complex, and costly processes that in practice constitute an effective barrier to entry to the local labour market of foreign health professionals. At the same time due to scarcity of health professionals in the industrial countries such as the US and the UK they have easier access to working visas than other professionals.

2.2.4 Entrepreneurs An important feature of migration relatively neglected in the discussion of talent mobility is the international mobility of entrepreneurship. Entrepreneurs, in the Schumpeterian tradition, are agents of resource mobilization, investment, and innovation. 4 From an international perspective, 4 For an interesting discussion of the distinctive features of the entrepreneurs in theory and practice, see Baumol (1993). A classic article on the economic role of the entrepreneur is Schumpeter (1934).

25

Analytical Perspectives

entrepreneurs can transfer innovative and wealth creation capacities from one country to another. This is a scarce trait in developing (and probably in developed countries also), so their permanent departure is likely to have a retarding effect on national development. If economic and business conditions are propitious, entrepreneurs do return home (or at least invest at home) bringing along fresh capital, technologies, and contacts acquired abroad. Thus, we can make a distinction between ‘entrepreneurial drain’ (entrepreneurs who do not return) and ‘entrepreneurial circulation’ (entrepreneurs who do return home or keep investing in both the source and destination countries). 5 Historically, worldwide successful entrepreneurs and bankers in the late nineteenth and early twentieth century in the US and Europe, such as Mellon, Vanderbilt, Carnegie, Rockefeller, the famous banking dynasty of Rothschild, with operations in London, Zurich, and other ﬁnancial centres, were foreign-born or ﬁrst descents of immigrants. 6 , 7 There is considerable variation in the scale of the business activity created by the entrepreneurship of foreign migrants. 8 Not all entrepreneur immigrants operate at the economic scale of the Rockefellers, Rothschild, or Soros. There are, indeed, many operating at the level of family businesses and small ﬁrms. A typical example is ethnic restaurants (Chinese, Indian, Brazilian, French, Italian, etc.) in the large cities of developed countries. Moreover in the carpet and furniture business in these cities there is a predominance of Turkish, Indian, Pakistani, and Moroccan 5 In this volume, AnnaLee Saxenian (Chapter 5) analyses new patterns of mobility of ‘technological entrepreneurs that move between Silicon Valley in the US and India, Taiwan, Israel and other countries’. 6 See Ferguson (1999). In this case, it is interesting to note that the Mellons, Rockefellers, and others, besides accumulating large wealth had an interest in creating centres of education and learning. In fact, they helped to establish universities and created private foundations devoted to educational purposes. Carnegie, in particular, was one of the pioneers in the formation of the system of public libraries in the US at the turn of the twentieth century. Later on names such as George Soros, an immigrant from Central Europe escaping Nazi persecution in the 1930s, abroad turned into a very successful ﬁnancier. Soros is another case of a talented social entrepreneur with a philanthropic leaning which manifested in the creation of the Soros Foundation and the network of Open Society Institutes throughout the world. 7 Some studies have observed a connection between ethnic diasporas and entrepreneurship. A classic example of this is the Jewish emigration to the US. In fact, it is estimated that the contribution of the Jewish community to business creation and banking is far larger than their share in the total population of the US. In the context of developing countries, Chinese emigration has played an important role in building a business community (of Chinese origin) in several very dynamic economies of Southeast Asia. In turn, immigration from Germany, Italy, Syria, Palestine, and Lebanon, to Argentina, Chile, and Brazil at the turn of the twentieth century, played a very important role in building the textile sector, banking, agriculture, and mining sectors in these Latin American countries. 8 This section is based on Solimano (2004a).

26

Overview of Selected Issues

owners. These patterns of immigrant entrepreneurship do not mobilize large amounts of ﬁnancial resources but they can be quite labour intensive and their businesses add to the variety of services in host countries. The sociological proﬁle of these endeavours is interesting: businesses are usually owned and run by members of a speciﬁc ethnic group and the employees (often family members) tend to be also of the same ethnicity. 9 The connections between ethnicity, entrepreneurship and migration, and their patterns of integration/exclusion with the local economy and society are themes that deserve further inquiry. For example, some ethnic migrants form entrepreneurial groups between themselves and may have more difﬁculty in integrating into local society than immigrants that develop entrepreneurial activities across a more diverse ethnic spectrum. The relationship between endowments of human capital and entrepreneurship is also an interesting subject. Entrepreneurs are not necessarily people with a high level of formal education. In addition, the ‘psychology of the entrepreneur’ is certainly different from that of the scientist, the expert, or the intellectual whom we usually identify with ‘human capital’. Typically the entrepreneur is prone to risk-taking, has a talent for combining capital, and labour, and for entertaining a vision of opportunities and the prospects for proﬁts (see Schumpeter 1934). In contrast, professionals, scientists, and engineers are often employees rather than owners and are supposed to be more risk averse than entrepreneurs. Historically, a main recipient of migrants with entrepreneurial skills in the late nineteenth century and early twentieth century was Argentina, a country that experienced rapid rates of output growth and net immigration, mainly from Spain and Italy (see Solimano 2004b). In turn, immigration allowed the mobilization of the large natural resources of the receiving countries and that was a key engine in their growth process. The other part of the mutual causation process is that immigration is an important factor in sustaining and reinforcing the dynamics of growth and prosperity. In fact, the immigration of people with entrepreneurial capacities and a favourable attitude towards risk-taking contributed to business creation, resource mobilization, colonization, and innovation— all factors that supported rapid economic growth—in the countries of the New World in the ﬁrst era of globalization (pre-1914; see Solimano and Watts 2005). 9

See Ndoen et al. (2000), and Kloosterman and Rath (2001).

27

Analytical Perspectives

More recently, in the late twentieth and early twenty-ﬁrst centuries, entrepreneurial immigrants from India, Taiwan, and China have provided an important human resource in the creation of high-tech industries both in hardware and software in Silicon Valley in the US. They have engaged in business creation and output growth in the high-tech sector contributing to economy-wide growth (see Florida 2005).10

2.2.5 Managers The international labour markets for talent can be grouped in, at least, two ‘circuits’ (or sectors) that demand qualiﬁed human resources in the global economy: the international private sector and the international public sector. In the international private sector, multinational corporations and international banks often transfer some of their key management abroad when opening branches and setting up operations abroad. The chief executive ofﬁcer (CEO) may be brought from headquarters or hired locally. Some corporations or international banks transfer their senior management from their headquarters. Certain corporate policies may be speciﬁc and companies may want to preserve their corporate culture in these matters—this is a clear point of further research. Transnational corporations and banks are another vehicle for the international transfer of talent within the international private sector.11 International investments often require that managers move internationally to establish contacts in foreign markets, make business deals, and to set up operations abroad. In addition, international investment projects may usually involve movement across countries of engineers and skilled workers in the phase of project design, project implementation, as well as during actual operations. Some of these people may move only temporarily (for a few months) while others move on a more permanent basis (for some years). 10 Various mechanisms can account for a positive effect of migration on economic growth in receiving countries (see Solimano 2001). The immigration of unskilled labour can help to increase and sustain growth in the host country by moderating the growth of wages therefore contributing to keeping proﬁts high, raising the proﬁtability of investment, and accelerating growth. These two mechanisms: (i) the transfer of entrepreneurship and highly skilled people; and (ii) an increased labour supply of unskilled workers operate, essentially, through investment and productivity growth (see Solimano 1998). An additional macroeconomic mechanism from migration to growth operates through savings. International immigration may raise savings in the host country by keeping wages down and boosting proﬁts. As proﬁt earners tend to have a larger propensity to save than wage earners, the net result is an increase in overall national savings. In a savings constrained economy this should be translated into more rapid economic growth. 11 See Vodusek (2001) for the case of international investment from Europe into Latin America.

28

Overview of Selected Issues

2.2.6 Mobility in International Organizations Multilateral and regional development banks, various international organizations, and development agencies at global and regional levels comprise what we may call ‘the international public sector’. International organizations are intended to promote international development through technical assistance, lending (in the case of development banks), and knowledge generation and dissemination. These institutions require qualiﬁed professionals to conduct their activities. Their staffs are often composed of economists, engineers, social scientists, health experts, and environmental specialists. Many of them come from developing countries. They often hold advanced degrees (master’s or PhD) earned in ﬁrstrate universities in the US, Canada, or Europe, and work for international organizations whose headquarters are located in major cities such as Washington DC, Paris, London, or Geneva. International organizations are attractive to professionals: they offer internationally competitive salaries and beneﬁts, stable careers, and their staff can get a ﬁrst-hand involvement with development problems from a privileged position. From the viewpoint of the direction of talent mobility, the international public sector encourages a ﬂow of human capital to the developed countries. The demand for professionals from international organizations leads to the migration of professionals in various directions—south–north, north–north, north–south, and south–south—depending on the location of these organizations and the source of talent.

2.2.7 Cultural Talent Our discussion of the mobility of talent has referred mainly to talent linked to the production side of the economy or the social sector (for instance, health professionals). However, talent moves also in response to the demand for cultural activities, entertainment, and aesthetic enjoyment. Here we refer to a variety of ‘cultural workers’, such as musicians, singers, writers, painters, designers, and so on. Their motivation for migration and international circulation is probably similar to other types of talent. The expectation of better economic possibilities abroad than at home, for instance higher earnings; access to a larger market; interaction with other producers of culture; and the lure of becoming better known internationally. Creative processes are rarely done in isolation and the interaction with other artists can enhance the quality of cultural work. At the same time, signalling and reputation are important elements behind 29

Analytical Perspectives

the success of artists and their earnings proﬁle. An opera singer of worldwide repute may have better access to mass media in international circuits than an unknown singer of pop music operating at a local level. Wellknown writers who operate at an international scale ﬁnd easier access to publishing. In turn, famous painters may have agents that commercialize their paintings. The cultural market, as we shall see in the next section, has features of ‘winner-takes-all’ markets such as sport and music.

2.3 Topics in the International Mobility of Talent In this section we will examine topics such as the rewards structure, the allocation of talent among competing ends, the relation between formal education and talent, the links between political regimes and out ﬂows of talent, and the relation of talent, wages, and income inequality.

2.3.1 The Rewards for Talent The market rewards for talent is a key determinant of the allocation of talent both at national level (within countries) and at international level (among countries). If the earnings of lawyers are higher than the earnings of teachers we can expect that more talented people will study law than education as talent allocation at a national level depends on the rewards of alternative occupations. In turn, the international mobility of talent depends on the expected income differential that can be earned abroad with respect to earnings at home in a given activity.12 For example if the earnings of engineers in country X, adjusted by the cost of living and the cost of moving, are higher than the earnings of engineers in country Y, we can expect that engineers will migrate from country Y to country X. As mentioned in Chapter 1 the earnings may be a salary for professionals, technical experts, and medical personnel, proﬁts for entrepreneurs, or honoraria, royalties, and international prizes for artists, writers, and painters. International income differentials across countries may be substantial: it is reported that a Filipino nurse can earn between US$75–200 per month in the Philippines compared to US$3,000–4,000 in the US (Bach 2003). In turn, the average annual net income of a US physician is reported to be substantially greater than the annual income earned by 12 Expected income differentials have to be adjusted by the costs of migration (pecuniary and nonpecuniary).

30

Overview of Selected Issues

Canadian physicians (see Bach 2003) inducing a movement of medical doctors and other health workers from Canada to the US. In general, large net salary differentials among countries of different levels of per capita income prompt emigration to the higher pay/lower tax country (see Lucas 2005). Failures of markets, both at national and international levels, to properly reward talent can lead to resource misallocation. Among the reasons why market rewards can diverge from social values is the difﬁculty in identifying the output of talent; as a consequence the rents associated with special abilities cannot be privately internalized and too few talented individuals will engage in activities that have a high social value. The return of talent can be particularly difﬁcult to assess in the ﬁelds of entrepreneurship and creative activity. The difﬁculties in rewarding entrepreneurial talent may be related to weak property rights, weak patent system for innovations, stiff taxation, or corruption (see Acemoglu and Verdier 1998). An early study of the effects of talent allocation on the rate of economic growth is Murphy et al. (1991), which shows that in economies in which rent-seeking is highly proﬁtable—due to distortions, import protection, corruption, and lobbies capturing key state agencies— the return to wealth creation, innovation, and entrepreneurship will be low compared to the return of devoting time and efforts to rent-seeking. The result may be economic stagnation and poverty as the return to talent is distorted against productive endeavours that create wealth and contribute countries to prosper. In turn, international differences in the relative returns between rent-seeking versus wealth creation/entrepreneurial oriented activities can be a cause for the emigration of entrepreneurs from high rent-seeking countries to lower rent-seeking countries where entrepreneurial talent is more valued.13 Murphy et al. (1991) tried, empirically, to assess patterns of talent allocation among what they call productive and rent-seeking activities. For that purpose they used the share of college enrolment in engineering in total college enrolment as proxy of talent allocated to productive activities and the share of enrolment in law as a share of total college enrolment a variable denoting talent allocated to unproductive, rent-seeking activities 13 Acemoglu (1995) also makes the case that the valuation of entrepreneurship is affected by social norms, and societies’ recognition of wealth creating versus other activities. In some countries entrepreneurs have high social esteem, and in others low. This theme is also present in Max Weber’s Protestant Ethic and the Spirit of Capitalism ([1930] 2000) in which countries that have a protestant ethic are supposed to be more prone to wealth-oriented systems due to a higher valuation of thrift, effort, and risk-taking activities, typical of the entrepreneurial spirit.

31

Analytical Perspectives

(admittedly this is a crude approximation as lawyers are also needed in the business sector in activities that create value). This variable was then used as an additional explanatory variable in growth equations à la Barro in a panel including 91 countries (or 55 countries with more than 10,000 college students) in the period 1970–85. In the sample of all countries the authors ﬁnd a positive and statistically signiﬁcant effect of the share of college graduates in engineering in the initial year, and a negative but statistically insigniﬁcant effect on growth rates of the proportion of college graduates in law. As the authors state, ‘the signs of the coefﬁcients are consistent with the theory that rent-seeking reduces growth while entrepreneurship and innovation raises it’. Rewarding talent engaged in starting new activities and developing new products or techniques—the distinctive role of the entrepreneur according to Schumpeter—in which the demand is difﬁcult to anticipate, presents several problems. History matters in the formation of expectations and therefore with new activities and products history literally does not exist. Thereby, talent needs to be compensated for this fundamental uncertainty. Both Frank Knight and Joseph Schumpeter underscored this point in their writings on the return on capital and entrepreneurship. For Schumpeter the entrepreneur is somebody who breaks the ‘status quo’ and innovates, and development is the shift between qualitatively different ‘circular ﬂows’ associated with a stream of new innovations led by the entrepreneur. This is different from the repetition of capital accumulation and growth under the same set of organizations and techniques (stationary equilibrium).14 This uncertainty on the value of talent is not only valid for the entrepreneur (a self-employed individual) but also for hired new talent (employees). In the case of employees there is also uncertainty on the market valuation of new products produced by hired talent. However, this is not the only source of uncertainty for the ﬁrm, it also has to ascertain the actual productivity, work effort, and social integration at ﬁrm level of talented new employees. Here the contracts structure (including monitoring capabilities) matters a good deal, as underscored by the new contract theory (see Bolton and Dewatripont 2005). Valuing talent is also difﬁcult in the ‘creative industries’ (see Caves 2000) of painters, writers, singers, classic musicians, ﬁlm directors, and designers. In the creative industry there is often uncertainty related to the ways markets will value 14 See Schumpeter (1934). The super-normal proﬁts associated with innovation have to compensate for this sort of risks.

32

Overview of Selected Issues

new paintings, new books, or new ﬁlms of creative people. This certainly has an impact on the behaviour of publishing houses, record companies, ﬁlm studios, opera houses, etc. A variety of contract structures have been developed in the creative industries to deal with these uncertainties that attempt to share these risks between agents and principals (see Caves 2000). Another feature of the economics of talent is the existence of increasing returns to ability in which small differences in individual abilities can generate large differences in pay and reward. This is the essence of the theory of winner-takes-all markets applied to arts, sports, and other activities that involve talent. In fact, the number one tennis player in the world makes an income several times greater than the second or third player who can be nearly as talented as the number one. In this context, the possibility of making super-normal rents attracts talent to these activities. Authors such as Frank and Cook (1995) have argued that the lure of such rents attracts an excessive allocation of talent to these activities compared to what is socially optimal if true probabilities of making the big prize were known ex ante. In contrast, activities with diminishing returns may not attract the brightest people, as effort tends to be only weakly compensated at the margin. This is often the case for teachers, public employees, and medical doctors in public health systems. Also teamwork and joint production in which individual contributions are harder to detect tend to discourage really outstanding talent. Bureaucratic organization with ﬂat remuneration structures may fail to attract talent. However, at international level the salary differentials between international organizations and national agencies may be very large, inducing the migration of talent to international organizations, particularly those run more on merit than on other considerations.

2.3.2 Education and Talent Allocation The literature on talent allocation stresses the importance of education in nurturing and developing talent. However, there is not consensus on the mechanism through which education affects the allocation and mobility of talent. The standard assumption is that investment in human capital and talent is positively correlated: talented individuals choose more reputable and better-paid careers. In other words, the highest return of investment in human capital goes to the most talented individuals. In addition, if education has a signalling effect (Spence 1974) talented individuals choose to be educated, preferably in good universities, to signal that 33

Analytical Perspectives

they have high ability. The critical notion in the ‘education as signalling’ approach is that information on the market is the key consideration in the choice of education by talented people. Authors such as Grossman (1999), Benabou and Tirole (2000), and Hvide (2001) have contested this assumption by considering that education plays also an important role in providing information to the individuals who are educated about their own abilities. Thus education helps individuals to gather private information about their capacities and potential performance in labour markets after completing their careers. In these papers employment contracts are endogenous and affect the allocation of talent. Interestingly, Hvide (2001) arrives at the following result: in the context of education as a learning process in which information capital is accumulated, the most able individuals who have a high level of self-conﬁdence will skip (higher) education and go directly to the marketplace, often as entrepreneurs. As they have a high degree of self-conﬁdence they avoid the potentially large opportunity cost of spending several years pursuing a career. They prefer to accumulate wealth (undertaking proﬁtable projects) from the start. In contrast, those individuals with intermediate self-conﬁdence educate themselves before choosing a sector and a contract type. Summing up, the most able skip education because those in the middle can imitate them too cheaply; however, those in the middle educate themselves to distinguish themselves from the least able people. These principles can, in principle, be applied also to the decision of education versus work in the broader context of global labour markets and also to the relation between education and taxation (Bergman 2003).

2.3.3 Democracy, Authoritarianism, and Outﬂows of Human Capital The outﬂow of human capital of certain countries is not only led by economic considerations of market rewards. The political regime— democracy or authoritarianism and different gradations of these regimes—also matters in the decision to emigrate as this affects the quality of life and the freedom to employ each individual’s talent in the way they choose. Thus the political regimes prevailing in host and source countries and also the quality of democracy, matter in the decision to emigrate or leave a country. In general, it is reasonable to assume that individuals will prefer to live in countries where civic freedoms and individual rights (freedom of speech and association, access to fair trial, religious freedom, right to elect public authorities, etc.) are respected and economic rights (property rights, contract enforcement) are protected. This tends to occur 34

Overview of Selected Issues

more often in democracies than in dictatorships. The extent these rights are respected is lower in poorly working democracies than in more mature democracies.15 As well-educated individuals are more mobile than lowincome people we can expect that nondemocratic regimes or poorly working democracies are likely to prompt the emigration of educated individuals. This was indeed the case for the Latin American dictatorships of the 1960s and 1970s in Argentina, Brazil, Chile (1973–89), and Uruguay, with the massive emigration of university professors and intellectuals who saw the universities intervened by the military, their research budgets cut and salaries frozen and their tenured positions affected by political considerations. As a consequence of hostile public policies towards universities and independent think tanks these countries suffered serious brain drain with consequences not easily reversible. In these cases, emigration (very often of individuals with a high stock of human capital) became an individual response to non-democratic political regimes which fail to respect civic rights.16 , 17 The restoration of democracy in Latin America in the 1980s and 1990s led to some return of scientists and intellectuals, although this ﬂow would have been probably larger if the economic conditions in universities and research centres—salaries and resources available for research—had been better.18 There seems to be no clear relationship between academic 15 See Olson (2000) for an insightful analysis of the economic consequences of democracies and autocracies. In turn, Albert Hirschman provides a view relevant for understanding the relation between politics and migration. In Exit, Voice and Loyalty he draws a distinction between purely economic choices and collective action. While exit is often an economic decision, voice belongs to the realm of collective or political action. This framework suggests that individuals, who are unsatisﬁed or discontent with current political and economic conditions in their home countries and where ‘voice’ becomes an ineffective expedient to change things, may choose to exit their countries (i.e., to emigrate). Thus voluntary migration (different from the problem of refugees and asylum which are instances of forced migration) is a decision also affected by political conditions that are considered inadequate by nationals and foreign residents. 16 Emigration was generally restricted in former socialist countries. One of the justiﬁcations for restricting exit and emigration was that educational and other social investment made by the state on citizens would be lost by emigration. However, given the lack of civil liberties and the poor economic performance of these regimes, particularly in their phase of maturity and then decline, it is likely that the outﬂows of people would have been sizeable under liberal emigration regimes with the ensuing political and economic costs for the regimes. However, emigration was used in controlled and selective fashion to get rid of political opponents and dissidents. 17 For an interesting, albeit dramatic, account of how emigration of the most talented individuals of the German Democratic Republic was used, as a state policy during communism, to get rid of active opposition and discontent, debilitated the GDR to the extent that it contributed to its unexpectedly rapid demise after the end of the communist regime in 1990, see Hirschman (1995). 18 See Pellegrino and Martinez (2001); also Hansen et al. (2002).

35

Analytical Perspectives

freedoms, democracy, and the amount of resources devoted to universities and research activity. This can be illustrated by the recent experience of post-socialist countries such as Russia and Poland. In these countries, particularly Russia, the end of communism and the transition to markets and democracy in the 1990s has coincided with a net outﬂow of skilled professionals, scientists, and information technology specialists. For example in Russia it is estimated that a signiﬁcant number of people employed in ‘science and scientiﬁc services’ have left Russia since the early 1990s. Germany and Israel account for 86 per cent of the Russian emigrants in this category in 2000 (Gokhberg and Nekipelova 2002). The outﬂow of scientists in Russia is largely attributed due to a squeeze in the budget of the science and technology sector that cut salaries and research budgets, with deteriorated working conditions in the science and technology sector. This, along with changes in legislation that had recognized the right of national citizens to take employment abroad (a right restricted under communism), seems to be an important variable explaining the outﬂow of scientists and professionals from Russia since the early 1990s (Gokhberg and Nekipelova 2002). Obviously, countries that live through periods of collapse of democracy, civil war, and violence do not create a good environment for domestic science, arts, and creativity to ﬂourish. The result is an emigration of talent to more favourable environments.

2.3.4 Talent Migration, Wage Convergence, and Inequality A recognized feature of current globalization is the fact that global labour markets are far less integrated than goods and capital markets. The issue of wage convergence for different categories of labour is investigated in Freeman (2006) using information of wages for a large world dataset covering the period 1998–2002. This author ﬁnds that measured in the same currency and using purchasing power exchange rates, the wages of the top 20 per cent in the earnings distribution show differences in a factor of four or ﬁve to one among countries. It is apparent that labour markets for higher paying categories of labour (more closely related to our description of talented individuals) are not well integrated internationally as measured by the dispersion of salaries. In general, one would expect that wage dispersion is low if labour markets are well integrated. In addition, Freeman (2006) ﬁnds that, internationally, prices and interest rates tends to have lower dispersion than wages conﬁrming the hypothesis that the degree of goods and capital market integration 36

Overview of Selected Issues

is higher than the integration of labour markets even for high-skills labour. Looking at the effects of overall migration on global income distribution, economic historian Jeffrey Williamson studied the process of mass migration of the ﬁrst wave of globalization of c. 1870–1913. He asserts ‘Where immigration increased the receiving country’s labour supply, inequality rose sharply; where emigration reduced the sending country’s labour supply, inequality declined’ (Williamson 1997). Therefore, inequality should have declined in Europe (source region) and increased in the US, Canada, Argentina, Australia, and Brazil (recipient countries) in the ﬁrst wave of mass migration of the late nineteenth century and early twentieth century. In fact, historical trends show that ‘When emigration trends were big, egalitarian trends were strong; when countries had to accommodate heavy immigration, non-egalitarian trends were strong’ (Williamson 1997). In principle global inequality (inequality between countries), must be reduced with international migration as people move from relatively low-wage countries to nations with higher wages, thereby reducing the real wage gaps between sending and receiving countries. This is, in turn, a key element in the whole discussion about convergence.19 An important effect of international migration in that period was to contribute to convergence of per capita national income levels and factor prices in the Atlantic economy. However, this is a story of mass migration and we are considering here the migration of talent that is less important in quantitative terms in affecting overall factor prices as it was the case with mass migration process of the ﬁrst wave of globalization of the late nineteenth century and early twentieth century. In the case of mobility of talent we can expect changes in the micro remunerations of different types of talent, such as technical experts, professionals, scientists, entrepreneurs, and artists, relatively depressing their remunerations in the recipient countries and increasing them in the source country. 19 It is estimated that around 70 per cent of the wage convergence in the ‘Atlantic economy’ (Europe, the US, and Canada) between 1870 and 1900 is explained by the collapse of the wage gap between Europe and the New World following massive international migration from the former to the latter (see O’Rourke and Williamson 2000). The story of convergence is one of lower real wages in labour abundant nineteenth century Europe catching-up with higher wages in the labour-scarce New World. In addition, lower wage countries such as Argentina and Canada were catching up with higher wage countries such as the US and Australia. By the late twentieth century, the wage gap between Argentina and the then developed countries had widened as the US, Canada, and Europe came to hold the highest per capita incomes in the world. With the onset of the First World War this process of convergence in wages across the Atlantic economy abruptly stopped.

37

Analytical Perspectives

2.4 Elements of a Policy Research Agenda on Talent Mobility From the previous discussion we can identify the following elements of a policy and research agenda on talent mobility for global development: 1. To ﬁll the information gap, particularly in developing countries, on the magnitude and characteristics of talent mobility. Many developing countries simply do not know how many of their scientists, technology experts, physicians, university professors, entrepreneurs, and artists are abroad. In developed countries the statistical base on the mobility of human resources is better. For example the OECD has developed a system of recording and of building a statistical and analytical base of the human resources devoted to science and technology (HSHR) in the OECD countries (see OECD 2002). Developing countries should strengthen their statistical capabilities on the mobility of highly skilled and educated individuals. 2. To put talent mobility on the development agenda. It is important to recognize that increased mobility of highly skilled individuals implies that many developing countries and developed countries too (as data of intra-OECD mobility of human resources show) are exporting talent. As a consequence part of their most qualiﬁed stock of human wealth is beyond their national borders. As with ﬁnancial capital, human capital emigrates when the incentives structure at home is distorted and the value of talent is not properly recognized. However, international inequalities matter also and development gaps among countries drive talent to richer countries. Future research in the topic should assess the importance of national and international factors in driving talent mobility around the global economy. 3. To enable talent circulation for global development may require action in several fronts. As mentioned before, countries such as India and Taiwan have been successful in building a domestic high-tech industry that is internationally competitive. A critical contribution to this has been made by expatriate entrepreneurs and technology experts that have been successful in, for example, the US and the UK. Boosting connections among entrepreneurs can increase the international circulation and mobility of capital, technology, and managerial capacities. To attract human and ﬁnancial capital back home may require some favourable tax treatment in the initial stage. Land grants for setting up new companies and other subsidies of a temporary, performance-based nature can also be helpful. For 38

Overview of Selected Issues

scientists and researchers increased connections among universities and research centres at home and abroad are needed. This may involve cooperation in research projects, organization of joint conferences, institutional agreements, fellowships programmes, and so on. 4. To encourage international initiatives such as concerts, exhibitions, shows, and cultural exchanges, in the cultural sector, promoting cooperation and enhance the circulation of talent. 5. Developed and developing countries need to reassess their rewards structure for talent. The national public sector and the universities in developing countries are critical sectors in developing countries in which rewards structures may be insufﬁcient to nurture, retain and attract talented professionals. Poor remuneration, lack of recognition, the absence of professional tracks in public administration, obstacles for business creation and innovation are all factors that lead to talent outﬂows and brain drain from the developing world. 6. To adjust national tax systems which also affect the international mobility of talent, as international net income differentials may reﬂect differences in personal or corporate income tax rates across countries. Here it is important that governments recognize the constraints that increased mobility of talent poses for taxing human capital. 7. To study further the relation between formal education and talent and its effects on the international mobility of professionals. Actual mobility of professionals is affected by the lack of international compatibility and recognition of university degrees and professional titles earned in foreign universities. The integration of higher education would need some common framework that would enable comparing the diverse national education systems, such as the ‘Bologna Process’ in the European Union, although the international marketplace provides the real test of any university degree, in the valuation of international talent.

2.5 Concluding Remarks In the 1960s and 1970s the discussion on talent mobility was dominated by concerns on brain drain. The dominant view at that time was that permanent emigration of talent from the developing countries had 39

Analytical Perspectives

adverse consequences for national development, autonomous policymaking, and qualiﬁed human resources. In the early twenty-ﬁrst century, the international circulation of talent has increased signiﬁcantly as we are living in a world of increased economic interdependence, rapid technical change, and lower transportation costs. The direction of talent circulation is multiple: south–north, south–south, north–north, and north–south. Individuals with special abilities move across countries in response to economic incentives and clusters of expertise, which concentrate in certain locations. That talent may eventually return home if the appropriate conditions for work and investment exist in their source countries. The causes of the outﬂow of talent reﬂect failures in rewarding talent in developing countries as well as superior paying structures and better work opportunities in advanced economies. Distortions of the reward structures against innovation and productive activities may produce a suballocation of talent in growth oriented activities and/or in an outﬂow of talent to foreign countries that provide better opportunities for wealth creation. Rent-seeking, patronage, and the politicizing of professional appointees in national and international public administration are other deterrents for talent interested in public policy. An agenda of talent mobility that works hand in hand with global development is required to address these issues.

References Abella, M. (2006). ‘Global Competition for Skilled Workers and Consequences’, in C. Kuptsch and E.F. Pang (eds), Competing for Global Talent. Geneva: International Institute for Labour Studies. Acemoglu, D. (1995). ‘Reward Structures and the Allocation of Talent’, European Economic Review, 39: 17–33. Acemoglu, D. and T. Verdier (1998). ‘Property Rights, Corruption and the Allocation of Talent: A General Equilibrium Approach’, Economic Journal, 108: 1381– 403. Bach, S. (2003). ‘International Migration of Health Workers: Labour and Social Issues’, Sectoral Activities Program Working Paper, 209. Geneva: ILO. Baumol, W. (1993). Entrepreneurship, Management and the Structure of Payoffs. Cambridge, MA: MIT Press. Benabou, R. and J. Tirole (2000). ‘Self-Conﬁdence: Intra-Personal Strategies’, CEPR Discussion Paper, 2580. London: Centre for Economic Policy Research. Bergman, M. (2003). ‘Taxation, Inequality and the Allocation of Talent’, SSE/EFI Working Paper Series in Economics and Finance, 522.

40

Overview of Selected Issues Bolton, P. and M. Dewatripont (2005). Contract Theory. Cambridge, MA: MIT Press. Borjas, G. (2006). ‘Immigration in High-skills Labour Markets: The Impact of Foreign Students on the Earnings of Doctorates’, NBER Working Paper, 12085. Cambridge, MA: National Bureau of Economic Research. Caves, R.E. (2000). Creative Industries: Contracts Between Art and Commerce. Cambridge, MA: Harvard University Press. D’Costa, A.P. (2004). ‘Globalization, Development, and Mobility of Technical Talent: India and Japan in Comparative Perspective’, WIDER Research Paper, 2004/62. Helsinki: UNU-WIDER. Drucker, P. (2000). Managerial Challenges for the 21st Century. New York: Basic Books. Dumont, J.C. and G. Lemaitre (2005). ‘Counting Immigrants and Expatriates in OECD Countries: A New Perspective’, OECD Social, Employment and Migration Working Papers, 25. Paris: OECD. Ferguson, N. (1999). The House of Rothschild: The World’s Banker 1849–1999. New York: Viking. Florida, R. (2005). The Flight of the Creative Class: The New Global Competition for Talent. New York: HarperCollins. Frank, R.H. and P.J. Cook (1995). The Winner-Take-All Society. New York: Free Press. Freeman, R. (2005). ‘Does Globalization of the Scientiﬁc/Engineering Workforce Threaten US Economic Leadership?’, NBER Working Paper, 11457. Cambridge, MA: National Bureau of Economic Research. Freeman, R. (2006). ‘People Flows in Globalization’, NBER Working Paper, 12315. Cambridge, MA: National Bureau of Economic Research. Gokhberg, L. and E. Nekipelova (2002). ‘International Migration of Scientists and Engineers in Russia’, International Mobility of the Highly Skilled. Paris: OECD. Grossman, M. (1999). ‘The Human Capital Model of the Demand for Health’, NBER Working Paper, 7078. Cambridge, MA: National Bureau of Economic Research. Hansen, T., N. Agapitova, L. Holm-Nielsen, and O. Vukmirovic (2002). ‘The Evolution of Science and Technology: Latin America and the Caribbean in Comparative Perspective’, mimeo. Washington, DC: World Bank. Hirschman, A. (1995). ‘Exit, Voice and the Fate of the German Democratic Republic’, in A. Hirschman (ed.), A Propensity to Self-Subversion. Cambridge, MA: Harvard University Press. Hvide, H.K. (2001). ‘Education and the Allocation of the Talent’, available at: http://ssrn.com/abstract=285752 Kapur, D. and J. McHale (2005). Give Us Your Best and Brightest: The Global Hunt for Talent and Its Impact on the Developing World. Washington, DC: Center for Global Development. Kloosterman, R. and J. Rath (2001). ‘Immigrant Entrepreneurs in Advanced Economies: Mixed Embeddness Further Explorer’, Journal of Ethnic and Migration Studies, 27(2): 189–201.

41

Analytical Perspectives Kuhn, P.J. and C. McAusland (2006). ‘The International Migration of Knowledge Workers: When is Brain Drain Beneﬁcial?’, NBER Working Paper, 12761. Cambridge, MA: National Bureau of Economic Research. Lucas, R.E.B. (2005). International Mobility of Talent and Economic Development: Lessons from Low-Income Countries. Cheltenham: Edward Elgar. McKinsey Global Institute (2005). The Emerging Global Labour Market: Part I—The Demand for Offshore Talent in Services. Cambridge, MA: Harvard Business School Press. Murphy, K., A. Shleifer, and R. Vishny (1991). ‘The Allocation of Talent: Implications for Growth’, Quarterly Journal of Economics, 106(2): 503–30. National Science Foundation (1998). ‘International Mobility of Scientists and Engineers to the United States: Brain Drain or Brain Circulation?’, NSF Issue Brief, 98–316. Ndoen, M., C. Gorter, P. Nijkamp, and P. Rietveld (2000). ‘Entrepreneurial Migration and Regional Opportunities in Developing Countries’, Tinbergen Institute Discussion Paper, 2000-086/3. OECD (2002). Proceedings from Seminar International Mobility of Highly Skilled Workers: From Statistical Analysis to the Formulation of Policies, 11–12 June 2001. Paris: OECD. Olson, M. (2000). Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships. New York: Basic Books. O’Rourke, K. and J. Williamson (2000). Globalization and History: The Evolution of a Nineteenth-Century Economy. Cambridge, MA: MIT Press. Pellegrino, A. and J. Martinez (2001). Una Aproximación al Diseño de Políticas sobre Migración Internacional Caliﬁcada en América Latina. Santiago: CELADE-ECLC. Regets, M.C. (2001). ‘Research and Policy Issues in High Skilled International Migration: A Perspective with Data from the United States National Science Foundation’, IZA Discussion Paper, 366. Schumpeter, J. (1934). The Theory of Economic Development (ﬁrst published in 1911, in German). Cambridge, MA: Harvard University Press. Solimano, A. (ed.) (1998). Roadmaps to Prosperity: Essays on Growth and Development. Ann Arbor, MI: University of Michigan Press. Solimano, A. (2001). ‘International Migration and the Global Economic Order: An Overview’, World Bank Policy Research Department Working Paper, 2720. Washington, DC: World Bank. Solimano, A. (2004a). ‘Globalizing Talent and Human Capital: Implications for Developing Countries’, in Papers and Proceedings, Annual World Bank Conference on Development Economics for Europe, 24–6 June 2002, Oslo. (Also ECLAC Working Paper, 15 (2003), ECLAC: Santiago.) Solimano, A. (2004b). ‘Development Cycles, Political Regimes and International Migration: Argentina in the Twentieth Century’, in G. Borjas and J. Crisp (eds), Poverty, International Migration and Asylum. Basingstoke: Palgrave Macmillan for UNU-WIDER.

42

Overview of Selected Issues Solimano, A. and N. Watts (2005). ‘International Migration, Capital Flows and the Global Economy: A Long Run View’, Series Macroeconomics of Development, 35. Santiago: ECLAC. Spence, M. (1974). Market Signalling. Cambridge, MA: Harvard University Press. Vodusek, Z. (2001). Foreign Direct Investment in Latin America: The Role of European Investors. Washington, DC: Inter-American Development Bank. Weber, M. ([1930] 2000). The Protestant Ethic and the Spirit of Capitalism. London: Routledge. Williamson, J. (1997). ‘Globalization and Inequality: Past and Present’, World Bank Research Observer, 12(2): 117–35.

43

3 The International Mobility of Technical Talent: Trends and Development Implications∗ Anthony P. D’Costa

3.1 Introduction The emergence of the new economy, in which services and information and communications technologies (ICT) play a signiﬁcant role, has created new opportunities for developing countries endowed with skilled workers (D’Costa 2006a). Competition among ﬁrms has intensiﬁed due to rapid innovations, shorter product cycles, and quick delivery (to market) time. It is also driven by the global availability of skilled workers (Desai et al. 2002; Florida 2005). While labour markets for skilled workers are not as globalized as capital markets (Brown 2001: 26–9), growing evidence of the international mobility of technical talent (Docquier and Rapoport 2004) has raised numerous questions on the causes and consequences of such movement for both sending and receiving countries (Solimano, Chapters 1 and 2 of this volume). The liberalization of cross-border movements of people, even temporarily, arguably yields far more beneﬁts to developing countries than economic integration based on the ﬂows of goods and capital (Rodrik 2005). Consequently, questions about supply and demand of skilled workers, citizenship, and related immigration policies have drawn considerable attention (Cornelius and Tsuda 2004: ∗ Thanks to Andrés Solimano and Tony Addison for their invitation to this project and to Joao Carlos Ferraz and project participants at the Santiago meeting for their feedback. Independently, research funded by the Abe Fellowship Programme generated Japan-related information. Janette Rawlings provided research support and offered substantive and editorial comments. All errors and omissions are mine.

44

Technical Talent

3–48). In tandem, the demand by developing countries for the temporary movement of skilled workers to OECD markets under the General Agreement on Trade in Services (GATS) Mode 4 has brought the subject of international mobility of technical talent under greater scrutiny (Mattoo and Carzaniga 2003). It is widely recognized that this mismatch in the supply and demand of technical skills is driven by recruitment of talent by multinationals, increasing global trade and investment, demographic shifts, and increasing information technology (IT) business opportunities in emerging economies. The objective of this chapter is to chart the complex dynamics of the movement of technical talent in the world economy and assess broadly the impact of such mobility on both sending and receiving countries. As more people move across borders, both temporarily and permanently, the economic and social fortunes of both poor and rich countries are bound in inextricable ways. Thus, from a developmental point of view, the distributional question of who gains from the mobility of talent and how best to capture the beneﬁts of mobility for national development become salient. Based on secondary data, the study presents a global view of the movement of talent and its development and policy implications. It also relies on primary data from the Indian and Japanese IT industry to highlight international mobility issues. Admittedly, the data across countries are scattered and neither strictly comparable nor always reliable. A modest attempt has been made to synthesize the disparate data and multifaceted processes and outcomes of international mobility to highlight the trends and implications for development. The next section of this chapter provides some deﬁnitions of variables commonly associated with the international migration literature, especially involving high skilled workers in the IT industry. The third section describes some of the socioeconomic characteristics of IT technical talent. The following section introduces some basic patterns of global migration in the world economy. The ﬁfth section delves into the main motivations behind the movement of talent. The sixth section assesses the impact of mobility of technical talent on both sending and receiving countries. The ﬁnal section brieﬂy discusses some of the policy implications of the international mobility of technical talent.

3.2 Some Basic Concepts Deﬁning ‘technical talent’ is problematic as it is linked to a range of technical skills. It is difﬁcult to measure skills as a variety of factors 45

Analytical Perspectives

contribute to skill development, such as work experience, length and type of training, formal education, and the economic value of the work performed. Barring exceptional talent as in athletes, artists, and entertainers, high skilled workers possess tertiary education of at least four years beyond the twelve years of primary and secondary education (Lowell and Findlay 2001: 7). The reference to ‘technical’ suggests formal training and education in ﬁelds such as the sciences and engineering. Generally, a four-year university degree would be the requisite formal education to produce technical talent, but shorter vocational training could be included as well. The OECD includes technical talent under the broader category of ‘human resources in science and technology’ (HRST). 1 This refers to physical and life sciences, engineering, social sciences, health, education, and business. Hence, managers, doctors, economists, and other professions requiring a college degree would be classiﬁed under HRST. 2 For the purpose of this chapter, technical talent will include high skilled workers and HRST who at the minimum have a four-year tertiary science or engineering degree and who for all practical purposes are the key human resources for the information technology sector. Some IT professionals become entrepreneurs and venture capitalists, who are also highly mobile, especially between their home and adopted countries (see Saxenian, Chapter 5 of this volume). Most IT experts and entrepreneurs would have an engineering background in computer science, electronics, or software engineering; some may come from other broadly technical ﬁelds such as engineering and the sciences. A few could have nontechnical backgrounds with either a degree in computer applications with knowledge in programming or with extensive IT training or marketing skills who are familiar with the IT market. Generally, engineers with an MBA serve as consultants and other managerial positions within the IT industry. Two concepts are used to analyse the mobility of technical talent. They are stocks and ﬂows. Similar to foreign direct investment (FDI), the stock of talent is measured at a given moment in time, while ﬂows are measured over time. Also, there are both inﬂows and outﬂows of talent. Hence, net inﬂows (or outﬂows) capture better the direction of mobility of technical talent and the availability of skills for any given country over the year. Both stocks and ﬂows are related, in other words each year’s 1 Research scientists form a subgroup but may overlap with other categories mentioned below (see Thorn and Holm-Nielsen, Chapter 6 of this volume). 2 Nurses do not fall into this category. However, healthcare workers are a signiﬁcant category in analysing international migration issues (see Blouin 2005).

46

Technical Talent

ﬂows cumulatively add to the stock of technical talent for the receiving countries. Net ﬂows by level of education suggest that those with higher professional qualiﬁcations tend to be more mobile than those with less education, though global migration also selectively includes less-skilled workers. Intuitively, net inﬂows of technical talent are positive for most OECD economies, while for developing countries such ﬂows tend to be negative. However, with new opportunities in sending countries, net ﬂows do not necessarily capture the more ‘circular’ movements of professionals between sending and receiving countries. A distinction needs to be made between temporary and permanent movement of talent. Foreign students pursuing university-based technical training constitute an important supply of future talent. Technically, foreign students are considered to be temporary visitors. However, the inﬂows of foreign students add to the future stock of talent in the receiving country should they not return home. As the demand for technical workers has been typically higher in OECD countries than in those that are non-OECD, it is inevitable that some students from developing countries seek employment in the host economies. At the same time, as employment opportunities increase in sending countries, the incentives for foreign students to return home also increase. Moreover, as the international outsourcing of IT services and design takes on greater prominence in global business strategy, the mobility of talent takes on a combination of temporary, permanent, and circulatory character.

3.3 Characteristics of Technical Talent 3.3.1 Education If technical talent is distinguished from other categories of workers by educational background in engineering and the sciences at the tertiary level, then countries with strong technical tertiary educational infrastructure are positioned well to generate technical talent. Governments explicitly pursuing industrialization with a science and technology policy have typically built up a good technical education system. As the global demand for technical professionals increases the national educational infrastructure tends to respond favourably to meet such demand. Thus science and technology spending contributes to the international mobility of technical talent (Solimano and Pollack 2004: 3). 47

Analytical Perspectives

Technical talent at its core embodies both generic training in logic, mathematics, and software programming and specialization in particular technical ﬁelds such as electronics, computer science, mathematics, physics, and life sciences. The minimum qualiﬁcation is a bachelor’s degree in engineering or the sciences, although there are demands also for master’s and PhD degree holders. Many engineering students from India, China, and other developing countries obtain a bachelor’s degree at home and then a master’s or PhD degree abroad to work as researchers in both commercial and nonproﬁt, public institutions. 3 In India there are also nonengineering students who obtain technical training in IT through diploma programmes such as the Master’s in Computer Applications (MCA). These graduates, along with nonengineers with mainly programming skills, also comprise technical talent. However, diploma holders tend to be less mobile internationally than engineers unless they have some solid ‘domain’ expertise such as in ﬁnance, retail, manufacturing, media and the entertainment industry, or supply chain management. Domain expertise is purely a function of work/project experience. Graduates with several years of experience in particular domains are highly sought after. However, as a general rule, without a technical background, entry into particular IT domains is difﬁcult.

3.3.2 Sociodemographic Characteristics The opportunity costs are high, but technical education promises higher expected returns over the lifetime of the graduate. It is also expensive in terms of national resource allocation. Resources devoted to tertiary education in developing countries reduce resources for basic primary education. A political economy analysis of higher education would suggest that a class bias is inherent in tertiary education, and especially technical training, as it requires greater resources per student. However, as a matter of public policy and higher expected social returns, promoting higher education can be justiﬁed so long as basic education is not ignored. But who gets to pursue technical education? It is intuitively clear that in market-driven economies households already enjoying higher economic and social status and predisposed favourably toward higher education are the main beneﬁciaries of tertiary education. Early socialization toward higher education suggests a strong middle class bias in tertiary education. 3 For most students from developing countries a four-year undergraduate overseas education would be ﬁnancially prohibitive.

48

Technical Talent

In developing countries, professional training, especially technical education, is perceived as a gateway to well paid employment. The economics of scarcity limits the entry of students in technical education as the demand for education exceeds the supply. Consequently, the premium associated with a degree from reputable technical colleges provides a generalized incentive for middle class students to pursue technical education. Given education’s public good characteristics and middle class aspirations, politically governments are compelled to subsidize technical education. The worldwide expansion of IT related industries and the growing signiﬁcance of the weightless economy suggest higher enrolments in technical training, especially in developing countries. In some countries, for example India, the growth in technical education has regional dimensions (D’Costa 2003a). The southern states of Karnataka, Tamil Nadu, Kerala, and Andhra Pradesh, for historical and institutional reasons, have a better record on education in general compared to northern and eastern states. Both Karnataka and Tamil Nadu have further promoted technical education by deregulating engineering education. Low-income households and rural families can access higher technical education if they have a good secondary education, some savings, and the willingness to risk current income for future returns. Afﬁrmative action programmes attempt to address pre-existing social and economic inequality. The reservations system in India gives preferences to historically and structurally oppressed scheduled castes and tribes for admissions to public universities and institutions of higher learning, which has had some impact on technical education for the minorities. The relative newness of high technology and the IT industry suggest that the stocks and ﬂows of technical talent will be relatively young. 4 Although the gender composition of technical talent favours males over females, the IT industry is creating opportunities for women. The high education and intellectual content of software engineering, the social acceptability of white collar in general, and good remuneration make the IT industry attractive for technically trained women.

3.3.3 Economic Characteristics Technical talent is prized because of the economic value it generates for ﬁrms and national economies. The relationship between education 4 The average age of immigrants tends to be less than the receiving country population. However, Israel, which has immigration as a central policy for nation building, has been a recipient of older immigrants (Paltiel 2001: 167–8).

49

Analytical Perspectives

and income, though inconclusive at the general macroeconomic level, is intuitively strong at the sectoral level. Professionals with technical degrees are better placed to ﬁnd employment in today’s globalizing economy fuelled by ICT than those with nontechnical degrees. With experience, the market value of technical professionals increases considerably in an industry characterized by growth and a relatively young workforce. It is evident that those with the right mix of education and skills can exploit the new opportunities. As with any economic activity, job speciﬁc and ﬁrm speciﬁc training is critical to transform raw talent to meet particular project needs. The market value of talent increases with ﬁrm reputation, years of experience, and progressively more experience with the management of complex projects. Though speciﬁc technical skills are embodied in individuals, it is the experience gained through teamwork in projects that rewards technical professionals over time. Also, the salary structure of the IT industry reﬂects the complexities of the tasks done by IT professionals. For example, among engineers a programmer is at the lowest end of the job hierarchy in the IT industry, while project leader, project manager, network administrator, and systems integrator will be ranked much higher. Their salaries will vary considerably, depending on the position, years of experience, and nature of projects handled. Thus engineers programming for embedded software are likely to be paid more than those programming for banking software since greater technical skills are needed for embedded software. However, project execution for banking software could be equally challenging. Furthermore, salaries also vary by ﬁrm size and reputation and the extent to which ﬁrms provide bonus and employee stock options to its employees. High economic value for technical talent is justiﬁed by high labour productivity relative to other sectors, often measured in terms of revenues per employee. High value is also due to the increasingly ubiquitous nature of IT products and services in the new economy, which can be seen as an intermediate product and service, designed to facilitate the production of ﬁnal goods and services. Furthermore, network externalities in the IT industry are also a signiﬁcant driver of growth. As ICT diffuses, so do the efﬁciencies in producing and using IT goods and services. This derived demand can be argued to be an important determinant of the economic value of technical talent. High demand suggests high growth in compensation rates for talent and subsequently, ceteris paribus, a greater response by the technical education system to meet growing demand. This is especially the case when demand is externally generated, leading to outﬂows of talent, both temporarily and permanently. The large wage 50

Technical Talent

differential between OECD and developing countries in the context of high demand is a signiﬁcant motivator of international migration.

3.4 Some Global Migration Patterns Today, roughly 2.5 per cent of the global population of 6.1 billion lives outside their home countries, compared to 2.2 per cent in 1965 (Whitwell 2002: 5). What has changed are the patterns of migration, the relative signiﬁcance of sending and receiving countries, the types of migration by occupation, skill, and duration, and the impact on both sending and receiving countries in the context of global economic integration. There are many reasons for the movement of talent, including political, military, and economic. The break up of the Soviet bloc and subsequent economic instability contributed to emigration from Kazakhstan, Uzbekistan, and Ukraine and former eastern bloc countries to Russia and Russian Jews to the US, Israel, and Germany (Heleniak 2004). Military dictatorships in Latin America and the massacre in Tiananmen Square have also sparked outﬂows of talent (Whitwell 2002: 7; Solimano and Pollack 2004: 4). However, the mobility of highly skilled workers is increasingly determined by market demand and supply conditions and perceived economic and professional opportunities in the world economy. The IT industry is one such case. The ageing of societies is another development that is creating unprecedented demand for workers, especially in healthcare.

3.4.1 International Migration Trends Based on the inﬂows of foreign population in OECD countries, the preferred destinations are Western Europe, North America, and Australia. 5 Within the OECD, Germany, Japan, Australia, Canada, the UK, and the US stand out as the most important destinations (OECD Migration Data Set). The main receiving countries are the larger OECD economies, while the sending countries include most of the developing world. However, not all movements of people are from non-OECD countries to the OECD. A good portion of migration for Europe is intra-European. Also, many Canadians work in the US, while engineers and computer scientists from non-OECD countries are attracted to Canada for immigration (Zhao et al. 2000: 8, 20; Wickramasekara 2002: 4). There is considerable migration within Asia 5 The measurement methods vary by country hence the data on foreign population are not strictly comparable.

51

Analytical Perspectives

and between Asia and the OECD economies (Hugo 2003: 11). Australia receives most of its permanent settlers from New Zealand followed by the UK. For Germany, Italy was the fourth largest sender of nearly 30,000 in 2001, while for the UK it was the US and Australia that were the top senders of 47,000 and 31,300 respectively. In the same year, the US sent over 20,000 people to Japan, just 5,000 less than Korea. Barring these intra-OECD ﬂows, the bulk of inﬂows to the OECD countries are from developing countries (see Table 3.1). The patterns of inﬂows reﬂect historical, colonial, ethnic, and regional ties. It is not surprising that Morocco and Algeria are the largest sources of immigrants to France due to historic and colonial ties, and Albania is the principal supplier to Italy due to regional proximity. Due to colonial, linguistic, and regional ties Japan receives Chinese and Koreans, the UK receives Indians, Pakistanis, and Bangladeshis, while common ethnicity attracts Americans and Australians to the UK. Similarly, French-speaking north Africans prefer to emigrate to France, while English-speaking south Asians prefer Canada, the UK, the US, and Australia. Emigration rates vary, with very poor countries sending relatively more skilled people. For example, Haiti, Somalia, Ghana, and Mozambique were the top four among 30 countries with the highest sending rates, whereas Sweden, Egypt, China, and India were ranked the top four among the group of 30 with the lowest rates (Docquier and Rapoport 2004: 9). Among non-OECD countries, middle-income countries display a greater propensity to send skilled migrants, while large developing countries with a larger absolute pool of talent tend to have lower emigration rates. Latin American countries such as Brazil, Paraguay, Bolivia, Venezuela, and Costa Rica fall within this group (OECD 2005: 129). However, their reasons for low rates are not necessarily because of large pools of technical talent (except perhaps Brazil) or growing professional opportunities at home but, rather by the limited availability of high quality technical education.

3.4.2 Migration Trends of High-Skilled Workers The biggest sources of non-OECD expatriate communities in OECD countries are ‘the former Soviet Union (4.2 million people), former Yugoslavia (2.2 million), India (1.9 million), the Philippines (1.8 million), China (1.7 million), Vietnam (1.5 million), Morocco (1.4 million), and Puerto Rico (1.3 million)’ (OECD 2005: 127). Among them, the former Soviet Union and India had the largest numbers of expatriates with tertiary education— 1.3 and 1.0 million respectively (OECD 2005: 127). The share of high 52

Table 3.1 Inﬂows of Permanent Settlers by Selected Receiving and Sending Countries, 1992–2003 (Thousands) AUSTRALIA

1992

New Zealand United Kingdom China South Africa India Total

7.2 14.5 3.4 1.3 5.6 107.4

CANADA

1992

China India Pakistan Philippines South Korea Total

10.4 12.7 — 13.3 —

1995

2000

2003

10.5 10.7 3.7 2.8 3.9 87.4

21.9 9.2 6.8 5.7 4.6 91.9

12.4 12.5 6.7 4.6 5.8 93.5

ITALY

1992

Albania Romania Morocco China Poland Total

1998

2000

2002

11.2 5.9 7.3 3.4 3.9 110.0

31.2 20.7 24.7 15.4 7.1 271.5

39.1 50.2 26.1 15.4 15.3 388.1

1995

2000

2002

JAPAN

1992

1995

2000

2002

13.3 16.3 4.0 15.2 3.2∗ 212.9

36.7 26.1 14.2 10.1 7.6 227.3

33.2 28.8 14.2 11.0 7.3 229.1

China Philippines Brazil South Korea USA Total

52.4 57.5 19.2 26.0 29.3 266.9

38.8 30.3 11.9 27.0 18.8 209.9

75.3 74.2 45.5 24.0 24.3 345.8

88.6 87.2 22.7 22.9 21.5 343.8

FRANCE

1992

1995

2000

2002

UNITED KINGDOM

1992

1998

2001

2002

Morocco Algeria Turkey Tunisia USA China Total

16.4 12.3 9.2 4.0 — — —

6.6 8.4 3.6 1.9 2.4 0.9 77.0

16.9 12.4 6.6 5.6 2.6 1.8 126.8

21.4 23.3 8.5 7.6 3.4 1.7 144.4

USA Australia India South Africa New Zealand Pakistan Total

43.9 25.0 9.2 2.3 10.6 8.3 175.0

39.4 26.6 11.6 11.1 12.0 7.2 228.0

13.0 34.0 16.0 13.0 12.0 10.0 373.0

— — — — — — —

GERMANY

1992

1995

2000

2003

USA

1993

1998

2000

2002

74.1 49.1 32.1 32.8 33.0 648.8

81.6 58.1 36.5 25.0 36.9 658.3

Mexico India China Philippines El Salvador Cuba Total

213.8 36.8 38.9 61.0 26.2 11.8 904.3

89.9 34.7 35.5 51.0 11.7 17.9 720.5

173.9 42.0 45.7 42.5 22.6 20.8 849.8

219.4 71.1 60.3 51.3 31.2 — 1063.7

Poland Turkey Russian Federation Italy Fed. Rep. of Yugoslavia Total

131.7 80.6 24.6 30.1 — 1207.6

Note: ∗ 1996 data. Source: OECD (2004: 297–310).

87.2 73.6 33.0 48.0 54.1 788.3

Analytical Perspectives Table 3.2 Expatriates and Percentage Share of Highly Skilled Expatriates by Selected Country of Birth Total no. of expatriates

% of highly skilled expatriates

1,301,076 266,070 275,770 536,327 1,649,711 682,156 587,400 1,928,199 632,980 796,046 1,364,754 655,162 1,816,418 580,570 1,507,164

16.4 37.8 27.9 11.5 39.6 25.1 42.8 51.9 45.6 24.0 14.8 30.8 48.1 43.0 23.6

Algeria Argentina Bangladesh Bosnia-Herzegovina China Colombia Hong Kong India Iran Jamaica Morocco Pakistan Philippines Russia Vietnam Source: OECD (2005: 148–9).

skill expatriate populations from non-OECD countries is presented in Table 3.2. Countries with more than 500,000 expatriates show a range of highskill expatriate intensities (number of skilled expatriates as a share of total expatriates). In other words, not all countries with a large absolute number of expatriates have a big share of high-skilled expatriates. Conversely, countries with few expatriates could have a high concentration of the highly skilled. The reasons are simple. Wars, ethnic conﬂicts, and political upheavals often lead to a large expatriate population with a small share of highly skilled professionals. Bosnia-Herzegovina, the Federal Republic of Yugoslavia, and El Salvador are three such examples. Other countries such as Iran, plagued with political uncertainties, have a high share of skilled expatriates (45.6 per cent) (see Table 3.2). Small countries such as Cuba and the Dominican Republic, with their proximity to the US, are also large sources of expatriate populations. Cuban expatriates in the US tend to be highly skilled. Mexico, on the other hand, with over eight million expatriates in the US had a highly skilled share of only 6 per cent. Historical ties as well as earlier Japanese migration to Brazil have made contemporary Brazilian emigration directed more toward Western Europe and Japan. Turkey’s easy access to the German economy through the guest worker programme has contributed to a large number of expatriates but with a low concentration of high-skilled workers (6.3 per cent). Smaller countries send out fewer people but contribute a greater portion of high 54

Technical Talent

skills. Most former east bloc countries, with advanced technical education systems, would fall in this group. The highest concentration of highly skilled expatriates is found among Asian countries. They include Hong Kong, China, India, Pakistan, Philippines, Taiwan, and Vietnam. Most of these countries are poor but have large pools of technical talent. For example, 80 per cent of Indians and 54 per cent of Chinese immigrants to OECD aged 25 and above have tertiary education (Chalamwong 2004: 5). These countries can be expected to send out large numbers of high-skilled people and have a high concentration of highly skilled expatriates. India, with nearly two million expatriates, had a concentration of 52 per cent, the Philippines with a similar expatriate population had a concentration of 48 per cent, and China, with 1.6 million, had a share of 40 per cent. Taiwan had the highest concentration with 61 per cent due to its rapid industrial development based on technical education.

3.5 Main Motivations Behind Mobility 3.5.1 Structural Demand and Supply Factors The decision to move to a new country is mostly an individual or a household one but one that is embedded in the wider structural and community context. At the individual/family level emigration is a response to better economic opportunities, signiﬁcantly inﬂuenced by responses of and feedback from earlier emigrants. In neoclassical terms this is interpreted as choosing the higher returns to marginal productivity in the richer, receiving country over the lower returns in the poorer, sending country. 6 However, the global labour market does not function so smoothly. It is highly regulated through national immigration policies. Structurally, the ever-increasing technology and knowledge intensive activities within the ambit of a new ‘weightless’ economy are generating higher demand for talent. The rapid development of electronics and digital technologies (convergence technologies) and their diffusion has contributed to the global demand for technical talent and thus inﬂows of high-skilled workers to OECD economies. Economic integration also inﬂuences the global supply and demand of talent. As multinational ﬁrms organize production globally they also 6 For a critique of the neoclassical interpretation, relying on economistic ‘pull and push’ factors of international migration, see Massey et al. (1998).

55

Analytical Perspectives

recruit professionals globally and engage in intra-company transfers of human resources. In 1996 the UK and the US registered 13,000 and 32,000 intra-company transfers respectively (OECD 2005: 36). In 2002, the numbers were 19,000 and 58,000. Regional free trade agreements such as the North American Free Trade Agreement (NAFTA) also encourage the movement of talent among member countries. For example, university educated Canadian workers could work in the US under a NAFTA temporary visa system (Zhao et al. 2000: 13). With tight control over their subsidiaries, Japanese companies also contributed to intra-company transfers as currency appreciation and rising wage costs compelled shifting production to east and Southeast Asian countries in the 1980s. Mobility is also inﬂuenced by labour shortages in OECD economies due to declining fertility rates, ageing societies, increasing dependency ratios, and tight immigration policies. 7 High-income countries already have low population growth and are expected to fall further in the next decade (see Table 3.3). For example, Japan is expected to witness a negative population growth rate of −0.2 per cent over the 2001–15 period. The non-OECD countries have a higher population growth rate with a much younger population. Those that have a large pool of technical workers are likely to remain major sending countries for the foreseeable future. PostSecond World War industrialization efforts by large developing countries such as China, India, and Brazil unwittingly contributed to a large technical pool. However, the exhaustion of industrialization in the context of low economic growth failed to absorb such talent in remunerative and professionally challenging assignments. Limited professional opportunities, unemployment, and low salaries led to the emigration of technical talent from most developing countries. More recently, in the 1990s, the economic crisis in Latin America generated substantial underutilization of technical talent at home and the US remained the main destination for the region (Barrere et al. 2004: 29). In the context of global shortages, competition, and intensiﬁed economic integration the outﬂows of talent from non-OECD countries have become structurally more pronounced. 8 Technical education and foreign degrees are perceived to enhance employment prospects in poor countries. However, unlike previous outﬂows of students, the magnitude of ﬂows has increased with fewer students returning home. Thus, over time, non-OECD economies are contributing to the stocks of talent in OECD countries by immigration and 7

In 2000, Switzerland faced a shortage of 10,000 IT workers (Page 2003: 208). Even western Germany is increasingly employing highly skilled Chinese workers in auto and electrical engineering industries (Giese 2003: 169). 8

56

Table 3.3 Demographic Shifts in a Global Context Total populationa

World Low income Middle income Lower middle income Upper middle income Low & middle income East Asia & Paciﬁc Thailand Philippines China Japan Europe & Central Asia Latin America & Caribbean Middle East & N. Africa South Asia India Sub-Saharan Africa High income Europe EMU

Average annual growth rate (%)

Population age composition (%)

Dependency ratio

Crude DR

Crude BR

1980

2001

2015

1980–2001

2001–15

2001 0–14

2001 15–64

2001 65+

2001 Young

2001 Old

per 1000 2001

per 1000 2001

4,429.6 1,613.4 1,988.8 1,626.4 362.4 3,601.6 1,359.4 46.7 48.0 981.2 116.8 425.8 359.9 174.0 901.3 687.3 381.7 827.4 286.7

6,130.1 2,505.9 2,667.2 2,163.5 503.6 5,172.3 1,822.5 61.2 78.3 1,271.8 127.0 474.6 523.6 300.6 1,377.8 1,032.4 673.9 957.0 306.7

7,093.9 3,090.9 3,001.1 2,413.0 588.1 6,091.9 2,041.3 66.3 98.2 1,392.6 124.1 476.6 625.7 387.7 1,680.0 1,227.9 880.6 1,001.9 306.0

1.5 2.1 1.4 1.4 1.6 1.7 1.4 1.3 2.3 1.2 0.4 0.5 1.8 2.6 2.0 1.9 2.7 0.7 0.3

1.0 1.5 0.8 0.8 1.1 1.2 0.8 0.6 1.6 0.6 −0.2 0.0 1.3 1.8 1.4 1.2 1.9 0.3 0.0

29.6 36.4 27.1 26.7 29.0 31.6 26.8 23.6 36.9 24.8 14.5 21.4 31.3 36.2 34.6 33.1 44.0 18.4 16.2

63.4 59.2 66.0 66.4 64.4 62.7 66.8 70.1 59.2 68.1 67.9 67.6 63.2 59.8 60.8 61.9 53.0 67.3 67.3

7.0 4.4 6.9 6.9 6.6 5.7 6.4 6.3 3.9 7.1 17.6 11.0 5.5 4.0 4.6 5.0 3.0 14.3 16.5

0.5 0.6 0.4 0.4 0.4 0.5 0.4 0.3 0.6 0.4 0.2 0.3 0.5 0.6 0.6 0.5 0.8 0.3 0.2

0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.3 0.2 0.1 0.1 0.1 0.1 0.1 0.2 0.2

9 11 8 8 7 9 7 8 6 7 9 12 6 6 9 9 17 9 10

21 29 17 17 20 23 17 15 26 15 9 12 22 26 26 25 39 12 10

Notes: a Estimate does not account for recent refugee ﬂows. DR=death rate, BR=birth rate. Source: World Bank Development Indicators.

Analytical Perspectives Table 3.4 Stocks of Non-OECD Students in Selected OECD Economies (Thousands)

USA UK Germany France Australia Japan

2001

% from non-OECD

2002

% from non-OECD

475.2 225.7 199.1 147.4 121.0 63.6

63.4 41.1 48.0 71.9 77.6 66.6

583.0 227.3 219.0 165.4 179.6 74.9

64.3 44.6 50.8 74.8 76.5 69.1

Source: OECD (2004: 36), (2005: 37).

student ﬂows are adding to the future stocks. With declining enrolments in science and technology ﬁelds in several OECD countries de facto opportunities have emerged for foreign students (see Department of Education data in Watts 2001: 149). The stocks of foreign students, from non-OECD countries in selected OECD economies, are presented in Table 3.4. The US remains the largest destination for students, with the UK a distant second. Smaller European economies tend to have smaller shares of non-OECD students. 9 Latin America remains a small source for foreign students in OECD countries (Tremblay 2002: 53). The movement of technical talent is visible from the increasing number of foreign-born scientists and engineers (S&E) in the US civilian labour force (Espenshade 2001: 137). In 1970, foreign-born scientists and engineers represented 7.6 per cent compared to 11.4 per cent in 1990, and 14.8 per cent in 1997. Between 1970–97, the total number of native-born and foreign-born S&E increased by 124 per cent and 373 per cent respectively (Espenshade 2001: 137). Based on National Science Foundation data, over 50 per cent of science and engineering students of Indian nationality planned to remain in the US, suggesting a growing stock of (Indian) talent in the US. Such expansion reﬂects the structural shift in the US economy, skill shortages, and the corresponding demand increases in technical talent.10 9 The US is attractive for students because of excellent, post-baccalaureate science and engineering programmes in large, well endowed university systems, ﬁnancial assistance for students, professional opportunities, and, until recently, a very receptive attitude toward foreign students based on the broader liberal political culture. English speaking students ﬁnd it easy to adjust to the American social environment. Nearly 50 per cent of permanent residents do not become citizens, indicating few differences in beneﬁts for citizens and noncitizens (Cornelius and Tsuda 2004: 21). 10 It is difﬁcult to estimate labour shortages but rising wage growth could reﬂect such shortages. But the ready availability of technical talent from abroad could check the rise in US salaries. Alternatively, if wages for technical talent are rising in India, which is an important supplier of talent to the US, then shortages in the US can be indirectly inferred.

58

Technical Talent

Most Latin American countries had higher rates of return of talent than both India and China. For example, in 2001 Brazil had 70 per cent rate of return of its 1996 US-trained PhDs; Chile, Mexico, Colombia, Peru, and Argentina all exceeded Indian and Chinese rates (Thorn and Holm-Nielsen, Chapter 6 of this volume). While recent Latin American economic performance has been unremarkable, their higher levels of economic development and per capita income may have contributed to their higher rate of return. Also, few Latin American students were found in OECD countries. Of the nearly 600,000 foreign students in the US in 2001–02, only 12 per cent came from Latin America compared to 56 per cent from Asia (Barrere et al. 2004: 36). Language afﬁnity may make it more attractive for Latin American students to selectively go to Spain, where 15 per cent of foreign students were from Latin America (Barrere et al. 2004: 35). Also, greater cultural disposition toward the US by Chinese and Indian technical talent and their ethnic-based networks may further reinforce this bias. Alternatively, the small number of highly qualiﬁed professionals in Latin America makes it easier for them to return. Latin American professionals may also be crowded out by a larger, and often better qualiﬁed, pool of Asian talent in receiving countries. This is evident from US data on human resources in science and technology R&D. It shows that less than 1 per cent of the total R&D workforce is from South America compared to more than 10 per cent from Asia (Barrere et al. 2004: 37).11 Salary differentials alone do not explain international mobility. Challenging assignments, favourable working conditions, and access to relevant peer groups are signiﬁcant professional factors that inﬂuence mobility. For example, the huge disparity in research and development expenditures between rich and poor countries, roughly to the tune of 16 per cent versus 84 per cent respectively, is a strong incentive for talent to emigrate (Solimano and Pollack 2004: 5). Budget cuts in science and technology have compelled Russian talent to emigrate to Germany and Israel (Solimano 2002: 10). Foreign scientists in Italy have sought professional opportunities and invitations from their colleagues partly because of professional peers (Brandi and Cerbara 2004: 2). Also, rigid business regulations may drive entrepreneurial talent to more business friendly environments. Of the many Indian business families operating overseas two groups who have made their mark by leaving India are the Mittal 11 As noted by Barrere et al. (2004: 30), generally ‘Latin American emigrants to the US are less educated than natives, and than [sic] Asian, African, and European immigrants’.

59

Analytical Perspectives

brothers and Swaraj Paul of Caparo Industries based in the UK. Both are in metals-based industry, with the Mittal family owning the world’s largest steel company (see D’Costa 1999). The presence of highly successful Indian and Chinese entrepreneurs in Silicon Valley also testiﬁes to the signiﬁcance of professional peers, networking, a conducive business climate, and commercial opportunities available in global settings (Saxenian 2003).

3.5.2 Immigration Policies The relaxation of immigration policies for skilled workers in recent years is also encouraging mobility (Cornelius and Espenshade 2001: 3–7).12 Many OECD countries have special programmes for recruitment and permanent residence for students and workers (OECD 2003: annex 1). Australia, Canada, France, Germany, Ireland, Korea, the Netherlands, and the UK have special programmes or simpliﬁed procedures for permanent immigration or extended temporary stays speciﬁcally for IT and software engineers. The UK gives preferential treatment for IT workers and fast tracks permits for them (Martineau et al. 2002: 14). As of 2001, holders of student visas in Austria, France, and Korea who graduate in IT ﬁelds can favourably change their residency status. Canada also targets high-skilled workers, as evidenced by a higher proportion of advanced engineering degrees held by foreigners than by Canadian-born (Boyd and Thomas 2001: 117). Germany introduced its Green Card Programme in 2001 speciﬁcally for ICT workers (Giese 2003: 170).13 Even Japan has relaxed visa regulations for Indian IT workers from a single entry, three-month visa to a multiple entry three-year visa (personal interviews with Japanese embassy staff, New Delhi, March 2005). The US is the most important player in attracting global talent. It has a permanent immigration programme through an employment-based system of professionals with advanced degrees in science and technology. Under this category of employment there is a quota of 140,000 entries per year, including the reunion of family members. To meet the demand for IT workers, the US also has several temporary work visa programmes. Under the American Competitiveness and Work Force Improvement Act 12 However, Indian IT professionals continue to face a host of barriers to work abroad (Parikh 2003). 13 However, Germany has been unsuccessful in attracting Indian IT professionals due to cultural barriers and rigid conditions attached to temporary movement of talent (Cornelius and Espenshade 2001: 11–12). Evidently other countries are more attractive to Indian professionals (Cornelius and Tsuda 2004: 28).

60

Technical Talent Table 3.5 US Inﬂows of High-Skilled Workers, Including H-1B Visa Holders 1985 Academic students Specialty occupations (H-1B) Professional workers NAFTA (TN) Intra-company transferees (L1)

1990

1995

2000

2001

2002

2003

251,234 319,467 356,585 648,793 688,970 637,954 617,556 47,322 100,446 117,574 355,605 384,191 370,490 360,498 — 65,349

—

23,904

91,279

95,486

73,699

59,446

63,180 112,124 294,658 328,480 313,699 298,054

Source: US Department of Homeland Security (2004).

of 1998 temporary inﬂows of technical talent are facilitated through the H-1B visa programme. The visa is employment-based and valid for a maximum of six years; the applicant must have a bachelor’s degree. The Immigration Act of 1990 permits the adjustment of temporary H-1B visa to an immigrant status as the applicants continue to be in jobs that are permanent (Lowell 2001: 50). The annual quotas are politically determined, with 65,000 visas distributed annually prior to 1999. The quota was increased to 115,000 in 1999 and 2000, 107,500 in 2001, and back to 65,000 thereafter. But it was raised to 195,000 for 2001, 2002, and 2003 before reverting back to 65,000 (Watts 2001: 144; Desai et al. 2003: 7). The actual number of H-1B visas granted has increased signiﬁcantly in recent years (see Table 3.5). The temporary H-1B visas contribute directly and immediately to the concerned industries deploying such talent. Asians have been signiﬁcant in the US IT industry (Espenshade 2001: 138). In 2003, roughly onethird of H-1B visas were granted to Europeans and 40 per cent to Asians. The principal recipients among Asian countries were India, China, Japan, and the Philippines. India garnered 21 per cent of the total and 54 per cent of the Asian share of H-1Bs, far ahead of other competing Asian countries (see Table 3.6). Indian ﬁrms have successfully leveraged the US immigration system, exporting talent in large numbers. Of the 331,206 H-1B visas approved in 2001, 49 per cent went to Indian professionals, and of these 92 per cent were IT related (Hira 2004: 842). The Indian experience contrasts sharply with the Mexican and Brazilian experiences (Alarcón 2001: 248). In 1994, India received 16 per cent of all H-1B visas compared to Mexico’s 2.6 per cent and Brazil’s 2.2 per cent.14 In 2002, 14 More telling is the data on immigrants admitted by occupation and country of birth. Under the ‘professional and technical’ and ‘executive, administrative, and managerial’

61

Analytical Perspectives Table 3.6 The Distribution of H-1B Visas Among Leading Asian Countries (% Share of Total)

China India Japan Philippines Total issued

1990

1995

2003∗

0.9 4.1 5.8 11.2 65,000

2.9 23.9 3.2 15.4 65,000

3.5 21.1 3.7 1.6 360,498

Note: ∗ Fiscal year. Source: US Department of Homeland Security (2004).

South America as a whole received less than 2 per cent of IT related H-1B visas compared to Asia’s 83 per cent (Barrere et al. 2004: 33). Immigration policies have also been relaxed with increased trade and FDI, allowing more intra-company transfers under the L1 visa programme. Though small in absolute terms, Latin American countries during 1996–2002 increased talent outﬂows nearly four times to 37,082 through intra-company transfers (Barrere et al. 2004: 35).15 However, strong commercial ties with the US meant that the UK, Japan, Germany, and increasingly India secured the highest numbers of US visas for intracompany transfers (Barrere et al. 2004: 34). Akin to the L1 programme, albeit on a smaller scale, trade-related Trade NAFTA (TN) work visas for professionals are extended to NAFTA members such as Mexico and Canada. However, visas are waived for Canadian TN professionals (Lowell 2001: 40). Visa quotas for students in academic programmes have been high, albeit lower since 11 September 2001. Students contribute to the stock of high skills and set the movement of talent in motion (Wickramasekara 2002: 4). Asian students dominate technical education in OECD economies. For example, in 2001, nearly 47,000 Indian students went to the US, accounting for 78 per cent of all Indian students enrolled in OECD countries (Khadria 2004: 29). In 1999 Indians had the largest number of science and engineering degree holders among foreign residents in the US and 30,000 science and engineering doctorates.16 Europe’s share of foreign students in the US was 18 per cent compared to Asia’s 55 per cent. Among Asian groups, India’s shares in 1994 were 17.8 and 5.1 per cent respectively compared to Mexico’s 0.8 and 0.4 per cent (Alarcón 2001: 256). 15 Argentina, Brazil, Chile, Colombia, and Venezuela increased such outﬂows nearly four, two, four, seven, and four times respectively during this period. 16 This is further reinforced by the presence of academics of Indian origin in higher education establishments in the US.

62

Technical Talent

countries, Japan had 24 per cent, Korea 21 per cent, China 16 per cent, and India 15 per cent (US Department of Homeland Security 2004: 89–92). The share of Central and South America was only 9 per cent, with Brazil, Colombia, and Venezuela contributing 50 per cent of the regions’ share. Mexico, on the other hand, despite its proximity to the US, sent only about 23 thousand students in 2003, with very few in the high technology areas (see Alarcón 2001: 240).

3.5.3 Business Models and the Movement of Technical Talent While international mobility of technical talent is partly explained by immigration policies, foreign student enrolments, and the different types of visas granted, the adoption of a particular business model also explains the temporary movement of talent in the IT industry. For example, outsourcing of software services to India mainly by American companies is illustrative. It began with on-site services in the US, where workers temporarily moved to the client’s site and provided software programming services, conversions, maintenance of software and hardware, debugging, testing and limited systems integration (D’Costa 2002: 183–99). However, proﬁts for the Indian ﬁrm were not high since pricing was based on time and materials costs, which included the high cost of living incurred by Indian talent living at the foreign client’s site (D’Costa 2003b: 67). This model of outsourcing gave way to more software development in India. Gradually on-site services decreased due to reduced year 2000 needs and to India’s growing technological maturity. The new export model is offshore development whereby Indian companies develop the software in India and transfer it via satellite to their US clients abroad. Between 1999 and 2003, the share of offshore delivery of services increased from 35 per cent to 58 per cent, while on-site services fell from 57 per cent to 39 per cent (NASSCOM 2004), thus reducing the movement of people. However, with the absolute increase of nearly 90 per cent in the volume of onsite services during this period, the temporary movement of workers to market, develop, test, implement, maintain, upgrade services, and interface with clients became signiﬁcant. As overseas markets become more mature the near-permanent presence of highly skilled marketing and technical professionals abroad becomes critical to offshore development. This heightens demand for IT workers and correspondingly encourages mobility. Hence, the rise in H-1B and L1 visas in the US is very much tied to the business models adopted in the IT industry. The mobility of technical talent to clients’ sites, while temporary in nature, creates 63

Analytical Perspectives

professional opportunities for on-site engineers to remain permanently.17 The growth of the offshore business model suggests that technical talent will increasingly remain in the sending country but the increasing volume of total global business suggests that absolutely more workers will be needed for on-site services. Consequently, as the diaspora network expands, greater learning is possible by both expatriates and residents as mobility among them heightens (see Kuznetsov and Sabel, Chapter 4, and Thorn and Holm-Nielsen, Chapter 6, both this volume).

3.6 The Impact of Mobility on the IT Sector Without detailed empirical investigation it is difﬁcult to predict the longterm effects of mobility (see Winters 2003). The impacts of the mobility of highly skilled workers in both receiving and sending countries are felt at many levels (Solimano and Pollack 2004: 13), and quite negatively in some sending countries (Wickramasekara 2002: 7). There are three kinds of broadly interrelated effects on both sending and receiving countries: economic, political, and social. Under the ﬁrst there are income, wealth, human capital, and innovative capability effects. These are felt both in the short- and medium-term and can be both positive and negative (see Figure 3.1). The political effects in the receiving countries can result in jingoist posturing and job losses, especially if non-OECD talent is perceived as taking away high skill jobs in the rich countries. There are several social effects of the movement of talent but three deserve scrutiny: namely the formation of epistemic networks, their links to sending countries’ innovative capability, and inequality.

3.6.1 Effects on Receiving Countries The immediate impact on receiving countries is the meeting of shortages with subsidized technical talent and maintaining industry proﬁtability. There is considerable debate over IT worker shortages. In Canada, the 17 In Japan, I came across many Indian IT professionals who came as on-site engineers for an Indian vendor and later joined the Japanese client as an employee. There is another institutional reason by which international mobility of IT workers is inﬂuenced. For example, Japanese businesses have a greater propensity to interact with their suppliers and vendors, hence should Japanese ﬁrms decide to outsource internationally they would prefer to have more Indian workers on-site. Consequently, there would be greater temporary movement of talent, ceteris paribus. Anecdotal information suggests a 10 per cent on-site ratio for US offshore projects in India compared to Japan’s 20 per cent (ﬁeld research, Japan, April–June 2005).

64

Technical Talent SENDING COUNTRY SENDING COUNTRY Remittances Trade and Investment Entrepreneurship Knowledge Flows Expansion in Skill Formation Brain Circulation

Brain Drain Public Waste Fiscal Loss Reduced Growth Inequality

ZERO SUM from migration?

International Mobility of Technical Talent

EPISTEMIC NETWORKS

RECEIVING COUNTRY Crowding out of Natives in Education Reduced Wage Growth Unemployment Leakage of Critical Information Xenophobic Immigration Policy Inequality NEGATIVE

INCREASING RETURNS from mobility? RECEIVING COUNTRY

Skilled Labour R&D Boost Profitability/Efficiency of Firms Academic Research Job Creation

POSITIVE

Figure 3.1 The Effects of the International Mobility of Technical Talent Note: Inequality is possible under increasing returns as well.

shortages were estimated at 20,000 in the mid-1990s compared to USestimated shortages of 190,000 (Zhao et al. 2000: 9). Other countries such as Australia and Singapore also exhibit shortages of IT labour as evidenced by inﬂows of IT workers from Malaysia, China, and other neighbouring countries (Solimano and Pollack 2004: 4). Receiving countries more than make up for their inability to generate talent at home and enhance the quality of the national workforce, as the Russians did for Israel (Solimano 2001: 9). The inﬂows of numerous students such as to the US, also add to the future stock of talent and entrepreneurship (Solimano 2002: 9). In early 2001, it was estimated that there were one million Indianborn individuals in the US and more than 75 per cent of the working age population had a bachelor’s degree or better (Desai et al. 2003: 1). Thirty-eight per cent of India-born US working age residents had postgraduate degrees compared with 9 per cent of US-born residents. It has been estimated that the US government annually collects nearly US$22.5 billion in payroll taxes from Indian H-1B visa holders alone (Desai et al. 2002). Indian and Chinese engineer entrepreneurs in Silicon Valley have generated considerable employment (Saxenian 1999; Lowell 2001: 34–5). The 65

Analytical Perspectives

availability of foreign talent also facilitates the upgrading of economic activities from low-value production to high-value activities consistent with the new economy. These include research and development, design and development, and entrepreneurship. Receiving countries such as the US, UK, and Australia also beneﬁt from foreign students who pay for their education. Earlier estimates show that inﬂows of over US$7 billion went into the US education system each year (Straubhaar 2000: 8). The export of education services by the US also means that it is setting up the preconditions for future ‘brain gain’. When it comes to political impact, even liberal governments are acutely sensitive to local pressures for protectionist policies. An election year, a slow growing economy, widening trade deﬁcits, and rising unemployment could all contribute to xenophobic sentiments and attributed to foreign workers. The beneﬁts of inﬂows of foreign talent are not visible to those who might lose their jobs. The argument that job losses could result from structural, cyclical, and technological factors rather than simply from foreign competition is not often appreciated by those who become unemployed in the new economy. Relying on foreign talent could depress compensation of OECD IT workers. Many labour groups in the US argue that there are no shortages by pointing to layoffs in the IT industry. But this interpretation overlooks the fact that it is older workers experienced in older technologies that face the brunt of layoffs. Foreign workers such as Indian software professionals are keeping abreast with recent IT technologies such as java and dot.net, while older workers in receiving countries may not. The strategy of US ﬁrms is to rely on new skills rather than experienced talent because of short product cycles, whereas India, as a follower, needs more experienced talent. India as a latecomer has the advantage of abundant young engineers trained in new technologies. Consequently, multinational IT companies prefer to hire young, technologically savvy professionals rather than retrain existing workers (Watts 2001: 145, 151). Receiving countries can also experience increasing inequality although the precise mechanisms for this outcome are complex. On the one hand, hyper-competition associated with globalization means only those with the appropriate technical and commercial skills can be absorbed in the new economy while the less educated, unskilled, and semi-skilled are likely to remain at the bottom of the economic hierarchy (Castells 1998; D’Costa 2003c). But the inﬂows of technical talent could stem wage growth in receiving countries and contribute to salary convergence at the global sectoral level. For certain high level IT professionals the salary gap 66

Technical Talent

between Silicon Valley and Bangalore has narrowed. The net effect of this double movement is global polarization in which the divide between the best IT professionals worldwide (along with other high-skilled professionals) and the rest becomes acute. This polarization is further accentuated by greater returns to business and shareholders in receiving countries through global outsourcing arrangements. Since less privileged minorities such as African-Americans and Hispanics in the US are already handicapped in terms of tertiary technical education and high skills, it is possible that a shift in social and ethnic balance might become more pronounced with the inﬂows of technical talent (D’Costa 2003c). Many foreign students take up underpaid postdoctoral work thereby compressing wage growth for such activities, which could discourage natives from taking up science and engineering education. But just as there is little evidence that immigrants lower wages or employment (Martin et al. 2002: 9–10), it remains to be empirically veriﬁed whether minorities are discouraged from long-term post-doctoral science and engineering education due to the prevalence of foreign-born technical talent working for low economic returns.

3.6.2 Impact on Sending Economies The most discussed impact of the outﬂow of technical talent on sending countries has been ‘brain drain’.18 However, increasingly favourable developmental effects such as remittance income, human capital development, and formation of epistemic communities are being recognized. Brain drain arguably entails a loss of skills and thus future innovative capability and a waste of public investments because of the relatively high cost of subsidized tertiary technical education (Solimano and Pollack 2004: 13).19 The 1970s witnessed a serious drain of talent from developing countries and today many African countries suffer from the emigration of technical professionals and healthcare workers. For example, between 1985 and 1990 Africa lost 60,000 professionals through emigration (Wickramasekara 2002: 5). With the collapse of the former Soviet Union and Eastern Europe, there has been an outﬂow of scientists, engineers, and academics abroad. Between 1989 and 2002, roughly 22,000 scientists from Russia’s R&D sector emigrated abroad (Nekipelova and Ledeneva 2004). The OECD economies absorbed most of the Russians, with the US, 18

For a review of models of brain drain see Commander et al. (2004: 241–5). However, waste is reduced if training and education costs are borne privately, as it is often the case with Indian IT workers (Gayathri 2001). 19

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Germany, and France accounting for nearly 55 per cent of the Russian scientiﬁc workforce abroad. In 2000, Germany and Israel accounted for 86 per cent of Russian science and technology emigrants (Gokhberg and Nekipelova 2001: 180).20 As OECD demand for talent grows the large scale emigration of highskilled workers could lower economic growth and raise poverty in the sending country, especially if the share of outﬂows relative to the stock of the sending country’s talent is high. India and China, which contribute temporary workers through employment visas and to permanent stocks as students, do not feel the negative impact of migration because they are among the 15 countries with the smallest shares of highly skilled aged 15-plus expatriates in OECD countries with 3.1 per cent and 3.2 per cent respectively (OECD 2005: 129). However, emigration of the highly skilled could lower productivity and lower economic growth, if the ratio of the expatriate skilled population to the stock of the sending country is very high. Relatedly, there could be increasing inequality as wages for those who remain in skill demanding sectors rise relative to the less skill demanding sectors (Lowell and Findlay 2001: 7; D’Costa 2003a, c). Several other outcomes are possible. There is a migration premium, which predicts that more years of education and the prospect of working abroad enhance expected income two–ﬁve times in purchasing power parity values (Commander et al. 2004). If the movement of talent translates into higher incomes for those who emigrate, the resulting relative scarcity of local talent could also lead to an upward wage spiral. This is a good outcome as higher income growth is likely to contribute to economic growth. However, given the industry structure of the IT sector in India, a wage cost push could lead to crowding out of small and medium sized enterprises by the larger domestic and multinational ﬁrms (D’Costa 2006b). Nayyar (1994) argues that the macroeconomic impact of emigration from India is insigniﬁcant due to the large number of educated unemployed. However, particular regions and sectors, especially the non-IT sectors, could face labour shortages if the rate of worker outﬂow is high.21 There is a ﬁscal impact on sending countries. Thus for India, it has been estimated that the ‘net ﬁscal loss associated with the Indian-born resident population ranges from 0.24 per cent to 0.58 per cent of Indian GDP in 20 The share of highly skilled immigrants relative to all immigrants (skill ratio) has been high for Eastern European countries (Straubhaar 2000: 12–13; Malaha 2004: 3). 21 Thus outmigration of workers from certain villages in Kerala (India) and Bangladesh illustrates the pressure on local labour markets. In the case of South Africa the emigration of nurses is a good example of the negative impact it might have on the provisioning of health services to AIDS patients.

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Technical Talent Table 3.7 Remittances Received by Developing Countries, 2001 (US$ Billions)

Total remittance receipts as % of GDP as % of imports as % of domestic investments as % of FDI inﬂows as % of total private capital inﬂows as % of ofﬁcial ﬂows Other current transfers Total remittances and other transfers

All developing

Low income

Lower middle income

Upper middle income

72.3 1.3 3.9 5.7 42.4 42.9 260.1 27.2 99.5

19.2 1.9 6.2 9.6 213.5 666.1 120.6 6.1 25.3

35.9 1.4 5.1 5.0 43.7 44.9 361.7 14.0 49.9

17.3 0.8 2.7 4.9 21.7 20.2 867.9 7.1 24.4

Source: IMF Balance of Payments Yearbook (2001); World Bank World Development Indicators 2001, in Ratha (2003: 157).

2001’ (Desai et al. 2003). However, the economic beneﬁts derived from network effects could outweigh ﬁscal losses. Consider the resident Indian technical talent in Silicon Valley that has been instrumental in creating an Indian brand name in IT services. Consequently, with the spread of the offshore model these Indian engineers are also spearheading investments in India (FDI) and exporting software services from India (trade). Investments and exports of software services combined with domestic market growth have contributed roughly 4 per cent of Indian GDP (NASSCOM 2005). India’s reputation in IT services is also recognized in Japan, a country still not quite ready for large scale immigration, as many Indian engineers are training their Japanese counterparts in software engineering and quality processes (ﬁeld research, Japan, May–June 2005). One favourable effect of mobility on sending countries is remittance income ﬂows (see Table 3.7).22 Low income and small economies tend to beneﬁt the most from remittances as they contribute substantially to national income, complement sparse FDI, and in general provide scarce foreign exchange, which could be used for economic development purposes (Hugo 2003: 19–20; D’Costa 2004; Lucas 2004). Female workers from Sri Lanka and the Philippines contribute considerably to remittance income (Hugo 2003: 15). A recent World Bank estimate put the total remittance inﬂows to developing countries at US$126 billion in 2004.23 22 At the community level large remittance incomes could increase dependency and encourage excessive consumption (Kapur 2003: 20). 23 Remittance income received by developing countries is highly uneven and tends to be centred in a handful of economies. Most of the remittances to developing countries are received by a small number of them. National central bank data shows that in 2000, India, Mexico, Philippines, China, Turkey, and Egypt secured the bulk of remittances to their

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However, the propensity to remit is likely to be inversely related to skill levels as evidenced by Mexican workers and Indian IT workers in the US and from Indian un- and semi-skilled workers in west Asian countries. There is little economic compulsion to send money home by middle class Indian IT professionals (Kapur 2003: 14). However, high income earned by expatriate talent could complement domestic resources and boost the overall investment climate. The investment and entrepreneurship relationship is best evidenced by the fact that overseas Chinese contribute nearly 50 per cent of China’s FDI (Hugo 2003: 15). The inﬂow of remittance income increases the ability of sending countries to meet international debt obligations and thus the availability of more resources for developmental purposes. Exports of IT products and services have similar favourable outcomes. However, a rapid rate of foreign exchange accumulation could, in the short term, lead to an appreciation of the local currency and thus reduce international competitiveness (the Dutch disease syndrome) of other export sectors. Both India and China are increasingly faced with upward pressures on their currencies. However, few countries are in such an envious position.24 Their development problems stem less from excessive foreign exchange reserves and more from uncompetitive industries due to poor technology, education, and skills. At the household level remittances have a signiﬁcant impact on the standard of living through increased consumption expenditures, which include children’s education and better healthcare (Raihan 2004). The downside to this development could be the government’s reliance on private remittance income to ﬁnance social expenditures such as basic healthcare. Remittance income could also contribute to local entrepreneurship based on the substantial savings from overseas employment. For example, in both Mexico and Egypt, savings from remittance income have contributed to local business development (Latapi 2004; Wahba 2004). However, these activities are likely to remain small, scattered, and inconsequential beyond the immediate households, their extended families, and local markets. Additionally, remittance income is like a windfall gain relative to those who do not have remittance earnings from abroad. corresponding regions (Orozco 2003, in Sorensen 2004). Together they received 50 per cent of all remittances, with India capturing 15 per cent of the global share (D’Costa 2004). 24 Lucas (2004) suggests that the Dutch disease was in operation for countries such as Albania and Moldova due to large inﬂows of remittances during their transition to market economies. D’Costa (2003b) hints at this possibility with India’s success with IT service exports.

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This could encourage increased consumerism and induce social inequality (D’Costa 2003c; Ratha 2003). It could also result in localized inﬂation, especially for housing. The high demand for technical and managerial talent in the world market, marked by emigration, contributes to human capital development. The high elasticity of local educational infrastructure to respond to the needs of the IT industry at home and abroad suggests that emigration and its subsequent economic rewards creates the incentives for workers to seek higher skills as witnessed by the rapid expansion of educational institutions in Karnataka, India (Winters 2003; D’Costa 2005). This is evident also in the Philippines, where the share of mathematics and computer science graduates between 1995 and 2000 increased from 7 to 10 per cent of all tertiary graduates (Chalamwong 2004: 24). The outﬂow of talent also suggests increased links with export markets and research institutions abroad and thus gains in managerial and technical experience. International mobility sets off a virtuous cycle of increased demand for technical talent, which prompts growth in the tertiary education system, and thus raises the local skill base of the economy. Many Asian sending countries, especially China, India, and Taiwan have responded favourably toward higher technical education by establishing education and research centres as well as technology parks. More importantly, positive spillovers (technological externalities) can be realized with skill development since not all knowledge can be internalized or privatized (Straubhaar 2000: 17). Since 1990, India’s employment of IT professionals has increased from 56,000 to 522,250, nearly ten-fold growth (NASSCOM 2002: 63). Technical education in India has consistently expanded throughout the 1990s, with engineering admissions increasing ﬁve-fold between 1992 and 2004. The number of IT admissions based on capacity increased from 73,000 students in 1992 to 342,000 in 2004, while the number of professionals with an engineering degree is expected to increase from 43,000 in 1997 to nearly 100,000 in 2004. Such growth is a major contributor to the stock and ﬂows of Indian talent. In contrast to earlier brain drain arguments, today international mobility of technical talent is optimistically viewed as contributing to epistemic (knowledge) networks (Solimano and Pollack 2004: 12). They are seen as repositories of talent to be secured in the future. For example, nonresident Indians (NRIs) are perceived as important sources of remittance income, investment funds, and technical knowledge for India. Rather than anticipate a permanent loss, emigrants are perceived as potential return migrants or in circulation between the receiving and sending 71

Analytical Perspectives

countries. The Indus Entrepreneurs (TiE), started in Silicon Valley in 1992 by Indian IT entrepreneurs, has over 40 chapters and 6,000 members worldwide. It acts as a conduit of commercial and technical knowledge and serves to link sending and receiving countries. Similarly the Chinese Institute of Engineers in the US collaborates frequently with its counterpart in Taiwan. These organizations create epistemic communities, are integral to intra-company transfers of MNCs, and contribute to technology transfer, human capital development, and diffusion of market knowledge (Chalamwong 2004: 9). Epistemic communities can be productively deployed should economic opportunities in sending countries emerge as return migrants tend to contribute favourably to national productivity due to their work experience abroad (Lowell and Findlay 2001: 8). With increasing economic opportunities in sending countries the circulation of talent among and within Silicon Valley in California, Sao Paulo in Brazil, Hsinchu in Taiwan, Singapore, Bangalore in India, and Shanghai in China for example could lead to brain gain for sending countries.25 The developmental implication of this circulation of talent is signiﬁcant especially if expatriates bring back new market and domain knowledge. The retention of professional contacts with their clients and peers can also contribute to business development at home. Taiwan and China, and to a limited degree India, have been witnessing the return of high skilled migrants (Saxenian 2003; Khadria 2004). India’s rate of return migrants has been only one-thirtieth of Taiwan’s (OECD 2003). Most South Koreans who obtained a doctorate in science or engineering in the US returned home (89 per cent), whereas the corresponding ﬁgures for China and India were 12 per cent and 21 per cent respectively (National Science Foundation 1998 cited in Solimano 2002: 34). Between 1978 and 2001 roughly 37 to 50 per cent of Chinese students returned from Japan, Australia, and various West European countries and only 14 per cent from the US (Zhang 2003: 80). More recent ﬁgures for the Indian IT industry indicate that about 30–40 per cent of experienced Indian software professionals returned (Commander et al. 2004). Among returnees there are entrepreneurs and venture capitalists as well. The technology boom of the 1990s created many opportunities for immigrant entrepreneurs in the US for new start-ups, which were later sold to larger companies. Some professionals quit major multinational 25 There are of course family and social reasons for the return of technical talent to their home countries as well.

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employers; some returned home to start new businesses in Taiwan and India. For example, of the top 20 Indian software ﬁrms ten were launched by nonresident Indians (NRIs) from the US and many joint ventures were between NRIs and Indian partners (Hunger 2002: 10–11). However, they maintained close technical and commercial links with receiving countries. The fundamental policy question is under what conditions could the return of migrants be sustained over the long haul. There are several possibilities, all aimed at tapping the expatriate communities (diaspora) living overseas. There are private, industry initiatives such as Chile Global, which designs and ﬁnances business innovation projects (Kuznetsov and Sabel, Chapter 4 of this volume). Governments can also play important roles in attracting talent back home. It has been observed that for Latin American countries the rate of return is higher than India and China. This is partly due to greater involvement of national governments to support studies and professional training abroad and their ability to impose the condition that such recipients return home. Colombia’s COLFUTURO programme for overseas graduate studies requires students to return home within 90 days after completion of studies (Thorn and Holm-Nielsen, Chapter 6 of this volume). Similarly, Mexico’s Presidential Fund for Retention in Mexico is aimed at bringing back talent, while Mexico’s science and technology ministry is targeting its overseas talent. In the end, the return of technical talent is predicated on global networks, state encouragement, institutional support for professional development in the home country, and most importantly national economic and social development.

3.7 Policy Implications of Technical Talent Migration The key issues facing both sending and receiving countries today are the imbalances in the supply and demand for technical talent, their political ability to manage the ﬂows of people, and their ability to harness the technical expertise of expatriate communities for national economic development. Political constituencies in receiving countries are right to be concerned if their labour markets are destabilized by lower wage growth and unemployment due to inﬂows of foreign technical talent. However, jingoist immigration policies or blanket protectionism are unlikely to be effective in an integrating world, especially in the context of serious demographic problems in many OECD economies. The availability of 73

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foreign workers in these countries will be critical to sustain high technology industries and social support for the elderly. Russia suffers from both massive emigration of young talent and an ageing population (Heleniak 2004: 16). Even China is witnessing an ageing population, while India foresees shortages of IT workers as it meets its own demand and the needs of the global economy (NASSCOM 2003; Sengupta 2006). If labour shortages are real and the competition for technical talent intense then it behoves receiving countries to boost enrolments in technical education and come up with ﬂexible immigration policies. East Asian countries such as Japan and South Korea suffer from both declining fertility rates and resistance to large scale immigration. These are also countries that rely heavily on IT related high technology industries. There is also the issue of reciprocity. If sending countries must alter their economic policies in favour of liberalization to facilitate greater global economic integration, often with massive adjustment costs, it is incumbent upon receiving countries to create the economic space for a smoother transition for sending countries. Nearly all the evidence of mobility of talent points to receiving countries beneﬁting greatly from immigrant labour (see Figure 3.1). Hence, on both economic and ethical grounds it is in the interest of receiving countries to maintain a liberal immigration system.26 Sending countries also beneﬁt from talent mobility via remittance income, often exceeding ofﬁcial aid and FDI. More importantly, expatriate technical communities could be a vital link for acquiring technology, market knowledge, and domain expertise. There is of course a danger that the outﬂows of talent may haemorrhage the local talent pool to the point where the dynamic costs of human capital development outweigh the dynamic beneﬁts. Smaller countries such as those in Africa are likely to suffer more due to a narrow economic base and limited educational opportunities for most. Hence, sending countries must also have proactive and forward looking nuanced policies to retain talent at home and tap the expatriate population for their expertise. This is a tall order but expanding economic and professional opportunities at home, which are in any case integral to national development, would be critical to encourage potential emigrants to stay and expatriates to return, even if on a circulatory basis (see Thorn and Holm-Nielsen, Chapter 6 of this volume). Since emigration of talent leads to greater investment in education and raises the 26 From a global redistribution point of view a wage convergence is necessary but convergence induces inequality with sending and receiving countries because of skill- and technology-based employment growth.

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average skill level of the population, it would be prudent to promote local industry to deploy such talent. Taiwan provides a good example of how the government can play a role in inducing expatriates to return home, either permanently or temporarily. The Indian experience illustrates how state driven technical education and ﬁrst-comer advantage in software exports can act to encourage the mobility of talent and induce growth in education. The challenge for India and other developing countries is how to induce large scale return or circulatory migration and investments by expatriate talent.27 The international mobility of talent is inevitable and today states are less effective in regulating the ﬂows of people (Bhagwati 2003). The General Agreement on Trade in Services (GATS) mode 4, which seeks to facilitate the temporary international movement of workers, is an acknowledgement of this inevitability. Yet the OECD has been biased toward other modes and is hesitant about implementation, confusing the temporary migration of mode 4 with permanent migration. Emigration that is too easy may cause political problems in receiving countries as well as reduce incentives for education and lower average skills in sending countries. However, the temporary movement of talent implies migrants will return and thus contribute to better stocks of human capital (see Domingues Dos Santos and Postel-Vinay 2003: 20). The International Labour Organization has identiﬁed six ‘Rs’ as a way to stem the outﬂows of technical talent. They go beyond ‘recruitment, remittances, and return’ to include ‘restriction, reparation, and resourcing’ (Lowell and Findlay 2001: 18–19; Wickramasekara 2002: 9). For various reasons, restriction, and reparation are difﬁcult to implement. Recruitment and return of talent are challenging but show promise for the IT industry. As the IT industry exhibits high growth, global hubs in China, India, Taiwan, Russia, and the Philippines become feasible sites for expatriate talent. Effective science and technology policies in sending countries are also likely to encourage return migrants. Furthermore, dual citizenship, academic and professional exchanges, and promotion of knowledge networks are all likely to impact brain circulation more favourably for both sending and receiving countries. The best way to retain technical talent is through service exports, policy reform for attracting FDI, domestic market growth, export market diversiﬁcation, and the 27 To ensure generally that temporary workers return home a portion of their earnings could be held until their departure (Rodrik 2005: 210). Consequently, returnees will also have savings on arrival. This approach may be more useful for un- and semi-skilled workers who might need greater support to transition back home rather than technical talent.

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continued emphasis on technical training (Lowell and Findlay 2001: 2; D’Costa 2003b; D’Costa 2004). The IT industry in India displays high salary growth, narrowing the global gap, suggesting greater possibilities for retention and return.28 However, runaway growth in salaries is compelling Indian IT companies to seek low cost sites in China. High investments in research and development in South Korea were responsible for bringing back many Koreans. Taiwanese science and technology policies have led to circulation of Chinese talent between the US and Taiwan, and now China. It is evident that retention and return of talent is effective when there is a perceived high standard of living, professional opportunities at home, and access to international professional networks. For sending countries these are signiﬁcantly determined by more mundane macroeconomic factors of economic growth, investment, and infrastructure development, and at the sectoral level, FDI, education, and science and technology policies. The importance of return migrants and thus circulation should not be overemphasized. Once they are abroad, expatriate populations need not be tied to home country expectations. However, temporary visits must be of long enough duration to make it attractive for highly skilled workers from non-OECD countries. Also, a longer term temporary visit is likely to result in a greater professional contribution of technical talent in the receiving and sending countries, after their return. Currently the H-1B visa programme for temporary movement of talent in the US is ﬂawed since foreign workers cannot freely move between employers (Watts 2001).29 It would be important to grant temporary visa holders greater latitude in choosing their professional outlets.

3.8 Conclusion This survey of international mobility of technical talent suggests the need for workable economic development policies to meet demands in the information driven economy, to address demographic challenges in receiving countries, and to harness the expertise of expatriate talent. 28 In a recent ﬁeld survey of Indian IT companies, I met several high level IT professionals who have either returned or decided to remain in India (ﬁeld research Bangalore, Chennai, Delhi, Gurgaon, NOIDA, Kolkata, February–March 2005). 29 Watts’ argument that a free market solution would be better rather the current H-1B visa system is somewhat problematic for it assumes a relatively closed ‘free market’ to the mobility of foreign talent (Watts 2001: 152). If the US were completely open to foreign workers it would be inundated with technical talent.

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Uncontrolled immigration is neither politically feasible nor socially acceptable in receiving countries. For sending countries the challenge is to retain talent and lure previous emigrants back to further national development. Managed but liberal immigration is consistent with globalization. In an era of foreign aid fatigue there is greater reason to promote development in labour abundant countries so that brain drain is transformed to brain gain, making international migration over the long haul a temporary process. Technical and entrepreneurial skills from the expatriate communities can be mobilized for domestic development and at the same time the export of skilled labour be accommodated by receiving countries. By examining the process of international migration and some of the economic costs and beneﬁts of the movement of technical talent, this study provides a window to the workings of the global economy and how the structural relationship between rich and poor countries might be altered. The ﬂexibility of the global economic system creates opportunities and imposes costs on national economies. Only those countries that have a well educated workforce, high quality physical and technological infrastructures, and relatively pragmatic policymaking capabilities tend to integrate well. Global competition demands ﬂexibility and technological capacity. This means that high-value service providers such as doctors, computer scientists, geneticists, managers, accountants, engineers, chip designers, etc. will be recruited globally to exploit emerging opportunities. Labour shortages in many ageing societies will dictate the direction and magnitude of ﬂows of technical talent. Already Indian students and professionals are in high demand in the IT industry in the US, the UK, and other European countries (Silicon.India 2004). The challenge will be to regain part of the growing expatriate technical community. Government incentives to lure professionals back and the rapid development of the home market can contribute to the return ﬂow of talent. Many other professionals, though settled abroad, could ‘circulate’ between sending and receiving countries, not just between India and the US but between India, the US, Western Europe, and Japan, thereby creating multiple nodes of global epistemic communities and transfer knowledge gained overseas to their home economies. A substantial responsibility will have to be placed on sending and receiving country governments to create dynamic national economies, which are expected to absorb skilled professionals by creating, retaining, and gaining back talent. A more balanced global economic governance policy recognizes that labour mobility cannot be contained but skilled labour can be retained or encouraged to return. This ‘circulation’ of talent will be critical for future 77

Analytical Perspectives

innovative capability. The receiving countries will have to revisit their immigration policies to ensure that the gains of economic integration also accrue to poor economies that send them skilled labour. Future institutional research following from this basic investigation on the mobility of technical talent must be directed toward obtaining industry- and ﬁrmlevel data from countries that are on the threshold of relying on foreign workers. There is a dire need for more systematic collection of data. Inter-governmental agreements in data collection methods will be critical. Also, signiﬁcant differences among different professions and skills call for more sector speciﬁc investigations. A more systematic analysis of labour shortages and the future growth of IT related industries will be crucial to understand the extent of shortages and the ability of sending countries to fulﬁl that need. India, China, and a few other countries, are faced with a historic opportunity to generate the kind of technical talent that will be demanded by the IT sector as a whole. As the mobility of labour increases the pressures to open up OECD economies under GATS will also increase. Rather than simply lose the talent permanently or rely on remittances, sending countries must rethink their development and education strategies. Receiving countries will need to be more receptive to poor countries with immigration reforms as they utilize technical talent temporarily and permanently from non-OECD economies. In the end a ﬁne balance between high rates of economic growth and structural change, social policies for the marginalized groups, and a relatively open world economy for both high and less skilled workers must be found. Only then can the international mobility of technical talent beneﬁt both sending and receiving countries. References Alarcón, R. (2001). ‘Immigrant Niches in the US High-Technology Industry’, in W.A. Cornelius, T.J. Espenshade, and I. Salehyan (eds), The International Migration of the Highly Skilled: Demand, Supply, and Demand Consequences in Sending and Receiving Countries. La Jolla, CA: Center for Comparative Immigration Studies, University of California-San Diego. Barrere, R., L. Luchilo, and J. Raffo (2004). Highly Skilled Labour and International Mobility in South America. Paris: OECD. Bhagwati, J.N. (2003). ‘Borders Beyond Control’, Foreign Affairs, 82(1): 98–104. Blouin, C. (2005). ‘NAFTA and the Mobility of Highly Skilled Workers: The Case of Canadian Nurses’, The Estey Center Journal of International Law and Trade Policy, 6(1): 11–22.

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Technical Talent Boyd, M. and D. Thomas (2001). ‘Match or Mismatch? The Employment of Immigrant Engineers in Canada’s Labour Force’, Population Research and Policy Review, 20(1–2): 107–33. Brandi, M.C. and L. Cerbara (2004). ‘High Skilled Migrants Inﬂows and Outﬂows in Italy. International Migration in Europe: New Trends, New Methods of Analysis’, mimeo. Rome. Brown, P. (2001). ‘Skill Formation in the Twenty-First Century’, in P. Brown, A. Green, and H. Lauder (eds), High Skills: Globalization, Competitiveness, and Skill Formation. Oxford: Oxford University Press. Castells, M. (1998). The Information Age: Economy, Society and Culture, Vol. 3. Malden, MA: Blackwell Publishers. Chalamwong, Y. (2004). The Migration of Highly Skilled Asian Workers in OECD Member Countries and Its Effects on Economic Development in East Asia. Paris: OECD. Commander, S., M. Kangasniemi, and L.A. Winters (2004). ‘The Brain Drain: Curse or Boon? A Survey of the Literature’, in R.E. Baldwin and L.A. Winters (eds), Challenges to Globalization: Analyzing the Economics. Chicago: University of Chicago Press. Cornelius, W.A. and T.J. Espenshade (2001). ‘The International Migration of the Highly Skilled: “High-Tech Braceros” in the Global Market’, in W.A. Cornelius, T.J. Espenshade, and I. Salehyan (eds), The International Migration of the Highly Skilled: Demand, Supply, and Demand Consequences in Sending and Receiving Countries. La Jolla, CA: Center for Comparative Immigration Studies, University of California-San Diego. Cornelius, W.A. and T. Tsuda (2004). ‘Controlling Immigration: The Limits of Government Intervention’, in W.A. Cornelius, T. Tsuda, P.L. Martin, and J.F. Holliﬁeld (eds), Controlling Immigration: A Global Perspective. Palo Alto, CA: Stanford University Press. D’Costa, A.P. (1999). The Global Restructuring of the Steel Industry: Innovations, Institutions, and Industrial Change. London: Routledge. D’Costa, A.P. (2002). ‘Technology Leap-frogging: The Software Challenge in India’, in P. Conceição et al. (eds), Knowledge for Inclusive Development. New York: Quorum Books. D’Costa, A.P. (2003a). ‘Uneven and Combined Development: Understanding India’s Software Exports’, World Development, 13(1): 211–26. D’Costa, A.P. (2003b). ‘Export Growth and Path-Dependence: The Locking-in of Innovations in the Software Industry’, in A.P. D’Costa and E. Sridharan (eds), India in the Global Software Industry: Innovation, Firm Strategies and Development. Basingstoke: Palgrave Macmillan. D’Costa, A.P. (2003c). ‘Catching Up and Falling Behind: Inequality, IT, and the Asian Diaspora’, in K.C. Ho et al. (eds), Asia.com: Asia Encounters the Internet. London: Routledge.

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Analytical Perspectives D’Costa, A.P. (2004). Globalization, Development, and Mobility of Technical Talent: India and Japan in Comparative Perspectives. Helsinki: UNU-WIDER. D’Costa, A.P. (2005). The Long March to Capitalism: Embourgeoisment, Internationalization, and Industrial Transformation in India. Basingstoke: Palgrave Macmillan. D’Costa, A.P. (ed.) (2006a). The New Economy in Development: ICT Challenges and Opportunities. Basingstoke: Palgrave Macmillan. D’Costa, A.P. (2006b). ‘Exports, University-Industry Linkages, and Innovation Challenges in Bangalore, India’, World Bank Policy Research Department Working Paper, 3887. Washington, DC: World Bank. Desai, M.A., D. Kapur, and J. McHale (2002). Sharing the Spoils: Taxing International Capital Flows. Cambridge, MA: Weatherhead Center for International Affairs. Desai, M.A., D. Kapur, and J. McHale (2003). The Fiscal Impact of High Skilled Emigration: Flows of Indians to the US. Cambridge, MA: Weatherhead Center for International Affairs. Docquier, F. and H. Rapoport (2004). Skilled Migration: The Perspective of Sending Countries. Washington, DC: World Bank. Domingues Dos Santos, M. and F. Postel-Vinay (2003). ‘Migration as a Source of Growth: The Perspective of a Developing Country’, Journal of Population Economics, 16(1): 161–75. Espenshade, T.J. (2001). ‘High-end Immigrants and the Shortage of Skilled Labour’, Population Research and Policy Review, 20(1–2): 135–41. Florida, R. (2005). The Flight of the Creative Class: The New Global Competition for Talent. New York: Harper Collins. Gayathri, V. (2001). ‘Rethinking High-Skilled International Migration: Research Policy Issues for India’s Information Economy’, Proceedings from Seminar International Mobility of Highly Skilled Workers: From Statistical Analysis to the Formulation of Policies, 11–12 June. Paris: OECD. Giese, K. (2003). ‘New Chinese Migration to Germany: Historical Consistencies and New Patterns of Diversiﬁcation within a Globalized Migration Regime’, International Migration, 41(3): 155–85. Gokhberg, L. and E. Nekipelova (2001). ‘International Migration of Scientists and Engineers in Russia’, Proceedings from Seminar International Mobility of Highly Skilled Workers: From Statistical Analysis to the Formulation of Policies, 11–12 June. Paris: OECD. Heleniak, T. (2004). Geographical Dimensions of Russia’s Demographic Crisis. London: Royal Institute of International Affairs. Hira, R. (2004). ‘US Immigration Regulations and India’s Information Technology Industry’, Technological Forecasting and Social Change, 71(8): 837–54. Hugo, G. (2003). Migration and Development: A Perspective from Asia. Geneva: International Organization for Migration. Hunger, U. (2002). The ‘Brain Gain’ Hypothesis: Third World Elites in Industrialized Countries and Socioeconomic Development in their Home Country. La Jolla, CA: Center for Comparative Immigration Studies, University of California-San Diego.

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Technical Talent Kapur, D. (2003). Remittances: The New Development Mantra? Cambridge, MA: Weatherhead Center for International Affairs. Khadria, B. (2004). ‘Human Resources in Science and Technology in India and the International Mobility of Highly Skilled Indians’, OECD STI Working Paper 2004/7. Paris: OECD. Latapi, A.E. (2004). ‘Migration and Development: The Case of Mexico’, paper prepared for the Annual Bank Conference on Development Economics, 10–11 May, Brussels. Lowell, B.L. (2001). ‘Skilled Temporary and Permanent Immigrants in the United States’, Population Research and Policy Review, 20(1–2): 33–58. Lowell, B.L. and A. Findlay (2001). Migration of Highly Skilled Persons from Developing Countries: Impact and Policy Responses: Synthesis Report. Geneva: ILO. Lucas, R.E.B. (2004). ‘International Migration to the High Income Countries: Some Consequences for Economic Development in the Sending Countries’, paper prepared for the Annual Bank Conference on Development Economics, 10–11 May, Brussels. Malaha, I. (2004). ‘International Migration: The Case of the Post-Soviet Russia. International Migration in Europe: New Trends, New Methods of Analysis?’, mimeo. Rome. Martin, P., H.D. von Loeffelholz, and T. Straubhaar (2002). Managing Migration for Economic Growth: Germany and the United States in Comparative Perspective. Baltimore, MD: The American Institute for Contemporary German Studies, Johns Hopkins University. Martineau, T., K. Decker, and P. Bundred (2002). Brieﬁng Note on International Migration of Health Professionals: Levelling the Playing Field for Developing Country Health Systems. Liverpool: Liverpool School of Tropical Medicine. Massey, D.S. et al. (1998). World in Motion: Understanding International Migration at the End of the Millennium. Oxford: Clarendon Press. Mattoo, A. and A. Carzaniga (2003). ‘Introduction and Overview’, in A. Mattoo and A. Carzaniga (eds), Moving People to Deliver Services. Washington, DC: World Bank and Oxford University Press. NASSCOM (2002). Strategic Review 2002. New Delhi: NASSCOM. NASSCOM (2003). Strengthening the Human Resource Foundation of the Indian IT Enabled Services/IT Industry, report by KPMG Advisory Services Private Ltd in association with NASSCOM under the aegis of the Department of IT, Ministry of Information Technology and Communications, Government of India, New Delhi. NASSCOM (2004). Available at: www.nasscom.org (accessed 8.9.04). NASSCOM (2005). Available at: www.nasscom.org (accessed 22.8.05). Nayyar, D. (1994). Migration, Remittances and Capital Flows. Delhi: Oxford University Press. Nekipelova, E. and L. Ledeneva (2004). ‘Contemporary Forms of Highly Skilled Migration of Russians: Labour Migration of Scientists and Mobility of Students.

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4 Global Mobility of Talent from a Perspective of New Industrial Policy: Open Migration Chains and Diaspora Networks∗ Yevgeny Kuznetsov and Charles Sabel

4.1 Introduction: Global Migration of Talent as an Opportunity All the very valid concern about ‘brain drain’ from developing countries notwithstanding, this chapter argues for and demonstrates the possibility of ‘win–win’ positive dynamics beneﬁting both sending countries and migrants themselves. Such a virtuous cycle is illustrated by India and China, where it is more relevant to talk about ‘brain circulation’ and ‘brain exchange’ rather than habitual brain drain (see Saxenian, Chapter 5 of this volume). But even in cases of low skill migration, such as migration from Mexico, one can ﬁnd evidence of mutually beneﬁcial gains. Yet the win–win dynamics we argue for are not automatic. It is, in fact, a gradual step-by-step process requiring ingenuity and creativity. To stress the possibility of such virtuous dynamics, we introduce two key notions: open migration chains and diaspora networks. Open migration chains are sequences of educational or job opportunities, which ∗ The authors are grateful to David Ellerman (University of California, Santa Cruz), Vladimir Kreacic, Lev Freinkman (World Bank), AnnaLee Saxenian (University of California, Berkeley), Andrés Solimano (ECLAC) and participants of the ECLAC/UNU-WIDER Workshop on International Mobility of Talent (Santiago, Chile, 26–7 April 2005) for helpful comments and suggestions. Special thanks to Emily Dalton (Columbia University) for efﬁcient editorial assistance.

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allow a migrant to move to progressively complex educational and job tasks necessary to work in the global environment. Diaspora networks (or expatriate networks) are the locus of concerted action by expatriates to promote their collective interests or to help them engage in their home countries. The notion of diaspora networks is not to be confused with a familiar notion of diasporas—a totality of individuals living abroad (as illustrated by Jewish diaspora or Armenian diaspora). Diasporas are composed of a surprising variety of diaspora networks, some of them constructive and useful from the perspective of a virtuous cycle we discuss here, but some are not necessarily so (if for instance a central concern of certain diaspora members is political and defensive, thereby dividing and alienating rather than bringing together the members for a shared agenda of change). By focusing on diaspora networks (micro level phenomenon) rather than diasporas (macro level phenomenon), we stress this heterogeneity and spontaneity of action. To understand open migration chains and diaspora networks, we put it into the context of the profound change in the organization of ﬁrms and value chains. Over the last quarter century the textbook ﬁrm has gone from centralized and closed to decentralized or networked and open. This transformation reﬂects a profound and general innovation in the way we address cooperative problem solving. It was axiomatic for the nineteenth and much of the twentieth centuries that problems beyond the reach of our individually limited capacities could only be solved by decomposing them, according to a master plan, into narrow, easily learned tasks and then combining the results into the desired output. Today, in contrast, we increasingly solve such problems by looking for others who are already solving (a part of) the problem we are facing. The central organizational challenge is accordingly not the management of the hierarchy that decomposes tasks and assembles outputs, but rather constructing the search networks that allow us to ﬁnd and collaborate with those who are already learning what we need to know. This shift from hierarchy to search network has profound effects on global supply chains, and therefore on strategies of economic development—new industrial strategies— in general, and on the role of high and low skill diaspora networks in particular. Section 4.2 indicates how a shift in the mobility possibilities of immigrants/migrants leads to a transformative fusion of traditional migration chains (in which the success of one villager in a low skill job abroad attracts ﬁrst one neighbour or cousin, then the next) and internal job ladders (where high skill employers work and learn moving from one task 85

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to a hierarchically more demanding one within a closed corporation) into open migration chains: the pattern, characteristic of high skill diasporas, where migration chains (including ﬂows back and forth between host and sending countries) grow where early migrants discover the possibility of acquiring at school and work the skills needed to participate at higher and higher levels in many, loosely linked ﬁrms in some sector of the decentralizing world economy. Section 4.3 provides a perspective on the literature on international migration of skills and diaspora networks. Section 4.4 highlights a new role of diasporas as search networks—as bridges between capabilities at home and opportunities abroad. Section 4.5 summarizes tentative lessons on how to organize deliberate action to institutionalize a variety of existing diaspora networks into search networks. More analytical sections 4.6 and 4.7 put the strands together by examining the global context of profound restructuring of value chains. Section 4.6 presents a compressed account of the innovative institutional mechanisms that undergird the new forms of collaboration and shows how these mechanisms explain transformations in supply chains that elude other interpretations. Section 4.7 outlines respective policy implications which we call, provisionally and tentatively, new industrial policy. Interventions to promote open migration chains and diaspora networks is one example of such ‘new industrial policy’. Section 4.8 provides conclusions. We do not pretend to give a full theoretical account of the changes under consideration, and still less to weigh all the evidence for and against the conclusions we draw. Our purpose rather is to present a uniﬁed account of developments normally treated as distinct policy domains, and thereby to call attention to connections among current problems and possible responses to them that may be of interest to practitioners leery of both partial, potentially incompatible solutions and disjointed theoretical discussions that reinforce traditional distinctions rather than helping to overcome them.

4.2 From Job Ladders to Open Migration Chains Much of the labour market theory of the late twentieth century was focused on industrial jobs. Within that broad domain, it was common, perhaps standard, to treat migration between countries as concerning low skilled workers, and to treat skill acquisition as occurring through learning on the job within the large, hierarchically organized corporation described above. Given the organization of production in those ﬁrms, 86

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moreover, most learning was plant or ﬁrm speciﬁc: it followed from the decomposition of large projects, such as design and production of a car, into small, linked tasks, that the machines needed for any step would be highly specialized and tightly matched in its speciﬁcations to the machine that produced its input and the machine that used its output. Machines designed to be used only with other machines in such a sequence are called asset speciﬁc—they have no value for any other use. By the same logic, the skills needed to operate each machine consisted in the largely tacit knowledge of the peculiarities of that machine in relation to upstream and downstream operations. (The knowledge was almost sure to be largely tacit, because the machines, in relation to their neighbours, were effectively unique, and formalization, at least in the then current view, was the statement of the general features of some process or situation.) Workers with little or no formal education learned these skills by progressing from machine to machine, and absorbing from more experienced colleagues, not from books, the highly specialized knowledge they needed. These job sequences were called job ladders. It was a sign of the importance of tacit knowledge in these job ladders and the economy as a whole that returns to formal education were low—for many workers in the US, for instance, there was little penalty, in lifetime earnings, for quitting highschool or skipping college because the skills needed for responsible, high paying jobs could be acquired in many cases by an industrial ‘apprenticeship’ in a particular factory or ﬁrm. 1 It was a further feature of this world that migration and skill acquisition were distinct phenomena. Migrants were presumed, correctly, to be seeking higher incomes and vastly increased possibilities for savings, but not new skills, when they went abroad. Their goal was to remit as much as possible to their families at home while working in the receiving country, and to return as soon as possible and with as much wealth as possible to their home countries. They were not interested in investing in skill acquisition as they were not planning to stay abroad long enough to reap the returns in their investment. However unattractive, low skill jobs were acceptable because they paid wages that were extraordinarily high by home country standards. Given these goals, they lived in effect in a noman’s land between their home and their (temporary) destination. Often they in fact circulated back and forth, as economic and family circumstances dictated. 2 They were, to use famous phrase, ‘birds of passage’. The guest workers brought to Western European factories in the 1960s and 1

See Piore and Doeringer (1971).

2

See, for instance, Baines (1995).

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1970s ﬁt this pattern perfectly, but they had many forbearers from the late nineteenth century. A central problem for these birds of passage 3 was, and remains, the identiﬁcation of plentiful, geographically concentrated supplies of low skill jobs over long distances. The jobs had to be plentiful and close together because, being low skilled and thus undifferentiated, there could be no guarantee that any particular one would prove stable. Migrants had to compensate for the potential instability of any one job by the easy availability of others, all so close to each other that changing jobs did not require changing homes. Finding such jobs required scanning many possible destinations for a single piece of information: are jobs available at this place for people ‘like us’? An efﬁcient way to scan was to rely on a network of relatives, friends and acquaintances from one’s home village as they were also looking for unskilled jobs abroad. Members or nodes in this network know little about each other—they rarely have worked or done business together, for instance—but they know all that is needed, for purposes of the joint search, about labour market conditions. Links of this kind—rich in information about a particular, thin slice of the world, poor in information about the character and abilities of the network members—are called weak ties; and the migration ﬂows that result from a network of weak ties directing migrants from a given origin to follow the news of plentiful, low skill jobs to a common destination is a migration chain. 4 A key consequence of the shift to networked organization based on search networks rather than hierarchy is to ‘de-specify’ machines and skills—to make both more general in purpose. Assume, as we did above, that a ﬁrm knows in advance that it cannot be sure what products it will be making two years from now, and how any of those products will be designed until many outsiders have revised initial projects. In that case it sacriﬁces some of the efﬁciency that comes with a machine that can do one thing and one thing only; rather it buys general purpose machines that can easily be reprogrammed to do many different operations. The shift means, however, that learning to shift from operation to operation with a given large domain and, more broadly still, learning to learn, become master skills each based on substantial bodies of formal knowledge. There is less and less wholly unskilled work and even the relatively unskilled work is no longer plant speciﬁc: think of the general 3 ‘Birds of passage’ is a famous turn-of-the century phrase for Italian immigrants to the US. It is also the title of a book by Piore (1979). 4 See Granovetter (1972).

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team working skills needed by workers doing assembly work in just-intime factories. 5 A crude but revealing measure of this shift is the rapidly increasing returns to formal education, and the corresponding increase in the gap between the lifetime wages of unskilled and skilled, not to say professional workers. 6 Potential migrants, of course, notice this shift. Those with good educational prospects at home go abroad to get still better ones, and then jobs that enable them to learn even more. Those with lesser opportunities start to think about improving them abroad, fearing that their long-term employability depends on their doing so. Instead of looking for destinations with plentiful unskilled jobs, migrants begin to look for destinations that offer many possibilities for skill acquisition at work or in school. As job ladders are transformed into more open, inter-ﬁrm, and more formally skilled labour markets, and weak ties among migrants begin to communicate information about learning possibilities, migration chains become open mobility networks—means for discovering where to go to learn how to learn to prosper in the reorganizing economy. High skill diasporas are a conspicuous example of such networks. Proliferation of professional association of diaspora members is evidence of this transition from thin to thick search networks. Associations such as the association of doctors of Armenian origin in the US or the association of engineers from Latin America are formed precisely as such ‘thick’ networks to help members identify opportunities for professional advancement. Mentoring—when more experienced and successful members who have already ‘made it’ share their personal networks and knowledge with younger members who are just entering their migration chains—is a central feature of these associations. Perhaps the most famous and successful organization of this kind, The Indus Entrepreneurs (TiE), was started in 1992 as a conduit for experienced Indians to mentor others and to provide a broad forum for networking and learning for its members. TiE is an institutionalized search network to help its members to move up in their migration chains. 7 Even more signiﬁcantly, this change affects not only professional associations; it now extends beyond skilled migrants deﬁned as those with tertiary degrees. Hometown associations of migrants of Mexican origin (there are more than 70 of those in the US) were started in the 1950s with a primary objective to defend the rights of (often illegal) labour migrants from Mexico, the vast majority of them unskilled. Hometown associations 5

See Helper et al. (2000).

6

See Acemoglu (2002).

7

See Saxenian (2006).

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used to be paragons of institutionalized but thin search networks which identiﬁed job opportunities, provided mutual help (including practical ways to live and work as an illegal migrant) from local communities of Mexico. Migrants from Zacatecas (a poor state in the centre-north of Mexico), for instance, have a hometown association in almost every major city in the US. But with time, and as many migrants became legal and progressed in their migration chains from hamburger-ﬂippers to supervisors of these hamburger-ﬂippers two things started to happen. First, an acute shortage of native speaking supervisors and shop ﬂoor managers has started to occur. Migrants from Mexico do not speak ﬂuent English. If only for this reason, their managers had better be their compatriots. Seizing the opportunity of migrants as a rapidly growing market is another compelling reason. So signiﬁcant is the shortage of certain Spanish speaking managerial positions that identifying and training such managers is now a central task of the Association of Latin American Professionals. 8 Naturally, open-ended migrants’ organizations such as Mexico’s hometown associations see this opportunity and contribute to this transformation but introduce mentoring too. For example, they direct their members to appropriate training programmes and other job advancement opportunities. What started as a paragon of a thin search network of low skilled migrants is showing signs of transformation to thick search networks to move the members along their migration chain. But the story does not end here. As migrants progress along their migration chains and acquire self-conﬁdence which comes with personal and professional success, they start thinking about giving to and helping not just their families but the communities they came from. Hometown associations from Zacatecas, in collaboration with the state government of Zacatecas, designed and co-ﬁnanced a promising three-forone programme of investment in community infrastructure: small roads, schools, hospitals, etc., in their home communities (Torres 2005). The programme is called three-for-one because for every peso the hometown associations put in, state and federal governments contribute another peso each. Although the vast majority of members of hometown associations are not wealthy, surpassingly and counter-intuitively, the binding constraint for this programme of collective remittances has always been contributions from the Mexico government, not the donations of 8 A. Peralta, head of the association. Conversation with the author (Y. Kuznetsov) during the meeting of professionals of Mexican origin with Mexico’s president V. Fox. The meeting was organized by CONACYT (Mexico’s Ministry for Science and Technology) and the CEO of AMD (a Mexican himself) in New York on 24–5 September 2003.

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the migrants (Torres 2005). Financial transfers are not even the most important aspect of collective remittance—governance and monitoring is. Community infrastructure projects in question need to be identiﬁed, ﬁnanced, and managed through a network of very diverse stakeholders which (used to) have little trust in each other: municipal government, users of the infrastructure, migrants, etc. As migrants are contributing their own money, they are highly motivated to make the project succeed rather than decay, as often happens with public work projects. But to make them work, they need to monitor them, both from a distance and through frequent visits to their home town. The diaspora network in this example is a transnational search network: diaspora members work with stakeholders at home to design, co-ﬁnance and govern projects to beneﬁt their communities at home. The implicit evolution at work here mirrors one advancement in the migration chain. As migrants advance from low paid and low skilled labour to higher paid and higher skilled, they acquire conﬁdence to think about giving back to their home country communities. Thin search networks of simple job searches evolve ﬁrst into thick search networks of professional advancement, mentoring, and learning, and then into diaspora networks contributing to their home countries. Whether these three things—simple job search, professional advancement, and engagement to contribute to home countries—are stages of the process or its functions, is an open question. Tentative evidence we have from diaspora networks of India, Mexico, and Armenia signals that it is difﬁcult to skip stages and it is more accurate to think about them as a succession of stages. But it does not mean, for instance, that an association of, say, Argentinean professionals in the US should wait decades before designing a meaningful agenda of giving back at home or that it should mimic the evolution of other professional associations such as TiE. Motivation to engage with the home country is decidedly intrinsic (i.e., it comes from inside rather than as a response to a set of incentives): participation is its own reward. Intrinsic motivation is a central concern of so-called third force psychology—it does not provide a conclusive answer. Abraham Maslow’s hierarchy of needs argues convincingly that one needs to satisfy basic needs before indulging in the luxury of selfactualization (Maslow 1971). Yet on the other hand, Viktor Frankl provides a no less compelling personal account of how self-actualization became a precondition for mere survival; see his personal story of life in the harsh environment of a concentration camp (Frankl 1962). To the extent that diasporas are called forth in critical moments of crisis and 91

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transition (think about present day Iraq and Afghanistan; Israel in the 1940s and 1950s; and Armenia in the 1990s), these issues are central to a rapidly growing literature on how to elicit contributions from diaspora members to beneﬁt their home countries, yet they are rarely discussed. When asked why she abandoned the comfort and security of her home to come to a newly formed Israel, Golda Meir responded, paradoxically, that it was ‘pure selﬁshness’. The task was so challenging and huge that ‘I must be a part of it. Just pure selﬁshness, I suppose’ (Meir quoted in Hirschman 1977). In what follows, we focus on diaspora networks as transnational search networks that evolved enough to engage in projects in home countries.

4.3 Three Generations of Literature on Diasporas of the Highly Skilled The focus of this chapter—the interaction of expatriate talent with their countries of origin—has been treated at some length in the literature. The literature on policy interventions to turn brain drain into brain gain for countries of origin has evolved in three distinct generations. The ﬁrst generation is illustrated by the 1968 debate between Harry Johnson and Don Patinkin, in one of the ﬁrst anthologies on the brain drain (Adams 1968). Johnson set forth a ‘cosmopolitan liberal argument’ emphasizing individual welfare gains for the migrating talent, while Patinkin stressed welfare losses for the country of origin. These welfare losses are particularly signiﬁcant when the country loses a critical mass of skills, with a risk of its intellectual community turning into a ghetto. Their differences notwithstanding, both Johnson and Patinkin focused on the physical movement of people; the policy pre-occupation was the physical return of migrants to their home countries (see also Bhagwati and Partington 1976). By the 1980s, the debate about brain drain had dissipated; it did not receive renewed attention until the 1990s. The sharp increase in skilled emigration from developing countries brought back the brain drain debate. The second generation of literature focuses on networks of professionals organized in diasporas and other forms of brain circulation networks; see Brown (2000); Kapur (2001); Saxenian (2002); Kapur and McHale (2005); Brinkerhoff and Wescott (2006). Partly because the return of expatriate professionals has proved unrealistic for many countries, a new focus is on leveraging the expertise and capital of expatriate professionals. This 92

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literature is insightful in outlining the potential of expatriate professionals as sources of capital and knowledge, yet in this literature skilled diasporas tend to fall as manna from heaven. Diasporas and brain circulation networks appear suddenly as a magical solution, allowing home countries to leverage the experience of their expatriates to the beneﬁt of the country of origin. The literature recognizes that much more understanding is needed to uncover the intricacies of the evolution of diaspora networks and their endogenous dynamics. Yet since little systematic information on the internal diversity of diasporas is usually available, this subject does not receive proper examination. A hallmark of related second generation programmes is the direct role of expatriates—as investors, consultants, scientists, and doctors, rather than as bridges, mentors, and antennae. Co-evolution of home country institutions and diasporas is a central thrust of emerging third generation of the literature (Kuznetsov 2006). The key thrust of an emerging approach is heterogeneity of both domestic institutions (the national governments and the private sector) and the diasporas. Save infernal traps (interlocking political and economic equilibrium traps which block learning before its gets started), any developing economy, even those characterized by a weak and ineffectual government, has segments or at least some high ranking ofﬁcials which are forward looking, dynamic, and efﬁcient. The same applies to the private sector: many developing countries have embryos of innovation clusters which are skill-based and export oriented. Old and new elites co-exist side by side. Crucially, dynamic segments of private and public sectors start to establish a common reform agenda. In this emerging literature, what counts for reform is less important (reform may mean fairly mundane things as improvement of the access to the poor to banking services or elaboration of economy-wide reform plans) than the intricacies and political economy of the reform process itself. For instance, Iskander (2006) discusses how the process of policy development can generate institutions supportive of business sector growth based on migration of highly skilled. She goes as far as to call for a shift in thinking from terms such as ‘diasporas’ to a broader analysis of labour markets and ﬁelds of entrepreneurship that have become transnational due to large scale migration. These transnational ﬁelds are still unmapped and compatible institutions relevant to ﬁnance, infrastructure, knowledge, and politics need to be created or developed. In order to better understand these transnational ﬁelds, and reap the knowledge necessary to build these institutions, Iskander outlines the necessity of 93

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going through a process of ‘interpretive engagement’. To illustrate this concept, Iskander points to La Banque Populaire Maricaine as an example of a ﬁnancial institution that has developed through such a process. This is the Moroccan state bank that has successfully served emigrants since 1969 through tailor made transfer, savings, and investment products. In order to ensure that products were kept in line with the changing needs of emigrants, there were repeated cycles of interpretive engagement in 1969, the 1980s, and the 1990s. For example, in 1969, as part of ‘Operation Moroccan Workers Abroad’, bank staff were sent abroad to be engaged in active discussion with emigrants. In the 1990s, the discussion evolved to the issue of how to keep the descendants of the initial clients interested. A hallmark of this third generation of literature which is, to repeat, only emerging is a view of country talent abroad as a key resource for restructuring and reform in both home and receiving countries. Not surprisingly, this generation of literature originated outside the established ﬁeld of migration studies although it does include established migration experts. For instance Michael Piore stresses that the US immigrant labour force is ‘made up of interpreters who understand the difference between our world and those of the market abroad that we seek to enter’ (Lester and Piore 2004) and he sees the interpretative ability of labour force as a major competitive advantage for the US. Predictably, the third generation of literature bifurcates into compelling case studies—(Saxenian, Chapter 5 of this volume); Iskander (2006); Kuznetsov (2006); Saxenian (2006) and conceptual papers which put the case studies in a provocative analytical light. Carefully designed empirical data intensive work speciﬁcally designed to test the far reaching hypothesis does not yet exist. Importantly, such a work should be a joint effort of established ‘economics of migration’ and experts in industrial policy and economic reform. What follows can be viewed as a ﬁrst step to establish such an inter-disciplinary bridge.

4.4 Diaspora Networks as Transnational Search Networks It is well known that expatriates have played a critical role in accelerating technology exchange and foreign direct investment (FDI) in the economies of India, China, and Israel. They have frequently taken the role of pioneer investors at a time when major capital markets regarded these economies as too risky. For some, there is nonﬁnancial intrinsic motivation for an early stage of participation. Others have effective mechanisms 94

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for risk mitigation that are not available to other investors. Many other nations now have the combination of successful expatriate communities and economies regarded as too risky for mainstream investors. Some economies have enjoyed signiﬁcant FDI but face the challenge of moving to higher knowledge intensive development (Latin American economies and new EU members). Expatriates abroad can serve as an entry point into new markets. Yet there is something profoundly elusive in deﬁning diaspora contributions to home countries. First, when the role of diasporas is most useful, it is most difﬁcult to deﬁne. For instance, at the end of the 1990s Korean chaebols such as Samsung were no longer able to obtain key technologies from US multinationals through licensing, which were their routine channels for decades: Samsung was considered too advanced and technologies were too critical to warrant such licensing. An expensive government programme—a pre-competitive stage consortium—was put together by the Korean government to deal with the problem, and it failed because the chaebols have little trust in each other and experience in private–private concerted action. Yet where high intensity government programme failed, light touch diaspora intervention succeeded. A small network of Koreans working for cutting edge ﬁrms proved critical in identifying binding constraints and designing ways to obtain and transfer necessary knowledge. Some of them came back to Korea to work for the chaebols in question while others remained in the US as antennas for the expertise. A transnational search network again. Note that their contribution was not reverse engineering and much less industrial espionage. They helped to identify the critical constraints, ways to solve them and ways to identify the relevant technical knowledge in the US. They were a search network, but someone else—the Korean chaebols, the government and spin-offs of the Korean chaebols—needed to act on their leads. Second, while the strength and magnitude of the talent abroad is important, the strength of home country institutions to utilize the talent abroad is critical. Thus Chile, Korea, or Scotland—countries with strong institutions—utilize their diasporas well, whereas Armenia or Argentina fail to take advantage of their talent in spite of many programmes. Yet another set of countries—such as Russia, Bosnia, and the Ukraine—do not even see their talent abroad as an opportunity. Third, although successful cases of diaspora engagement are relatively rare, when they do happen it is not due to a deliberate intervention. In most cases diasporas and expatriate networks emerge spontaneously as 95

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a manna solution. Serendipity seems to be much more important than government interventions. These are the three paradoxes of diasporas. Our explanation of these paradoxes is the following. A prevalent view is that engagement of the diaspora is about a well deﬁned full-time job (or its part-time equivalent): investor, consultant, lawyer, philanthropist, or business angel, is currently prevalent but it is basically incorrect. That of course may happen, but many steps have to be taken beforehand. We argue, however, that the expatriates are more important and useful as bridges, translators, and midwives: they open the doors and make connections but someone else still has to do the job. In contrast, a common perception is that they are somehow best suited ‘to do the job’. This is why government and the private sector of the home country are so crucial: they need to do the job, not the diaspora members themselves. Diasporas may be crucial to help formulate new and innovative projects but it is up to home country organizations to implement it. But since those are often weak and rudimentary, diasporas are viewed as substitutes of this weakness. This is an expectation which is understandable but wrong. Diaspora members are not substitutes, they are complements to activities of home country organizations. This of course means also that diasporas can be very instrumental in strengthening home country organizations. To illustrate how it works, let us give an example of an institutional and successful search network, GlobalScot, and two diaspora networks in the making, one in Chile and another in Mexico. GlobalScot is a highly innovative and highly successful programme to form a network of about 800 high powered Scots all over the world and use their expertise and inﬂuence as ‘antennas’, ‘bridges’ and springboards to generate a surprising variety of projects in Scotland. Box 4.1 conveys a gist of this diversity. Interestingly, although GlobalScot relies on all the strengths of Scottish Enterprise (its home organization is a highly capable local economic development organization) even GlobalScot failed to utilize the ideas and connections from GlobalScot members. The GlobalScot is now increasingly forging connections between its members and businesses in Scotland by-passing Scottish Enterprise. Chile takes inspiration from GlobalScot and is currently in the process of designing a programme called ChileGlobal. It is housed in Foundation Chile, a premier and highly idiosyncratic business innovation organization, which designs and ﬁnances business innovation projects. ChileGlobal, a network of about 60 (as of May 2005) inﬂuential Chileans in the US, Canada, and Europe, is a natural extension of the core business 96

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Box 4.1 HOW THE SEARCH NETWORK IS USEFUL FOR HOME COUNTRIES: EXAMPLES OF GLOBALSCOT

r

r r

r

r r

r

r

An inward investment project was identiﬁed through one of the ﬁrst founding members to respond to the invitation to participate in GlobalScot. It has now brought an internet licensing company to Glasgow, initially employing eight people which, according to the founder, will quickly become a multi-million pound business. An electronic engineering company that designs, tests and manufactures innovative condition monitoring systems, received, within a day of requesting, a full day’s advice on how to agree to a licensing deal with a large US blue chip company at a crucial stage of negotiations. A specialist training provider to the international oil and gas industry, looking for an entry point into the Gulf of Mexico was connected to a GlobalScot (exPresident of Enterprise Oil, Gulf of Mexico) who introduced them to a number of oil and gas companies in the region leading to business with several of the companies and a ﬁrm foothold in the market. A company specializing in the creation of virtual characters for gaming software was able to make valuable connections with a number of global Scots during a trip to California for an exhibition. A non-executive director at the company described the contacts as ‘an absolute bullseye target for the type of business advice needed ... people you would never dream of trying to reach as there would usually be about a dozen gatekeepers between you’. A GlobalScot member who is VP Production Procurement at IBM, donated one day a month to working with SE’s electronics team, providing insight into the global electronics sector by advising on new product developments, growing and shrinking markets and new opportunities. A University of Strathclyde spinoff company, developing the application of innovative 3-D display technology for use in medical imaging sectors and oil industries requested access to USA-based GlobalScots who could advise on the commercial development of imaging technology. Thirty-two members in the medical imaging sector responded immediately, resulting in valuable relationships which saved initial consultancy fees and opened doors into commercial entities that would have been inaccessible otherwise. A GlobalScot member who is Chief Scientist & VP Research and Development for a West Coast USA Biotechnology company undertook a twoday tour of the Scottish biotechnology sector which directly inﬂuenced SE’s Biotechnology Framework for Action. Back in California, he engaged other life sciences members in implementing his report, resulting in a programme to develop internships for Scottish life science students within Californian ﬁrms. ITI Scotland is a £450 million, ten-year project to encourage and support precompetitive research in key market areas with strong economic and business development potential. GlobalScot members were actively involved in the initial consultation process ensuring that ﬁnal proposals were speciﬁcally targeted

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Analytical Perspectives Box 4.1 (Continued) to address the particular strengths of the Scottish economy. One member, President of University of Maryland Biotechnology Institute, also delivered a virtual address at the launch of ITI Scotland, observing that ‘extremely innovative, cross-cutting research was already underway’. (Source: M. McRae, Head, GlobalScot, Scottish Enterprise)

of Foundation Chile. The Foundation is an incubator of search networks, and ChileGlobal is seen as yet another such search network, albeit special. Our point that search networks help uncover partial solutions that are working can be illustrated by the case of Mexico. The Mexican Ministry of Science and Technology views about a million tertiary educated Mexicans in the US (about 400,000 of them in managerial positions) as a unique opportunity which Mexico has not even started to explore. Hence, with advisory assistance from the World Bank, CONACYT started ‘Red de Talentos para Innovacion’—a network of talents for innovation—its own search network similar to ChileGlobal and GlobalScot. However, by its very nature search networks are inter-disciplinary and inter-organizational: they bridge boundaries and articulate new projects by ﬁnding previously unnoticed similarities. This is why bridge organizations such as Fundacion Chile and Scottish Enterprise are so critical: they serve as incubators of search networks. But in Mexico there is nothing similar to Fundacion Chile. Moreover, there is no tradition of meaningful inter-organizational communication and joint action. There is no dearth of inter-ministerial councils to coordinate issues but they tend to be cartels of established interests, an arena where each agency protects its own turf. Moreover, in a corporativist structure every action was mandated from the very top, and breakdowns of the corporativist system resulted in a governance paralysis at a federal level. To proceed, the Mexico Talent Abroad programme required creative and day-to-day collaboration between the Ministry of Foreign Relations, Ministry of Economy, and Ministry of Science and Technology (CONACYT). A solution (an unintended one?) found by a high ranking ofﬁcial of CONACYT was simple yet brilliant. He instituted a series of meetings of relevant agencies which were held on Saturdays. The fact that the meetings were outside the established routines helped to open a meaningful discussion and to deﬁne a new agenda of concerted action. Management of the programme is handled by Mexican Enterprise Accelerator in San Jose, California, which 98

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is established by the Ministry of Economy. All these are embryos of a possible future Fundacion Chile yet to be invented in the Mexico context. Hence, a humble and small (judging by its cost to the government purse) diaspora programme is an important organizational innovation to discover post-corporativist governance structure for the country. This is an example of how diaspora networks help formalize other networks while making them more effective as a means for incubating new programmes as governance structures as well as new projects. Now that we have an idea of how serendipity in the formation of diaspora networks can be transformed (through Saturdays only meetings or otherwise) into more systematic ‘guided serendipity’, let us turn to the discussion of lessons of the design of deliberate programmes to utilize diasporas of talent for the beneﬁts of the home countries.

4.5 Turning Diaspora Networks into Search Networks: Interventions to Trigger Guided Serendipity This section provides some observation on how deliberate action can trigger diaspora networks. We describe a series of light touch interventions which guide the serendipity of diaspora networks and transform them into sophisticated search networks.

4.5.1 Turning ‘Transactions’ Into ‘Discussions: Project Development vs. Project Financing’ Diaspora members can be useful to their home countries in two broadly deﬁned modes of involvement: ‘discussions’ and ‘transactions’. ‘Discussions’ include websites, conferences, workshops, on-line communications, and other activities helping diaspora members get to know each other, connect with each other, and deﬁne in which way they can contribute to the development of their home countries. ‘Transactions’ involve actions usually requiring time commitment and sometimes, although not necessarily, or even desirably, monetary contributions. Diaspora activities are easy to start but very difﬁcult to sustain. Enthusiasm to get involved is enormous and it feeds into diaspora websites, conferences, and other meetings. Those do not require major commitments of either personal time or money. But initial enthusiasm tends to evaporate as easily as it emerges: people get tired of meetings and discussions alone. The most common mistake is to be carried away by 99

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discussions (organizing diaspora conferences) without turning them into tangible outcomes like projects. People usually like to see tangible outcomes: joint research projects with home country scientists, helping a start-up in the home country ﬁnd new markets. Let us call these tangible activities ‘transactions’ or ‘projects’. A project then is a set of discreet activities and outcomes which can be measured. A project can be as small as a visit of a university professor to a home country, but it does require active commitment in terms of personal time and money. What we are after in diaspora programmes is eliciting commitments of diaspora members. The commitment can come in terms of time related to development of project and in terms of money—ﬁnancing a project. A project can be commercial or philanthropic, although this dichotomy is becoming increasingly obsolete. The biggest and most typical case is ‘feelgood’ donations—small amounts of cash from many dispersed members of diaspora. Large ‘showcase’ donations are different as they come from a few wealthy individuals but in the end they share a common feature— they are all about gifting money and require little personal engagement in designing and supervising the projects that these donations would be ﬁnancing. Triggering a process to transform ‘discussions’ into ‘transactions’ appears to be a key issue. Most diaspora initiatives run out of steam (and thus eventually fail) because they cannot transform from discussions to projects. Many diaspora initiatives naively assume that initial enthusiasm would spontaneously result in something tangible and the enthusiasm will continue ad inﬁnitum. The central issue is a long gestation period from initial discussions to commitments (particularly when large commitments are involved). All too often results are expected quickly. This is a valid attitude since visible demonstrable effects are what keep the process going. A recommendation then is to start with small commitments and small projects and increase them gradually and incrementally, with accumulation of trust and experience. Commitments may start from occasional lectures at a home university, supervision of a project of a talented student and grow, gradually and incrementally, to a large research project (in case of scientiﬁc networks) or business project (in case of business network of managers and entrepreneurs). This blend of trust and experience is credibility. Credibility is a central issue and must be earned by all participants in the process. Given that many diaspora members were involved in the past in many activities which started with good intentions yet failed because a key actor (usually the government) was unable to keep its commitments, it does pay off to start small and produce small 100

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but tangible outcomes as a demonstration to win the hearts and minds of sceptics. Such a demonstration effect can be celebrated in meetings, conferences and workshops. The proposed sequence then is from small discussions to small transactions and only then to large discussions which are convened to generate, gradually with time, larger transactions. The usual sequence is large discussions which gradually devolve into small discussions because there are no transactions to focus the energy of the participants and maintain the momentum of the process.

4.5.2 Key Role of Individual Champions to Initiate the Process and Organizations to Sustain It When credibility is not yet developed, key individual champions initiate the process by investing their own social capital—they bring people together for a cause, the mobilization of diaspora in our case. It is difﬁcult to overestimate the role of individuals in triggering a sensible process of diaspora mobilization. When little else is available or can be trusted, they are the key institutions. They make connections, ameliorate scepticism, and propose project ideas. They move the process forward against all odds. Usually such champions combine their commitment as an individual with a high position in a formal hierarchy; they use resources and organizational ‘weight’ to initiate the process. Many diaspora initiatives failed because they failed to identify such champions and to make sure they stay involved for a sufﬁciently long time. In the absence of individuals with high personal credibility, there is very little that can lend credibility to an insipient diaspora process, particularly because governments begin with very little credibility. Individuals are crucial to initiate the process: it is home country organizations which sustain it. Quality of home country organizations appears to be the single most important determinant of diaspora initiatives. Diasporas could be massive, rich, and entrepreneurial and have a lot of enthusiasm to get involved, yet it is home country organizations which invariably become binding constraints. A paradox of sorts (diasporas, by deﬁnition, reside outside the home country) but it shows, again and again, that diasporas are no panacea. Diaspora members live outside the country but once they engage the home country, they become constrained by its institutions. True, they can do a lot, perhaps more than anyone else, to relax these constraints in the longer term but in the short term they will feel the bite. This is why Chile and Scotland have had much more success in interactions with their diasporas, even though these 101

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diasporas are small and less resource rich than diasporas of Armenia and Argentina (countries with weak governments and inconsistent policies). Huge variation in quality and sheer diversity of home country organizations creates a tremendous number of organizational paths to generate credible commitments of diaspora members. One can see both induced developments when a government programme serves as a trigger. The evolution is from individuals to government organizations to nongovernment organizations, and spontaneous development, from key individuals outside the government to professional diaspora associations playing a key role, to government organizations gradually assuming an increasingly important role. Spontaneous development tends to be sufﬁcient in the case of large countries and large diasporas (China and India are two such paragons) while the induced development is necessary for small countries and small diasporas. In the environment of weak home country institutions, donors could play a stronger role in diaspora mobilization. Donors are engaged with the country anyway, despite its institutional weaknesses. Using a diaspora as a partner for development provides donors with one more instrument. This could be a cost effective channel to provide development assistance, with a considerable upside gain if things suddenly turn out well. As an example one could consider Iraqi transitional government as a major pilot for the US to use diaspora for achieving development goals.

4.6 Why are Search Networks Becoming Ubiquitous? Implications of Profound Restructuring of Value Chains 4.6.1 From Hierarchies to Search Networks In a traditional organization, headquarters set broad goals and successively lower levels of managers decompose those goals into narrower and narrower ones. Eventually organizational routines specify in detail how to parse and execute tasks, and verify their execution (Chandler 1977). Roughly after 1980, the textbook organization became federated and open. Decisions of higher units are shaped by lower ones; the lower units can be formally outside the organization. As information in this new organization ﬂows up and down as well as sideways, the organizations are said to be networked. General designs are set provisionally by the highest level and revised in light of proposals by internal and external ‘lower’ level units responsible for executing key subsystems. Rule following no 102

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longer entails exact obedience to orders, as in hierarchies, but rather the obligation to propose a new rule when the current one arguably defeats its purpose (Nohria and Eccles 1992). The networked ﬁrms arise from and are built to facilitate the iterative process of co-design whereby internal and external suppliers contribute to the redeﬁnition of speciﬁcations for (components of) new products based on their experience in manufacturing existing models. These collaborative, co-design disciplines are utterly familiar (to practitioners) under the name of Japanese production methods, although they are no longer limited to Japanese ﬁrms or those in close association with them. So pervasive are these practices that it is almost impossible to survey recent writings about the global economy without stumbling across extended reference to them. 9 These methods establish a ﬁrst idea of what to produce (and how) through benchmarking: an exacting survey of current products and processes, supplemented by assessments of new and unproved techniques that might become available for use. Once benchmarking provides a provisional starting point, design follows a disciplined, decentralized process known as simultaneous engineering. Each subunit responsible for a constituent component proposes modiﬁcations of the initial plan, while also considering the implication of like proposals from the other subunits for its own activities. Provisional designs are thus evaluated and reﬁned, and the cost of each attribute is compared to its contribution to functionality using the techniques of value analysis/value engineering. Once production begins, systems of error detection and correction use breakdowns in the new routines to trigger searches for weaknesses of the design or production process that escaped earlier examination.10 The goal of such root-cause analysis is to trace disruption back to its original source, which may not be palpably linked to the proximate cause of the breakdown. Moreover, the exchanges of information required to engage 9 Thus, for example, in discussing the value of long-term collaborative relationships based on voice rather than exit, LRT (‘Beyond Markets and Hierarchies’, p. 51), refer to Steven Spear and H. Kent Bowen, ‘Decoding the DNA of the Toyota Production System’, Harvard Business Review (September–October 1999: 97–106). This article provides a useful discussion of the disciplines by which Toyota tests and revises the assumptions. 10 Langlois (2002: 24) notes the possibility of using disruption as a cue for problem solving and continuous improvement, but confuses the form of tight coupling by just-in-time inventory systems with the nondecomposability of production and erroneously concludes that it would be beneﬁcial ‘only for some kinds of relatively stable systems where frequent change is not important’. Any textbook on Japanese production methods will demonstrate that root-cause analysis and related problem solving techniques are especially useful to reduce set up times and otherwise facilitate small batch production in volatile environments.

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in benchmarking, simultaneous engineering, and error detection and correction also allow the collaborators to monitor one another’s activities closely enough to detect performance failures and deception before they lead to disastrous consequences. Ultimately, these information exchanges lead the actors to convergent understandings of the world they are exploring. We can think of these disciplines as pragmatist, in the sense that they oblige ﬁrms routinely to question the suitability of their current routines and continuously to readjust their ends and means to one another in light of the results of such questioning.11 Taken together, these new pragmatist disciplines play an important part both in mitigating the cognitive self-limitation at the heart of the innovator’s dilemma and in shaping the links that connect ﬁrms in the new economy to each other. They increase the mutual transparency of the actors essentially by revealing to each how widely and rigorously the others scan for solutions in addressing joint problems of design or quality. In the form of benchmarking or root-cause analysis, for example, they require the actors to undertake searches that are unbounded ex ante (consider all the products ‘like’ the one you want to build; assume that the root-cause of a problem will have no direct connection to the proximate cause), yet sufﬁciently informative to produce a serviceable map of the available solution space. As each party monitors the others’ search process, tacit knowledge is rendered at least partly explicit, easing long range collaboration (by reducing the chances that the parties take incompatible things for granted) and reducing the chance that all the parties cling to the same dangerously limited assumption (by routinely disrupting the disposition to take the same things for granted). These disciplines thus decompose complex systems into recombinable chunks while providing elements of a form of governance of intra- and inter-ﬁrm relations that are based neither on traditional, highly detailed contracts (or relational variants of them) nor on trust born of long familiarity. Put another way, these disciplines point towards a form of ﬂexible or continuously corrigible formalization that blurs the distinction between tacit and fully explicit knowledge, on the one hand, and between informal and rigidly speciﬁed governance on the other. Linking actors in this way, the disciplines of iterative co-design create structures—search networks— that allow potential collaborators both to redeﬁne the problems they face and make use of (partial) solutions that were unlikely to be counted as such until the problem itself was recast to reveal the connection. 11

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For a fuller discussion, on which this presentation draws, see Helper et al. (2000).

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Network organizations relying on such search networks manifestly outperform hierarchies in volatile environments, where goals change so quickly that reducing them to a seamless set of task speciﬁcations is highly risky, if it is possible at all. Speciﬁcally, in such environments the open, federated organization can produce a more useful and resilient design for a product or service by canvassing more alternatives in less time than a hierarchy with a like purpose (Eisenhardt and Tabrizi 1995; Ward et al. 1995). Often the network organization can achieve simultaneously three goals—cutting development time while increasing the utility and reliability of designs—which hierarchies are thought to have to trade against each other, and that only in stable environments.

4.6.2 Supply Chains, Modules, and Clusters This reading of the organizational transformation of the large ﬁrm suggests an understanding of global supply chains, and of the room for manoeuvre of suppliers in developing economies, at odds with two inﬂuential but contrary views of these structures. The ﬁrst view assumes that subsystems and large components can be deﬁned by the lead producer or by the large retailer who will sell the ﬁnal product with sufﬁcient precision that suppliers (and suppliers to the ﬁrst tier suppliers, and so on down) can produce what is needed simply by following instructions. This is the hierarchical division of labour dispersed on a global scale to take advantage of low wages and other locational advantages. It makes the developing country suppliers who participate in these ‘commodity chains’ almost completely dependent on the designs, in all senses, of the lead, rich country producer or retailer. But there is overwhelming evidence—in industries as varied as chip design, automobile parts, running shoes, and sports clothing—that the kind of robust modularity and ﬁxity of design required for such a strategy is simply unsustainable given the rapidity of changes in markets and technology. Hence in all these industries suppliers are being pressed to expand their design capacities, or, better, their capacity to engage in iterated co-design; and as they do, of course, they increase their ability to engage new customers, enter new markets, and generally increase their autonomy. The second and contrary view says that it is not (a new type of) highly detailed instructions that make possible a global supply chain, rather the (new?) capacity to engage in highly informal relations, over long distances, that explains the current decentralization of production. Economists sometimes model this development as a variant of familiar 105

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repeat play games. More often it is discussed in terms of clusters or industrial districts—geographically concentrated groups of ﬁrms in the same or related industries which together respond ﬂexibly to changing demand based on their long history of collaboration. Global supply chains, on this view, are connecting into, or helping to create such clusters or districts, although it is unclear just how much autonomy they have with respect to their lead customers. Although this view is right in seeing the current unit of production as groups of ﬁrms (and external organizations providing complementary services that small and medium-sized producers cannot provide themselves), and also right to see that geographic proximity is still relevant to production in a global age, it overlooks a substantial body of new evidence showing that mastery of the pragmatist disciplines is a precondition for participation in global supply chains as much for ﬁrms in established, advanced country clusters as for ﬁrms in developing economy clusters that are just now forming or struggling to ‘upgrade’ their position in the hierarchy of skill.

4.6.3 Hybrids and the Implication of them on Governance In arguing that pragmatic collaboration—and not modularity or informalism—is the distinctive structuring principle of the globalizing, new economy, we do not mean to suggest that all relations within and among ﬁrms in the new economy are, or will soon be, pragmatically collaborative. On the contrary, it is evident that customers and suppliers within and outside of districts frequently maintain a mix of relations with their various partners, engaging in iterated co-design with some, repeat but informal collaboration with others, while working at arm’s length— perhaps on the basis of modular standards—with others still. The reasons for the persistence of these traditional forms of collaboration are in part transitional—related to problems of strategic coordination between customers and suppliers both anxious to minimize the costs to themselves of moving to new forms of cooperation—and in part fundamental, related to the very nature of iterated co-design itself. In practice the two sets of reasons will often blur together, but it is useful to distinguish them for analytic purposes as we will do brieﬂy here. The transitional problems of strategic coordination result immediately from the trade-off faced by, say, a large customer entertaining dealings with a range of potential suppliers. From the customer’s standpoint, of course, the ideal supplier would be the most capable designer as well as 106

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the lowest cost, most reliable producer. But even if pragmatic collaborators can offer bundles of design capacity, efﬁciency, and reliability that cannot be matched by traditional suppliers, at any moment there are almost surely some modularizing competitors offering, say, a combination of minimally acceptable levels of design capacity and reliability at highly advantageous prices. Whether the customer contracts with the low cost supplier rather than the pragmatic collaborator will depend at least as much, and probably more, on the conﬂicting short-term concerns of operating managers—the need, for instance, to turn a big proﬁt on this deal, rather than worry about next generation design—as on the strategic vision of the higher ups. Thus, customers will engage in co-design with some— but only some, and not always the same—actors all the time, while dealing traditionally with the rest. Faced with the apparent inconsistency of the customer’s relation to them, suppliers will hedge their own behaviour to survive being at arm’s-length as well as (different kinds) of cooperation. Their responses in turn permit, and may encourage, continuation of the customers’ strategic vacillations. This transitional confusion is compounded by an ambiguity at the heart of iterated co-design. We saw that iterated co-design emerges in response to both the need to formalize collaboration in volatile conditions and the impossibility of doing so completely. It uses devices such as benchmarking and error detection and correction to trigger disciplined discussions of what can, at any moment, usefully be formalized and how. But in the end these devices are only aides to discussion—they reduce the possibility of ignorant, complacent mistakes, without guaranteeing far sighted decisions. In the end, as usual, actors, not algorithms, decide strategic questions. In particular, what to formalize, even assuming the most benign collaborators imaginable, remains at the margin a matter of judgement, even if the judgement is informed by application of new, pragmatic formalisms. Large customers, with their highly institutionalized division of responsibilities between marketing, design, and sourcing are especially likely to get caught in disputes about short-term advantages of different supply relations. Small and medium suppliers, lacking the resources fully to assess their long-term possibilities, or recover from badly misplaced bets, are especially likely to be daunted by deep strategic ambiguity and hence to waver erratically between choices too timid and too bold. While iterated co-design is arguably central to the new economy in setting the standard by which other forms of collaboration are judged and providing the tools for reﬁning those judgements, for the foreseeable future, traditional relations will continue to exist 107

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alongside the innovative ones (though, to raise a consideration we cannot pursue here, the traditional character of these relations is likely to be coloured and perhaps transformed by their association with the novel types). A corollary of this clariﬁcation of the role of pragmatic collaboration is that governance—here the institutions that shape ﬁrms’ decisions about their internal organization and relations to collaborators—matters at least as much in the new economy as in the old. Where the ground level or ﬁrst order actors such as corporate purchasing departments or district ﬁrms face problems of short-term strategic coordination and long-term strategic uncertainty, the danger is particularly great that well founded local decisions will produce disastrous global outcomes. Governance institutions that reduce the chances of stumbling into such traps by providing the actors with information they would not otherwise have before they decide, and then helping them catch errors early through deliberate, periodic review of their decisions are in such circumstances especially valuable. We will see that the idea of search networks turns out to be as relevant to this economy-wide problem as to problems of intra- and inter-ﬁrm organization.

4.7 Policy Implications: New Industrial Policy Industrial policy is a set of instruments to upgrade ﬁrms and promote economic restructuring. Vertical industrial policy sometimes associated with ‘picking winners’ was focused on promotion of backward and forward linkages. Its successes (South Korea and Japan) are spectacular and well known, and so are the failures. Traditional industrial policy has three sets of problems:

r r r

Cognitive limitations—‘picking winners’ in modern fast changing industries is next to impossible; ‘winners’ are continuously evolving—this is a self-discovery problem. Very limited capacity of public sector to make an informed choice— capability problem. Capture by vested/entrenched interests—a problem of disentrenchment.

A key concept of new industrial policy—search networks—allows a resolution to these problems. The example of creation of venture capital 108

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industry in Taiwan (see Saxenian, Chapter 5 of this volume for more details) helps to clarify how. When the Taiwanese government decided to promote venture capital industry in the beginning of the 1980s, it had neither the capabilities nor a blueprint. Furthermore, the concept of venture capital was foreign to traditional Taiwanese practice, in which family members closely controlled all of a business’s ﬁnancial affairs—entrenched interests were strong. Through a process of intense interactions with the Taiwanese Diaspora in Silicon Valley, new institutions such as Seed Fund (with initial allocation of NT$800 million, later complemented by additional NT$1.6 billion) provided matching capital contributions to private venture capital funds. Two American-style venture funds: H&Q Asia Paciﬁc and Walden International Investment Group were created in the mid-1980s. They were managed by US educated overseas Chinese who received invitations to reallocate to Taiwan. Once ﬁrst venture funds proved successful, domestic IT ﬁrms created their own VC funds. Once those started to pay off, even conservative family groups started to invest in venture capital funds and IT businesses. A search network consisting initially of key members of Taiwanese government and leading overseas Chinese engineers in Silicon Valley was central in the emergence of modern venture capital industry in a very unlikely place dominated by conservative and risk-averse business groups. This search network was without a blueprint, yet did have a role model (Silicon Valley) and a clear idea of ‘what to do next’. By deﬁning each subsequent step along the road, the search network became wider, with eventual incorporation of sceptics and opponents. The venture capital industry in Taiwan was co-designed and co-created by this search network in exactly the same way as a new model of car is co-designed in Japanese methods of simultaneous engineering discussed in the previous section. The solution to the problem of creating new industries, when almost no elements exist for creation, is revolutionary incrementalism. This means step-by-step transformation of bad public and private features by drawing ﬁrst on the exceptions from the general rule. This in turn requires using internal diversity to ﬁnd better performing parts of each, and matching them—this is just what search networks do. In the case of Taiwan’s venture capital industry, the diaspora networks proved critical to trigger a dynamic and resilient search network. To be more speciﬁc, it was a case of dual (government and diaspora) leadership. Yet in many instances search networks emerge in a more low key way, with the government playing a supporting role. Supplier development 109

Analytical Perspectives

programmes in the case in point: supplier development programmes are a joint effort of buyers (usually more capable and large companies) and potential suppliers (usually small and medium-sized enterprises) to upgrade potential suppliers so that they can meet buyer requirements of quality and reliability. It tends to be a multi-year effort which starts with a lot of discussions between buyers and (potential) suppliers but eventually leads to transactions. Private sector actors invest most of the resources and take most of the risk. The role of the private sector is to bring the two sides together and to provide a disciplined framework, with benchmarks for progress, for their dialogue. The search network in this case consists of representatives of buyer and supplier companies, the government and consultants assisting the process. This search network not so much ‘picks’ but nourishes the winners among SMEs chosen as qualiﬁed potential suppliers. A good supplier development programme is not another ‘SME programme’ in addition to a dizzying number those already existing but rather a framework programme allowing to draw on the overcrowded policy ﬁeld to satisfy speciﬁc training, ﬁnancing, quality upgrading, and other needs of SMEs. In doing this matching of viable elements of existing programmes to speciﬁc needs, a concerted action between agents who rarely talk to each other—a central problem in most developing countries—is starting to emerge. Thus, drawing on heterogeneity of both private and public sector—and bringing together ofﬁcials willing to experiment and take risks—supplier development programmes (and search networks in general) create embryos of the new public sector. The logic of diaspora initiatives is exactly the same. A sending country is an analogue of SME in the supply chain and a central objective is generating a ‘win–win’ situation between sending and receiving countries. In a nutshell, new industrial policy is about generating missing connections. It is a response to unresolved issues of vertical and horizontal industrial policies: how to create growth promoting connections without opening the door to rent-seeking.

4.8 Conclusions This chapter has viewed migration of skills from the perspective of new industrial policy. More speciﬁcally it has discussed open migration chains and diaspora networks as search networks. Open migration chains are functional equivalents of value chains: they emphasize upgrading of individual human capital. Diaspora networks are about concerted action 110

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and clubs. They can be viewed as tools to upgrade open migration chains in exactly the same way as a supplier development programme is a concerted action to upgrade value chains. Although at ﬁrst glance, juxtaposing global migration of skills in the context of restructuring of ﬁrms and value chains obscures more than it clariﬁes, open migration chains and diaspora networks are not (yet) familiar concepts. Yet the parallels we outline are a main contribution of the chapter. First, from an analytical perspective, value chains: open migration chains just as deliberate interventions to upgrade them are the search networks that allow us to ﬁnd and collaborate with those who are already learning what we need to know. Second, from a purely pragmatic policy perspective such a parallel may be helpful for a policymaker. Simply put, we know much more about the intricacies of designing good supplier development programmes than about how to design good diaspora initiatives. Lessons from a more mature policy experiment are therefore helpful to an incipient policy experiment—the design of diaspora networks to beneﬁt home countries. Our perspective is both ambitious and humble. It is ambitiously optimistic because emerging migration ladders open the opportunity for a win–win situation—an evolving virtuous cycle of co-development of migrant human capital and home country institutions. It is humble, however, in recognizing intricacies of policy solutions to make it happen. As we have shown, the creation of a robust diaspora network as a search network requires substantial amount of time, patience, and institutional capabilities. Above all, good expatriate networks—as any search networks—tend to generate opportunities and projects, but someone else has to act on those opportunities and ﬁnance the projects. Capabilities of government and private sector stakeholders remain the key; diaspora networks are no panacea. On an ambitious note, this chapter contributes to a discussion on so-called new industrial policy viewed as a set of interventions which is distinct from the ‘old’ functional/horizontal industrial policy of the 1980s and 1990s—yet capable of avoiding the familiar old pitfall of ‘picking winners’—is becoming a subject of policy debate and experimentation. As our earlier example of Mexico highlighted, well designed diaspora programmes can contribute both to the creation of new public sector and new industrial policy. Their signiﬁcance therefore extends beyond the narrowly deﬁned issues of international mobility of talent. 111

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References Acemoglu, D. (2002). ‘Technical Change, Inequality and the Labour Market’, Journal of Economic Literature, 40: 7–72. Adams, W. (1968). The Brain Drain. New York: Macmillan. Baines, D. (1995). Emigration from Europe 1815–1930. Cambridge, MA: Cambridge University Press. Bhagwati, J.N. and M. Partington (1976). Taxing the Brain Drain: A Proposal. Amsterdam: North Holland. Brinkerhoff, J. and C. Wescott (2006). Converting Migration Drains into Gains: Harnessing the Resources of Overseas Professionals. Manila: Asian Development Bank. Brown, M. (2000). ‘Using the Intellectual Diaspora to Reverse the Brain Drain: Some Useful Examples’, mimeo. Cape Town: University of Cape Town. Chandler, A.D., Jr. (1977). The Visible Hand: The Managerial Revolution in American Business. Cambridge, MA: Belknap Press at Harvard University Press. Eisenhardt, K.M. and B.N. Tabrizi (1995). ‘Accelerating Adaptive Processes: Product Innovation in the Global Computer Industry’, Administrative Science Quarterly, 40(1): 84–110. Frankl, V. (1962). Man’s Search for Meaning: An Introduction to Logotherapy, trans. Ilse Lasch. Boston: Beacon Press. Granovetter, M. (1972). ‘The Strength of Weak Ties’, American Journal of Sociology, 78(6): 1360–80. Helper, S., J.P. MacDufﬁe, and C. Sabel (2000). ‘Pragmatic Collaborations: Advancing Knowledge while Controlling Opportunism’, Industrial and Corporate Change, 9(3): 443–88. Hirschman, A. (1977). The Passions and The Interests: Political Arguments for Capitalism Before its Triumph. Princeton, NJ: Princeton University Press. Iskander, N. (2006). ‘Innovating Government: Migration, Development and the State in Morocco and Mexico, 1963–2005’, unpublished PhD thesis. Cambridge, MA: MIT. Kapur, D. (2001). ‘Diasporas and Technology Transfer’, Journal of Human Development, 2(July): 265–86. Kapur, D. and J. McHale. (2005). Give Us your Best and Brightest: The Global Hunt for Talent and its Impact on the Developing World. Washington, DC: Center for Global Development. Kuznetsov, Y. (ed.) (2006). Diaspora Networks and the International Migration of Skills: How Countries Can Draw on Their Talent Abroad. Washington, DC: World Bank Institute. Langlois, R.N. (2002). ‘Modularity in Technology and Organization’, Journal of Economic Behavior and Organization, 49(1): 19–37. Lester, R. and M. Piore (2004). Innovation: The Missing Dimension. Cambridge, MA: MIT Press.

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Migration Chains and Diaspora Networks Maslow, A.H. (1971). The Farther Reaches of Human Nature. New York: Penguin Compass. Nohria, N. and R.G. Eccles (1992). Networks and Organizations: Structure, Form, and Action. Boston, MA: Harvard Business School Press. Poire, M. (1979). Birds of Passage: Migrant Labour and Industrial Societies. Cambridge: Cambridge University Press. Piore, M. and P. Doeringer (1971). Internal Labor Market and Manpower Analysis. Lexington, MA: Health Lexington Books. Saxenian, A. (2002). Local and Global Networks of Immigrant Professionalism in Silicon Valley. San Francisco: Public Policy Institute of California. Saxenian, A. (2006). The New Argonauts. Cambridge, MA: Harvard University Press. Torres, F. with Y. Kuznetsov (2005). ‘Mexico: Migrants’ Capital for Small-Scale Infrastructure and Small Enterprise Development’, report prepared for the World Bank. Ward, A. et al. (1995). ‘The Second Toyota Paradox: How Delaying Decisions Can Make Better Cars Faster’, Sloan Management Review, 36(3): 43–61.

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Part II Case Studies: Entrepreneurs, Scientists, Students, Health Professionals, and Cultural Workers

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5 The International Mobility of Entrepreneurs and Regional Upgrading in India and China AnnaLee Saxenian

5.1 Introduction By 2000, over one-third of Silicon Valley’s high skilled workers were foreign-born, and overwhelmingly from Asia. These US educated engineers are transforming developmental opportunities for formerly peripheral regions as they build professional and business connections to their home countries. In a process more akin to ‘brain circulation’ than ‘brain drain’ these engineers and entrepreneurs, aided by the lowered transaction costs associated with digitization, are transferring technical and institutional know-how between distant regional economies faster and more ﬂexibly than most large corporations. This chapter examines how Chinese- and Indian-born engineers are contributing to highly localized processes of entrepreneurial experimentation in their home countries, while maintaining close ties to the technology and markets in Silicon Valley. Global labour markets are being transformed as the falling costs of transportation and communications facilitate greater mobility and as digital technologies support the formalization and long distance exchange of large amounts of information. International migration, historically a one-way process, has become a reversible choice, particularly for those with scarce technical skills, and it is now possible to collaborate in real time, even on complex tasks, with counterparts located at great distances. US educated scientists and engineers from developing countries—once

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forced to choose between settling abroad and returning home to far less attractive professional opportunities—are now contributing to their home economies while maintaining professional and economic ties in more technologically advanced economies. Many travel regularly between the US and their home country; some become ‘transnational’ as they work, and even maintain residences and citizenship in more than one nation. The migration of talented youth from developing to advanced countries was viewed by most economists in the post-war decades as a brain drain that exacerbated international inequality by enriching already wealthy economies at the expense of their poor counterparts (Bhagwati 1985). According to a classic textbook on economic development The people who migrate legally from poorer to richer lands are the very ones that Third World countries can least afford to lose, the highly educated and skilled. Since the great majority of these migrants move on a permanent basis, this perverse brain drain not only represents a loss of valuable human resources but could also prove to be a serious constraint on the future economic progress of Third World nations. (Todaro 1985) Data on these trends are hard to ﬁnd, but the UN has estimated a total of three hundred thousand highly skilled emigrants from all developing countries to the West during the 1960s (Rapaport 2002); the 1990 US Census showed 2.5 million highly skilled immigrants, excluding students.

Much of the movement of talented individuals from developing to advanced countries during the latter part of the twentieth century involved migration to the US, speciﬁcally to Silicon Valley. The region’s technology producers grew very rapidly from the 1970s through the 1990s, absorbing scientists and engineers voraciously and irrespective of national origin. Tens of thousands of immigrants from developing countries, who had initially come to the US for graduate engineering education, accepted jobs in Silicon Valley rather than return to their home countries where professional opportunities were far more limited. 1 By 2000, over half (53 per cent) of Silicon Valley’s scientists and engineers were foreign-born. Indian and Chinese immigrants alone accounted for over one-quarter of the region’s scientists and engineers, or some 20,000 Indian and 20,000 Chinese (5,000 Taiwan- and 15,000 mainland-born) engineers. 2 1 NSF data shows that over 95 per cent of foreign-born engineering and science doctorate holders from India and China planned to stay in the US after graduation. 2 Indians accounted for 13 per cent and Chinese for 14 per cent of the region’s engineers and scientists. This data is from the 5 per cent Microdata Sample, 2000 US Census.

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This chapter argues that the same individuals who left their home countries for better lifestyles abroad are now reversing the brain drain, transforming it into brain circulation as they return home to work, establish partnerships, or start new companies, while maintaining business and professional ties with the US. The spread of venture capital ﬁnancing provides a window into this process. In the early 1980s, returning migrants from Taiwan and Israel began to transfer the Silicon Valley model of early stage high-risk investing to their home countries, locations that US venture capitalists typically had neither interest in nor the ability to serve. These native-born investors provided the cultural and linguistic know-how needed to operate profitably in these markets. In addition to capital, they brought technical and operating experience, knowledge of new business models, and networks of contacts in the US. Israel and Taiwan today boast the largest venture capital industries outside North America, and both have high rates of new ﬁrm formation and growth. Israel is now known for software and Internet ﬁrms like Mirablis (an instant messaging program developer) and Checkpoint (security software); Taiwan has become a centre of leading edge personal computer (PC) and integrated circuit (IC) manufacturing with ﬁrms like Acer Technology Ventures (PCs and components) and TSMC (semiconductor foundry.) All have relied on the skills and contacts of returning scientists and engineers as well as cross-regional investors and other service providers. 3 Long distance migrations have shaped the contours of the world economy throughout history (Piore 1979). The transfers of skill and knowhow that accompany the movement of individuals and groups within and between nations can have an enduring impact on patterns of economic development, as with the modernization of Japan during the Meiji restoration in the nineteenth century, and the transfer of British textile and German steel technology to the US during the nineteenth century. Economic historians have documented the contributions of personnel recruitment to knowledge transfer, and they have demonstrated that the experience, relationships, and tacit knowledge that reside in individuals and their communities play a central role in long-distance transfers of technology and economic institutions (Brenner 1994; Sowell 1996; Bordo et al. 2003).

3 For details on the process of brain circulation and its impacts on Taiwan and Israel, see Saxenian (2006).

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Today’s returning entrepreneurs have dramatically accelerated the adaptation of technology and institutions to local circumstances that are invariably different from those in the US. Transferring production to a new environment requires deep knowledge of the local context—the subtle as well as more apparent differences in social, cultural, and institutional settings. And there are few substitutes for native experience. Nor is this a one-way process. The fragmentation of production and the dramatic reductions in the cost of transportation and communication allow these highly mobile entrepreneurs to build and maintain long distance partnerships to tap overseas expertise, cost savings, and markets. The chapter focuses on the creation of venture capital industries with close links to Silicon Valley—a process that entails extensive institutional change, particularly in domestic capital markets, and in turn can have important consequences for the pattern of economic development. Not surprisingly, this process was faster in small countries like Israel and Taiwan than in the complex political economies of China and India. Nonetheless, by 2004 venture capital and private equity ﬁrms were investing more than US$1 billion annually in enterprises located in China and a comparable amount in India. While this is a fraction of the venture capital invested annually in the US or even the amount of foreign direct investment in these economies, it supports indigenous entrepreneurship and has created an alternative, increasingly competitive, trajectory to the development opportunities provided by both established domestic ﬁrms and multinational corporations in these nations. At the outset the chapter discusses the limits of traditional core– periphery understandings of the relation between developed and developing economies in an era of global labour mobility and brain circulation, particularly the failure to anticipate the development of independent technological capabilities in the periphery. Then we trace the transfer of the Silicon Valley model of venture capital to Taiwan during the 1980s by networks of US educated Chinese engineers. In this case the transfer of institutional and policy know-how was arguably as important as the subsequent transfer of skills and technical knowledge. Then we take a detailed look at more recent processes of policy reform and institutional adaptation in China and India. The venture capital industries in these two countries have grown rapidly, with close connections to their Silicon Valley and US counterparts, and in both countries, economic development in certain regions is characterized by high rates of entrepreneurship and experimentation. The chapter concludes with thoughts about the 120

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extent to which it is possible to generalize from these cases of peripheral entrepreneurship to other late developing economies.

5.2 Economic Development in an Era of Global Labour Mobility Traditional accounts of economic development assume that new products and technologies emerge in industrialized nations that combine sophisticated skill and research capabilities with large, high income markets— and that mass manufacturing is shifted to less costly locations once the product is standardized and the process stabilized. Success in this view builds on success in advanced economies, while peripheral economies remain followers. This divide is perpetuated by both the strategies of multinational corporations and the tendencies toward agglomeration created by the economics of increasing returns. This model leaves little room for the development of independent technological capabilities in the periphery. At best, foreign investment from the core might contribute to the incremental mastery of manufacturing techniques and upgrading of local suppliers. Even the most successful newly industrializing countries are destined to remain imitators as long as leading edge skill and technology reside in the corporate research labs and universities in the core. The primary route to development in the periphery, in this view, is the mobilization by the state, in conjunction with local banks and industry, of the resources to either develop or import the mass manufacturing capabilities that were perfected in the core. Transformations in the world economy have undermined the power of this core–periphery model, however. The increasing mobility of highly skilled workers and information on the one hand, and the fragmentation of production in information and communication technology sectors on the other, provide unprecedented opportunities for formerly peripheral economies. Regions that missed the post-war economic boom, in particular, have provided fertile environments for a decentralized growth based on entrepreneurship. The key actors in this process are neither policymakers nor multinational corporations in isolation, although both certainly play a role, but rather communities of technically skilled immigrants with work experience and connections to Silicon Valley and related technology centres. US educated and trained engineers are increasingly transferring upto-date technology and market information and helping to jump start 121

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local entrepreneurship, allowing their home economies to participate in the information technology revolution. Because of their experience and professional networks, these cross-regional entrepreneurs can quickly identify promising new market opportunities, raise capital, build management teams, and establish partnerships with other specialist producers— even those located far away. The ease of communication and information exchange within ethnic professional networks accelerates learning about new sources of skill, technology, and capital as well as about potential collaborators. It also facilitates the timely responses that are essential in a highly competitive environment. This decentralized responsiveness is an advantage that few multinationals can claim. The scarce resource in this environment is the ability to locate foreign partners quickly and to manage complex business relationships and teamwork across cultural and linguistic barriers. This is particularly challenging in high-tech industries in which products, markets, and technologies are continually redeﬁned— and where product cycles are often nine months or less. First generation immigrants like the Chinese and Indian engineers in Silicon Valley who have the language, cultural, and technical skill to function well in the US as well as in their home markets have a commanding advantage. They have created institutions and social structures that enable even the smallest producers to locate and maintain mutually beneﬁcial collaborations across long distances and that facilitate access to distant sources of capital, skill, and markets. Late developing economies typically face two major disadvantages: they are remote from the sources of leading edge technology, and they are distant from developed markets and the interactions with users that are crucial for innovation (Hobday 1995). Firms in peripheral locations use a variety of mechanisms to overcome these disadvantages, from joint ventures and technology licensing to foreign investment and overseas acquisitions. However, a network of technologists with strong ties to global markets and the linguistic and cultural skills to work in their home country is arguably the most efﬁcient and compelling way to overcome these limitations. Cross-regional entrepreneurs and their communities can facilitate the diffusion of technical and institutional know-how, provide access to potential customers and partners, and help to overcome reputational as well as informational trade barriers for isolated economies. The increasing sophistication of information and communication technologies and the liberalization of global markets have accelerated this process. It is now quick, simple, and inexpensive to communicate internationally and to transfer information between distant locations. 122

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Information systems that facilitate the formalization of knowledge are dramatically expanding the volume as well as the variety of possible forms of information exchange. However, information technology alone cannot ensure successful coordination or efﬁcient transfers of technical and institutional knowledge. Long distance collaborations still depend heavily upon a shared social context and language that ensures mutual intelligibility between partners, particularly as speed and responsiveness are essential in today’s technology competition. Market liberalization has been equally important to the economic transformation of China and India. But the reduction of trade barriers and bureaucratic intervention alone does not create the institutional and social context, let alone the domain knowledge, required to ensure sustained competitive success in global industries. Technology entrepreneurship remains highly localized even in the most advanced economies and it cannot be created by ﬁat, as evidenced by decades of failed attempts to ‘grow the next Silicon Valley’. Efforts to jump-start entrepreneurship by mobilizing researchers, capital, and a modern infrastructure cannot replicate the shared language and trust of a technical community that permits open information exchange, collaboration, and learning (often by failure) alongside competition in places like Silicon Valley. Returning entrepreneurs are ideally positioned to collaborate with domestic policymakers and businesses to identify appropriate market niches, mobilize domestic skill and knowledge, connect to international markets, and identify and devise strategies to overcome obstacles to further growth. In the 1970s and 1980s US educated Israeli and Taiwanese engineers and entrepreneurs returned to their home countries by the thousands and successfully transferred both US style venture capital and the Silicon Valley model of business focus and partnering. These regions have now completed several cycles of reinvestment by successful entrepreneurs who also serve as role models and contribute accumulated know-how and contacts to a subsequent generation of technology ventures. By contrast, the entrepreneurial ecosystem is still in its formative stages in the technology regions of India and China. These regions have seen important early entrepreneurial successes, and both have sizable technically skilled workforces willing to work very hard for relatively low wages. While few US educated emigrants returned to either India or China during the 1980s and 1990s, the post-2001 technology recession triggered an upsurge in cross-regional returnees that has continued to the present. The contributions of an international technical community in transferring the institutions of technology entrepreneurship should not 123

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be confused with the broader role of a diaspora in the home country. The aggregate remittances, investments, or demonstration effects of a diaspora can affect an economy in a variety of different but largely limited ways. These cross-regional networks, however, are created by a small subset of highly educated professionals whose potential contributions to economic development are disproportionately signiﬁcant. They are not typically drawn from the traditional economic or political elites of their home countries. Rather, most are the top engineering students from middle class households whose access to education in the US has landed them in a very different technological and institutional environment—one that they initially master and later transfer to their home countries. Returning migrant communities are not replicating Silicon Valley around the world. Wide variations in national economic and political institutions, themselves the products of enormously varied histories and cultures, ensure distinctive and divergent economic trajectories. It is more appropriate to see the emerging regions as hybrids, combining elements of the Silicon Valley industrial system with inherited local institutions and resources. Returning entrepreneurs typically seek (with varying success) to transfer venture capital ﬁnance, merit-based advancement, and corporate transparency to economies with traditions of elite privilege, government control, and corruption. They seek to reproduce the teambased ﬁrm with minimal hierarchy and horizontal information ﬂows in an environment dominated by family run businesses or state owned enterprises. Moreover the national institutions that support the Silicon Valley system—efﬁcient and well developed capital markets, property rights, an independent judiciary, regulatory oversight, and sophisticated education systems, research institutions, and physical infrastructure—are rarely present in these peripheral economies. A regional economic trajectory is shaped both by local institutions and by the range of technological and market opportunities available at the time it enters global markets (Bresnahan and Gambardella 2004). The fast growing market for wireless communication in Asia has, for example, created opportunities for ﬁrms in China and India to contribute to the direction of the technology and its applications—even if they do not deﬁne the technical forefront. Entrepreneurship led growth, with competitive small and medium sized technology producers in high skill regions connecting to and collaborating with counterparts elsewhere, is only one possible future for these formerly peripheral regions. They could forgo the opportunity to upgrade local skills and capabilities, and instead remain suppliers of low cost labour to global (or domestic) corporations. China 124

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and India have the labour supply to do this for a relatively long time. However, many transnational entrepreneurs have maintained close ties to the technology and markets of Silicon Valley, and are constructing ﬁrms committed to an alternative, high value-added trajectory.

5.3 Taiwan: Transferring the Silicon Valley Model Taiwan’s venture capital industry was modelled after that in Silicon Valley—and with time fostered mutually beneﬁcial economic ties between high-tech industries in the two regions. Dr Kuo-Ting Li, a former economic affairs minister who is widely regarded as the architect of Taiwan’s technology strategy, was the original champion of venture capital in Taiwan. Li visited Silicon Valley regularly during the 1970s and 1980s to meet with US educated Chinese engineers and seek their advice on strategies to make Taiwanese industry more globally competitive. He was especially impressed with the local venture capital industry and the institutional supports that it created for entrepreneurship. In the early 1980s— long before it was fashionable elsewhere—Dr Li convinced the ﬁnance ministry of the need to provide funding for research intensive production and promote the development of a public capital market. In 1982 he introduced legislation to create, develop, and regulate venture capital in Taiwan, including comprehensive tax incentives and ﬁnancial assistance. While such policy may seem uncontroversial today, the concept of venture capital was foreign to Taiwanese practice, in which family members closely controlled all of the ﬁnancial affairs of a business. Dr Li also faced signiﬁcant resistance from senior policymakers like Dr Ramo, a technological consultant of Executive Yuan, who argued that Taiwan lacked the capabilities to develop a venture capital industry (Saxenian and Li 2003). 4 The policy measures and regulations that Taiwan ultimately adopted were greatly shaped by the large community of overseas Taiwanese engineers, many of whom were based in Silicon Valley. The ﬁnance ministry, for example, hired US educated engineers to develop a plan for the creation and organization of private industrial investment companies in Taiwan. They concluded that Taiwan should import the venture capital model from the US. At the same time Taiwan’s economic affairs minister, Li-Te Hsu, and the CEO of Acer, Stan Shih, also visited the US to learn about the institutions and systems of venture capital. 4

The data in this section is drawn heavily from Saxenian and Li (2003).

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Overseas Chinese engineers also played a crucial role in the mobilization of a political consensus to support the government promotion of a venture capital industry. An IBM executive based in Silicon Valley, TaLin Hsu, used his status as an outside expert—in Chinese terminology, a ‘foreign monk’—to actively promote the new policy measures among different governmental decision making units in Taiwan. In the eyes of its domestic and overseas promoters, the justiﬁcations for the introduction of the venture capital mechanism to Taiwan were fourfold. The supporters of Li argued, ﬁrst, that rather than trying to replicate the high level technological innovation of places like Silicon Valley, Taiwan should exploit its own strengths—its supply of relatively low cost, highly skilled engineers. In this view, Taiwan would position itself to develop commercial applications based innovations from the US. Lower skill, mass production could be carried out elsewhere. Li envisioned the Hsinchu Sciencebased Industrial Park (HSIP), which was created in 1980, as the place for Taiwanese entrepreneurs to undertake this commercialization and as the place to develop a bridge between domestic and foreign companies. The availability of venture capital would be the key determinant of success in this strategy. Policymakers also recognized that the conservatism of Taiwan’s established ﬁnancial institutions was a major hindrance to the incubation of high-tech ventures. Most ﬁnancial institutions at that time were commercial banks, which provided only mortgage or debt ﬁnancing. In addition, the risk-averse attitude of the government ofﬁcials who managed the ‘development fund’ and other ﬁnancial incentive programmes limited the ability of these capital sources to spawn risky technology enterprises. A private venture capital industry would provide an important capital source for such high-risk but potentially high-reward ventures. In addition, Taiwan’s businesses were overwhelmingly (95 per cent) small and medium sized enterprises and most were family run businesses that lacked incentives to adopt modern management techniques. Policymakers believed that a venture capital industry could help promote the introduction of modern ﬁnancial and management skills by institutionalizing the separation of ownership and control. Finally, they recognized that the introduction of the venture capital mechanism would entail the development of a public capital market that provided an exit option for venture capital investments. Recognizing that Taiwan lacked the relevant institutional know-how to start a venture capital industry, in the early 1980s domestic policymakers organized collaborations with large US ﬁnancial institutions to facilitate the transfer of relevant ﬁnancial and managerial expertise. They also 126

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sent individuals to the US to be trained in managing a venture capital business and introduced a series of initiatives to encourage domestic ﬁrms to enter the industry. Under Li’s guidance, the ﬁnance ministry created signiﬁcant tax incentives to encourage the establishment of a venture capital industry—20 per cent of the capital invested in strategic (technology intensive) ventures by individual or corporate investors was tax deductible for up to ﬁve years. The ministry also offered substantial matching funds through a ‘seed fund’ with NT$800 million from the Executive Yuan Development Fund. In addition regulation governing security and exchange was modiﬁed to support the development of a public capital market. The domestic computer company Acer founded Taiwan’s ﬁrst venture capital ﬁrm in 1984 as a joint venture with the old-line Continental Engineering Group. However there were initially no followers. Faced with the challenge of raising capital from Taiwan’s risk-averse ﬁnancial and industrial communities, Li invited the overseas Chinese community to establish venture capital businesses in Taiwan. Ta-Lin Hsu, who had been a key senior policy adviser and STAG member since the 1970s, set up Hambrecht & Quist Asia Paciﬁc in 1986. Hsu reports that it was not easy to raise the initial US$50 million fund. In particular Li ‘twisted lots of arms’ to raise US$21 million (51 per cent) from leading Taiwanese industrial groups such as Far East Textile, President Enterprises, and Mitac. The balance (49 per cent) came from the government. 5 The ﬁrst general manager in H&Q Asia Paciﬁc’s Taipei ofﬁce, Ding-Hua Hu, was a classic returnee to Taiwan. After earning a PhD in engineering at Princeton, Hu returned in the 1970s to play a leading role in building Taiwan’s semiconductor industry as the ﬁrst general director of the Electronics Research and Service Organization and as a professor of electrical engineering at the elite Chiao Tung University. In 1987, two other overseas Chinese engineers, Peter Liu and Lip-Bu Tan, responded to Li’s invitation as well, establishing Taiwan’s second US style venture fund, the Walden International Investment Group (WIIG) as a branch of the San Francisco-based Walden Group. Both H&Q Asia Paciﬁc and WIIG (along with Peter Liu’s spin off ﬁrm, WI Harper) were able to raise capital for Taiwanese funds with relative ease from the networks of overseas Chinese in Silicon Valley who were familiar with venture capital. All three remain leading investors in Silicon Valley and Taiwan’s technology industries, and increasingly in mainland China as well. It was 5

Interview with Ta-lin Hsu, San Francisco, US, 1 June 1997.

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only after these investments showed returns—after companies like Acer and the returnee company, Microtek, were publicly listed on the Taiwan Stock Exchange in the late 1980s—that the venture capital industry in Taiwan took off. The seed fund with matching grants for venture investments was depleted and the Executive Yuan committed a second fund of NT$1.6 billion that was also allocated quickly. Domestic IT ﬁrms began to create their own venture funds, including D-Link, Macronix, Mosel, Taiwan Semiconductor Manufacturing Company (TSMC), SiliconWare, UMAX Data Systems, UMC, and Winbond. Old-line ﬁrms in traditional industries like petrochemicals that had been reluctant earlier to get involved in the ‘new economy’ also began investing in technology related venture funds and businesses. The emergence of Taiwan’s venture capital industry and the early successes of venture backed start-ups attracted growing numbers of overseas Chinese to return from the US to start businesses. Miin Wu—a Stanford graduate who worked in Silicon Valley for over a decade before returning in 1988 to start Macronix International, one of Taiwan’s ﬁrst semiconductor companies, in Hsinchu Science Park with funding from H&Q Asia Paciﬁc—is a well known example. The availability of venture capital arguably transformed the Hsinchu Science Park from its original role as an export processing zone into a fertile environment for the growth of indigenous technology ﬁrms. By 1996 over 2,500 engineers and scientists had returned to work in the Hsinchu Science Park and 40 per cent of the 203 companies based in the park were started by returnees (Saxenian 2006). The availability of venture capital distinguished Taiwan from the rest of Asia at a time when capital was available in the region only to large corporations with ties to governments or to wealthy families. One measure of the success of Taiwan’s venture capital industry is the impressive performance of venture funded ﬁrms in public capital markets. Ten of the 32 new ventures started in the Hsinchu Science Park in 1996 received funding from local venture funds. By 1998, over 130 venture funded companies were listed on the Taiwan Stock Exchange and some 40 were listed on NASDAQ in the US. Taiwan’s technology sector emerged in the 1970s as a source of low cost skill for labour intensive calculator and electronic component manufacturing. The networks of US educated engineers who worked with policymakers to develop local institutions like venture capital, helped transform the local environment, creating conditions for entrepreneurial experimentation. In the early 1990s—with the growth of entrepreneurship and accumulated production experience—local ﬁrms began differentiating 128

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their products on the basis of innovation and quality rather than simply low cost. Entrepreneurs and established ﬁrms deﬁned specialized niches that allow them to focus and shift to higher value-added activities without competing head on with industry leaders in the US and elsewhere. By the end of the decade, Taiwan had established a position as the world’s most ﬂexible and cost effective centre for IT manufacturing.

5.4 Building China’s Venture Capital Industry The Chinese government initiated creation of domestic venture capital in the 1980s, but in contrast with Taiwan, where a dynamic private sector venture capital industry took off in the 1990s, the industry in China was constrained by a ﬁnancial system and capital markets inherited from the planned economy. The China New Technology Venture Investment Corporation, which was established as a limited corporation in 1985 by the State Science and Technology Council and the ﬁnance ministry as the country’s ﬁrst experiment with venture capital, was declared bankrupt and closed by the People’s Bank of China in 1997. This and several other early failures were an indication of structural problems, but did not stop local governments, universities and state owned companies, and other organizations from setting up venture capital funds. Notably missing, however, were commitments of capital to these venture funds by private sources. In 2000, some 160 domestic venture capital ﬁrms were in operation in China, primarily located in Beijing, Shanghai, and Shenzhen. The government remained the primary source of capital, either directly or indirectly through university or state owned ﬁrms—thus compromising the incentive for fund managers to make high-risk investments, particularly in private enterprises (White et al. 2002). Investments in government owned companies, by contrast, carried little risk. Julie Yu Li, a partner in a venture capital ﬁrm started by a government owned trading company in Shenzhen, summarized the challenge: ‘I am supposed to invest in hightechnology businesses, but my director once asked me if I could “reduce the risk to zero”!’ And she points out other limits of the current system: I never expected my job would be this difﬁcult. We have no way to identify entrepreneurs or to evaluate risks and returns and we must get approval from the president to make any investments, which takes forever because it is so hard to get access to senior management.6 6

Interview with Julie Yu Li, Shenzhen, China, 11 January 2001.

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A Silicon Valley based entrepreneur who has advised the Chinese government on reforming the industry notes: ‘Venture capital fund managers in China have little at stake in the success of their ventures. If they are honest they will take no risk at all; if not they take advantage of the opportunity to make under-the-table deals with entrepreneurs.’ The regulatory framework for venture capital investing in China remains weak—it is unnecessarily restrictive in some ways, overly lax in others, and the rules are often overlooked in practice (Xiao 2002). China’s company law, for example, historically limited the number of shareholders and set a minimum level of investment that was not only high in the Chinese context but also exceeded the practice in the typical Western venture capital ﬁrm. It also limited the contribution of intangible technology to the valuation of an enterprise to 20 per cent—unrealistic for technology businesses. Reform of the system has been continuous in recent years, and shaped by extensive input from returning Chinese entrepreneurs and professionals. Carmen Chang, a Taiwan born, US educated partner at Wilson Sonsini Goodrich & Rosati, one of Silicon Valley’s leading law ﬁrms, has served Silicon Valley’s leading Taiwanese and mainland Chinese entrepreneurs since the 1980s. Chang has been recruited to advise on major investments as well as policy and regulatory reform in China. She led the legal team for the high proﬁle semiconductor foundry in Shanghai, SMIC, a more than US$2 billion deal that involved major US, Taiwanese, and Chinese investors. She helped establish a joint venture between Silicon Valleybased 3Com and China’s Huawei; and she has served as an adviser to the Chinese Securities and Regulatory Commission as they planned for a NASDAQ type market in Shenzhen. China’s venture capital industry faces other challenges related to the limited government oversight, including the information asymmetries between investors and fund managers, and between venture capital ﬁrms and the companies they ﬁnance. In both cases the lack of transparency, reporting standards, performance measures, and external oversight creates strong incentives for corruption and for concealing or falsifying information (Xiao 2002). It is therefore no surprise that while the China’s venture capital ﬁrms have ﬁnanced thousands of high-tech enterprises, these investments have generated minimal returns to date. 7 Along with its banks, China’s capital markets are the weakest link in its economy. While the Taiwan stock exchange played a vital role in 7

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Interview with Tang Hui-hao, 10 September 2004.

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providing liquidity for venture capital ﬁnanced start-ups, the Chinese stock market was organized in the 1980s to provide capital for the expansion of state controlled companies, a bias against private enterprise that continued throughout the 1990s as the Chinese exchanges were used to prop up failing state owned enterprises. Even today, in spite of many efforts at reform, the market remains poorly regulated and subject to price manipulation. The old governmental quota system, which gave each province an annual initial public offering (IPO) quota and ensured that state companies dominated the market listings regardless of their proﬁtability, is being phased out. However the top regulators at the China Securities and Regulatory Commission are government appointees and management of the exchange remains highly political. The onerous listing requirements and regulatory procedures for approving public share offers on the main stock exchanges still favour state backed ﬁrms. In 2000 only a handful of the more than 1,000 companies listed on the Shanghai and Shenzhen stock exchanges were from the private sector. In the late 1990s the China Securities and Regulatory Commission planned a second board in Shenzhen modelled after NASDAQ for high-risk, high-return companies. However the anticipated opening was delayed following the US technology stock collapse in early 2001. An initial step toward setting up the second trading board was taken in 2004 when small and medium sized ﬁrms were allowed to list on the Shenzhen exchange for the ﬁrst time, and the expectation was that a second step would be taken in 2005 with a lowering of the listing requirements for these smaller capitalized companies. On the other hand, when a local government issues a list of the industries that venture capital will focus on in the coming years, it suggests that China is often still trying to ‘grow the new economy using the tools of the planned economy’ (Xiao 2002). The only genuine high-risk technology investors in China are the approximately 50 foreign venture capital funds with a presence in the country, many from Taiwan and Silicon Valley. These ﬁrms—including Japan’s Softbank, Warburg Pincus, Intel VC, WI Harper, WIIG, H&Q Asia Paciﬁc, Acer Technology Ventures, V2V, IDG, and Vertex—invest in China very cautiously. Their investors typically bring knowledge not only of technology and management but also understanding of and experience in doing business in the Chinese market. Acer Technology Ventures, for example, has ofﬁces in Silicon Valley, Taipei, and Shanghai and plays a central role in promoting cross-Paciﬁc start-ups. The limited partners include Acer afﬁliate companies (32 per cent), Acer top management (6 per cent), and institutional investors. 131

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A series of high proﬁle IPOs including SMIC, 51job Inc (an on-line human resource services company) and China’s largest on-line game company, Shanda Interactive Entertainment, fuelled a rush of new investors into the China market in 2004, boosting venture capital investment to just over US$1 billion, or double the amount a year earlier. While this is not a large amount compared to the total foreign direct investment in China of approximately US$62 billion in 2004, many observers worry about a ‘mini bubble’ with too much risk capital chasing too few high quality start-ups alongside the already excessive valuations of Chinese technology stocks. 8 , 9 Longer term investors have learned from hard experience the challenges of doing business in China. The chairman of WIIG, Lip-Bu Tan, recalls that when he ﬁrst went to China in the early 1990s he intended to invest in state owned enterprises, but soon realized how difﬁcult it would be to overcome their inefﬁcient management, obsolete equipment, and limited understandings of market economies. He then sought to create joint ventures between US start-ups and local Chinese companies, but concluded that the challenge of bridging the conﬂicting goals and approaches of two management cultures was insurmountable. According to Tan, the experience with Howard Yang’s New Wave Silicon taught him that the best strategy in China is to invest in US educated students who want to return home to start ﬁrms. New Wave Silicon was acquired in 2002 by Silicon Valley-based semiconductor company, Integrated Device Technology, for US$85 million, earning money (and US dollars) both for WIIG as well as for China’s Hua Hong Microelectronics. The key, says Tan, is to ﬁnd US university graduates who have stayed and worked in companies in a place like Silicon Valley for many years, ‘You have to be reasonably brain-washed in the US to succeed in a western-style technology venture in China’. As the mainland Chinese community in the US matured in the ﬁrst decade of the twenty-ﬁrst century such seasoned start-ups seem increasingly plausible. Tan’s vision of the model returnee ﬁrm includes headquarters and R&D capability in Silicon Valley, incorporation in the Caribbean, manufacturing and/or development in China, and higher 8 Overseas Chinese venture capitalist David Chao, who is based in Silicon Valley but regularly travels to China, observes, ‘I think of China as the wild, wild West. Business law has only been in practice for the last 10 years. There are fundamental issues that still have to be addressed. What rights does a shareholder have in China? There’s also this signiﬁcant cultural gap . . . There’s deﬁnitely a lemming effect going on here. A lot of these guys will get burned.’ 9 Gary Rivlin ‘Talk of a Bubble as Venture Capitalists Flock to China’ in The New York Times, 6 December 2004: C10.

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level design or logistics capability in Taiwan, led by entrepreneurs who understand Chinese language, culture, and institutions. The cross-Paciﬁc venture capital ﬁrm Authosis specializes in early stage fabless IC design companies, particularly those focusing on the China market. The ﬁrm is headquartered in Hong Kong and has operations in Shanghai and Shenzhen as well as in Silicon Valley. Authosis founder and CEO Danny Liu has extensive experience working for China’s Legend Group (now Lenovo), which provides invaluable relationships in domestic technology and business circles, as well as experience investing in Silicon Valley start-ups. The advisory board includes the former CEO of the Silicon Valley Bank, a former Dean of Engineering at UC Berkeley, the CTO of Taiwan Semiconductor Manufacturing Co. (and also a professor at UC Berkeley), and computer science and engineering professors from MIT, Tsinghua University, and Peking University. One of the ﬁrm’s earliest and most successful investments was the electronic design automation company Celestry Design Technologies, started by Wayne Wei-Ming Dai. These cross-regional venture capital investors have ﬁnanced some of China’s most promising new technology enterprises. The most successful ﬁrms have experienced Chinese senior management teams who return from the US to start technology businesses. These returnees are advantaged by networks of former classmates, friends, and family they can tap as they undertake the challenges of growing a ﬁrm in an environment that requires personal connections to get things done. The standard crossregional start-up combines the new product and business vision, technology architecture, product marketing, and R&D oversight from Silicon Valley with China’s R&D implementation, manufacturing and production logistics, and ﬁeld engineering and local sales support. Their leverages are the management experience of Silicon Valley’s overseas Chinese, China’s low cost engineering resources, standard and commercially available development tools, and the supply chain manufacturing infrastructure of greater China (Taiwan and mainland). In this vision, products like mobile appliances or new semiconductor designs can rely on the US market as an early driver and then be commercialized in both China and US markets. There remain substantial challenges to these cross-regional start-ups. Venture investment in China is still in its early stages; there has not yet been a complete cycle of investments and reinvestments in a second generation of entrepreneurs. Cross-regional ﬁrms also face signiﬁcant difﬁculties coordinating distant activities, particularly in developing organizational synergy and persistent, consistent communication. Finally, they face the challenge that all technology ﬁrms in China face, of controlling 133

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and protecting their intellectual property (Chwang 2003). Finally, they lack viable exit options since private enterprises have virtually no access to China’s public capital markets (the two main trading boards, in Shanghai and Shenzhen, are dominated by former state owned enterprises). Equally important for foreign investors, the Chinese yuan (CNY) is not convertible, so there is no legal way to get earnings out of the country. The power of the overseas community is most evident in the semiconductor industry, which originated in Silicon Valley and has been transferred by Chinese entrepreneurs ﬁrst to Taiwan and then from Taiwan and Silicon Valley to China. In the words of WebEx CEO Min Zhu, Silicon Valley is the technology leader and the centre for real innovation because it supports the growth of start-ups. New ﬁrms cannot grow this fast in China or India. The most powerful model is a truly international company that combines the creative ideas and architectures that are developed in the United States with the ability to quickly implement them where skill is less expensive: both need to be scaleable.10

5.5 Venture Capital and Entrepreneurship in India Veteran Silicon Valley venture capitalist William H. Draper III took US style early stage venture investing to India in 1995. Soon after establishing a US$55 million fund, Draper International, with a colleague in San Francisco and local partners in Bangalore and Bombay, he realized the many obstacles involved in working with entrepreneurs in India. The concept of venture capital was new in India, where the closely held family centred business model dominated both small ﬁrms and the large groups like Birla and Tata. It was very difﬁcult to coordinate activities between India and Silicon Valley, and start-ups—with far more limited resources—faced all the same frustrations experienced by multinational investors, from the frequently corrupt and restrictive bureaucracy, to the lack of Western-style stock option plans, to retain key personnel to the limits of basic infrastructure such as power and water and the very high cost of connectivity. In the words of Draper’s partner, Robin Richards, in 1997: From a venture capitalist’s perspective, it is 5–10 times slower to start-up a company in India than in the US, mostly due to the difﬁculty of getting the correct infrastructure in place for production. And since most of the technology market 10

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Interview with Min Zhu, San Jose, US, 16 April 2001.

Entrepreneurs: India and China is focused in the West, it is difﬁcult for an India-based entrepreneur to form the necessary business partnerships, and ﬁnd the right management, marketing and sales talent to join his or her company. (Kurian 1997)

Within two years, Draper and Richards had reoriented the strategy for the fund to focus primarily on investments in US-based ﬁrms with a large proportion of their activities in India. When the fund closed in 2000, only one of the India-based companies that had received funding was successful (Rediff Communications), whereas a majority of the US-based ﬁrms in the portfolio had found liquidity. The timing was fortuitous, to be sure, but Draper attributes the successes as well to the combination of technology development in India and business, marketing, and sales operations ‘near the action’ in the US. Some of the ﬁrms in the fund were in the US to start, but others were in India and Draper brought them to Silicon Valley. According to Richards, they learned about some of their best US-based deals in India: ‘You could be sitting in Bangalore and hear about 10 great deals in Santa Clara that you could be a venture capital investor in, but you’d hear about them ﬁrst in Bangalore’ (Schram 2001: 66). Draper International discovered that the ecosystem for Silicon Valley style entrepreneurship was absent in India in the 1990s. Successful Indian and multinational software services and business process ﬁrms had created facilities that allowed them to draw on local skill, but they remained externally oriented and isolated from the local environment. Labour mobility in regions like Bangalore was 20–30 per cent in the 1990s as workers sought to maximize their earnings in a tight market, but it was not associated with the experimentation of a technical community as in Silicon Valley or Hsinchu. As a result, it simply contributed to annual wage increases on the order of 25–40 per cent, as well as the increasing tendency for ﬁrms to expand to other areas (Parthasarathy 2000). A domestic venture capital industry emerged in India in the 1990s, but much of it was large public sector funds or banks and multilateral institutions. Organizations like Union Trust of India Ventures or Small Industries Development Bank of India Venture Capital lacked domain knowledge or experience in software or technology related industries. The funds, typically run by conservative ﬁnanciers concerned with tangible assets and unwilling to take risks, were overwhelmingly late stage investors in software services. In the words of A.V. Sridhar, former senior manager at Wipro, ‘The Indian venture capitalist will not take risks in new areas, as opposed to a risk-free deﬁnitive software services market, where he is assured of quick returns and proﬁts’ (Biswas 1998). The supply of 135

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venture capital in India remained very small by international standards, in part because of a multiplicity of conﬂicting, often cumbersome and anachronistic regulations and a variety of other forms of discrimination against the industry. In 1998 only 21 companies were registered with the Indian Venture Capital Industry Association, and they had approximately US$700 million available for investment. This compared to Israel’s 100 funds with US$4 billion available for investment in 1999 and Taiwan’s 110 funds with US$1.32 billion investments. A few domestic technology start-ups survived the environment of the 1990s, as well, but none experienced the successes of start-ups in Taiwan or Israel at the time, although most were started by returnees from the US (Desai 2003). For example, Silicon Automation Systems (SAS) was started in Silicon Valley in 1989 by four Indian engineers educated in the US. They bootstrapped the venture, and in 1991 they moved part of the operation to Bangalore while seeking to maintain a strong research and software and hardware design (as opposed to software services) orientation. In 1997 SAS was a small, privately held ﬁrm with about three hundred employees and US$10 million in exports. Another returnee, Pradeep Singh, started the software services ﬁrm Aditi in Bangalore in 1994, after nine years at Microsoft. With headquarters in Seattle, Aditi relied on Microsoft as a stable client while also seeking to grow the business. During the 1990s most of the other returnee start-ups in Bangalore and elsewhere in India— a small number, to be sure—either failed or stagnated. The boom in the US technology sector in the late 1990s had contradictory consequences for India. Labour shortages resulted in an increase in the quota for temporary visas granted on the basis of skill, with 124,697 Indian nationals gaining approvals of H1-B status in 2000 alone, representing nearly half (48 per cent) of all visa approvals. The next largest sending country was China, accounting for only 9 per cent of H1B recipients (22,570). Desai (2003) estimates that at least half a million Indian programmers received visas (of all sorts) for the US between 1996 and 2001. Labour shortages also contributed to the growing numbers of cross-regional start-ups between Silicon Valley and India. Rakesh Mathur, who worked for Intel in Silicon Valley for many years before starting three successive successful technology companies—Armedia, Junglee, and Stratify—explains, The key constraint to starting a business in Silicon Valley in the late 1990s was the shortage of software developers. I realized that I could go to India. All three of my start-ups had design centres in Bangalore but were registered as American technology companies. (Mathur 2002)

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Mathur made six trips to India in 1999, and in 2000 his ﬁrm Stratify established a 100 person operation in Bangalore. Mahesh Veerina, who started self-ﬁnanced Internet technology ﬁrm Ramp Networks in 1993 with two friends, reports that they were quickly running out of money and could not afford to pay for local engineers, so they hired programmers in India for one-quarter of the Silicon Valley rate. The ﬁrm’s engineers reported that they were able to cut development time in half because the Indian team worked while the US team slept. By 1998 the ﬁrm had 65 employees in Santa Clara and 25 in India—and required that every engineer spend at least a couple of weeks working in the other country (Thurm 1998). While data are not available, it appears that this cross-regional business model was increasingly common in the late 1990s. While ﬁrms like Ramp Networks and Stratify represent the standard model for building a cross-regional company, starting in the US and tapping talent in India, Draper International pioneered the reverse strategy. In 1997 the venture capital ﬁrm identiﬁed and recruited A.V. Sridhar, a senior manager at Wipro who had never worked outside India, to Silicon Valley to start a company in the data mining ﬁeld. Sridhar quickly identiﬁed a marketing team, including Sanjay Anandaram, who was already working for Wipro in Silicon Valley, and senior managers with experience at Oracle India and IBM Research. The start-up, Neta Inc., developed Internet personalization software and was acquired two years later by Internet portal Infoseek (now Go.com). Sridhar explains why he moved to Silicon Valley to start the business, ‘To create a successful company, one has to be real close to the market. One has to be in a place which supports the creation of new technologies as a daily affair’ (Biswas 1998). Permanent returnees to India from Silicon Valley remained few and far between throughout the 1990s, but the professional and personal networks linking Indians in Silicon Valley to family members, friends, and colleagues at home combined with access to email and low cost travel and phones to generate an unprecedented rate of information exchange between the United States and India. In the words of a Silicon Valley engineer: I go back to India two or three times a year because of my work and there are parts of India where you take a train and go over there and they don’t even have a rickshaw or a cab to take you to your destination. You have to walk. But everybody in the small town knows exactly what the job situation is in Silicon Valley. They know the H-1B quota level, when it is ﬁlled, when it is open again. They know exactly what kinds of skills are required in Silicon Valley, not even in California, just Silicon Valley. (Santa Clara County Ofﬁce of Human Relations 2000)

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Websites like Non-Resident Indians Online (www.nriol.com), www. return2india.com, and www.siliconindia.com became increasingly popular among US educated Indians. They travel home frequently, some returning home to get married (often following the traditional practice of arranged marriage), and seemed torn between the familial and cultural pull of home and what they regarded as superior professional and economic opportunities in the US. The potential for substantial returns attracted a new generation of venture capitalists. A group of new US$50–100 million funds, typically from established markets such as Walden International and E-Ventures (Softbank), targeted early stage investments in India. Corporate venture capital also became active in Indian technology regions. Intel Capital committed to invest US$100 million in Indian IT start-ups during 2000, and Computer Associates began investing actively as well. Traditional sectors that had earlier shunned the software industry became interested in investing because of the high valuations. Fund managers began to tap India’s high net worth individuals and family ﬁrms for capital. Total venture capital investments in India reached US$1,160 million in 2000. The level declined to US$937 million in 2001, and dropped off further in 2002 and 2003. A new generation of cross-border investors with accumulated experience in both India and Silicon Valley has emerged as well. The JumpStartUp Venture Fund was established in Bangalore in July 2000 by three veterans of the IT industry: Kiran Nadkarni had 14 years of experience with venture capital in India, serving most recently as the Draper International partner in Bangalore; K. Ganapathy Subramanian came from ICICI Venture, a leading venture capital ﬁrm in India; and Sanjay Anandaram, who had worked at Wipro in both Bangalore and Silicon Valley and then at start-up Neta Inc. The US$45 million fund was targeted at early stage information technology start-ups and had funding from both institutional investors (including Silicon Valley Bank) and individuals, including Bill Draper and successful Indian executives in the US (contributing 20 per cent of the fund). In 2002, JumpStartUp moved its headquarters from Bangalore to Santa Clara, California, in order to shift its investment strategy from an India focused fund toward US–India cross-border investments. The partners realized that their small fund was not sufﬁcient to support early stage start-ups from the ground up in the environment of the early 2000s, when outside investors were reluctant to contribute to cash poor companies. The new strategy recognizes that Silicon Valley’s cash strapped 138

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new ventures must increasingly set up engineering centres in India. JumpStartUp envisions a role as co-investor with established venture capital ﬁrms in order to help portfolio companies set up engineering teams as well as design, deployment, and support functions in India. In the words of Nadkarni, It is very hard for companies started by non-Indians to think of working out of India, unless they have done it in the past. Unless the founders have intent to do things out of India . . . When a start-up decides to establish a development centre in India, invariably you will see that one of the founders is an Indian. (Shankar and Sundaram 2003)

Most venture capital in India remains focused on later stage investments in software services ﬁrms, but venture capital ﬁrms with Indian fund managers who bring technology investment and entrepreneurial expertise have targeted the early stage US–India connection as well, including WestBridge Capital Partners and Artiman Ventures. The economic logic for this structure appears compelling: a company that would need US$10– 15 million in its ﬁrst round of funding in Silicon Valley might hire a comparable engineering workforce in India for only US$2–3 million.

5.6 Conclusion As highly skilled engineers and entrepreneurs become increasingly mobile, the old pattern of one-way ﬂows of technology and capital from the core to the periphery is being replaced by a more complex and decentralized two-way ﬂow of skill, capital, and technology between differently specialized regional economies. Silicon Valley is now at the core of this rapidly diversifying network of economies because it is the largest and most sophisticated market as well as a leading source of new technologies. Emerging technology regions like Hsinchu, Bangalore, and Shanghai are not replicas of Silicon Valley—rather these new regional economies are like extensions of Silicon Valley and they have co-evolved with the Silicon Valley economy. While producers in these regions initially entered global markets by providing low cost skill, each has developed specializations that add distinctive value to electronic products and systems by transforming activities once regarded as mundane and low-tech into more efﬁcient and dynamic processes. Israel was a low cost location for research and development labs in the 1980s; today entrepreneurs are pioneering sophisticated Internet and security technologies. Taiwan was known in 139

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the 1980s for its cheap PC clones and components; today it is recognized for the ﬂexibility and efﬁciency of its semiconductor and electronic systems producers. Beijing and Shanghai were known in the 1990s for ‘me too’ Internet ventures; today Chinese producers are poised to play a lead role in developing wireless technology. Bangalore provided labour intensive software coding and maintenance in the 1980s and 1990s; today local companies are managing large scale consulting and software services projects for leading global corporations. The new technology regions have all become high wage, high cost locations in their national economies, yet they continue to spawn startups and attract new ﬁrms, and most existing producers continue expanding locally. This growth is reminiscent of the continued clustering of computer and communications related ﬁrms in Silicon Valley during the 1980s and 1990s; these areas now boast a regional advantage that compensates for their high costs. Silicon Valley producers no longer view locating or sourcing from India or China as an efﬁcient way to reduce costs; rather, they argue that the only reason to work with producers in those locations is to gain access to the talent. These developments explain why Silicon Valley-based ﬁrms are active participants in all of these regions as investors and as partners, not simply as competitors. A ﬁrm like Cisco designs and sources critical parts of its operating system software from India and application speciﬁc integrated circuits from Israel for its high-end routers, and the manufacturing of most of its hardware from Taiwan and China. It also invests in start-ups with promising technologies in these locations. On the other hand, a startup like July Systems obtained venture capital from ﬁrms based in the US, Taiwan and China, and India, and its products will likely incorporate components from all these locations as well as being targeted at all their markets. US technology producers beneﬁt directly from the development of these specialized technology regions. They now look to their counterparts in Taiwan and China, India, and Israel not simply for low level implementation but increasingly for co-development and co-architecting of products and components. In addition, ﬁrms in the new technology regions are increasingly partnering with one another as well as with ﬁrms from Silicon Valley, as when a Taiwanese semiconductor ﬁrm invests in Israeli start-ups specialized in digital speech processing chips, or when an Israeli company contributes intellectual property components to a chip design ﬁrm based in India. These collaborations deepen the capabilities of each of

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the partners and over time can support a process of reciprocal innovation and upgrading in the respective regions.

5.6.1 A Model for Others? This is not to suggest that all developing economies are positioned to reap the beneﬁts of brain circulation and peripheral entrepreneurship. This opportunity is beneﬁting countries that have invested heavily in higher education, typically technical education, and are politically and economically stable enough that immigrants will consider returning home. Some of the largest technically skilled immigrant groups in Silicon Valley have not built business or professional connections to their home countries for political reasons. Most of the region’s Iranian and Vietnamese immigrants, for example, are political refugees and hence not inclined to return to countries that, in any case, lack the economic stability needed for technology investment or entrepreneurship. This criterion applies in varying degrees to many of the developing economies that have technically skilled communities in the US and at home, including Russia, parts of Eastern Europe, and Latin America. It is possible that urban areas like St Petersburg or Buenos Aires will become more attractive to returning entrepreneurs in the future as their economies develop and eventually provide greater professional opportunities for returnees. However, large parts of Africa and Latin America lack the skill base or political openness to become attractive environments for technology entrepreneurship. In many Asian countries, government support for large scale, capital intensive investments in the 1970s and 1980s, either by domestic corporations (Korea) or by multinationals (Singapore), have created inhospitable environments for entrepreneurial experimentation. One indication of this is data on the sources of innovation. South Korea’s chaebol, or large business groups, accounted for 81 per cent of all US patents earned in Korea in the 1990s compared to only 3.5 per cent earned by business groups in Taiwan (Trajtenberg 2000). Likewise, in South Korea the top 50 assignees accounted for 85 per cent of all US patents, with Samsung alone accounting for 30 per cent, while Taiwan’s top 50 assignees accounted for only 26 per cent of all US patents. This decentralization of innovative capabilities was reﬂected in a substantially higher rate of patenting in the late 1990s, with Taiwan earning 17.7 patents per US$ billion exports compared to 11.6 in Korea (Mahmood and Singh 2003).

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Evidence from the Korean and Japanese communities in Silicon Valley suggests that even when entrepreneurs are successful in the US, they often lack opportunities for alliances and partnerships at home. It is very difﬁcult for these small ﬁrms to collaborate on equal terms with the giant chaebol and keiretsu (industrial groupings in Japan). This contrasts to the Taiwanese technology entrepreneurs in Silicon Valley whose ﬁrms have grown up through partnerships with their counterparts, often also entrepreneurs, at home. The creation of a transnational community is a two-way process. While policymakers and planners can encourage cross-regional connections, they cannot create or substitute for transnational entrepreneurs and their decentralized networks. Government agencies from Singapore, Hong Kong, and Japan regularly sponsor networking events for their expatriates in the Bay Area as a way to recruit return entrepreneurs and investments. However, the absence of entrepreneurial collaborators at home means that these agencies can provide incentives and information but not access to partners with an interest in jointly transforming the home environment. Governments cannot by themselves insure the preconditions for return entrepreneurship; this is inherently a process of collaborative institution building that takes both local knowledge and understanding of global technology markets and networks. Cross-regional networks develop only when skilled immigrants are both willing and able to return to their home countries for business in large enough numbers to create close links to the technical community in the home country. The receptiveness of the home country depends upon factors such as political stability, economic openness, and level of economic development. It often builds on multinational investments in research and development that have contributed to a developing local skill base and infrastructure that supports entrepreneurship. A critical variable is political leaders willing to collaborate with returning entrepreneurs to develop a shared vision and remove institutional and political obstacles to entrepreneurship led technology growth.

References Bhagwati, J.N. (1985). Essays in Development Economics, ed. Gene Grossman. Cambridge, MA: MIT Press. Biswas, S. (1998). ‘Leading the VC Wave in India’, Siliconindia, May/June.

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Entrepreneurs: India and China Bordo, M., A. Taylor and J. Williamson (eds) (2003). Globalization in Historical Perspective. Chicago: University of Chicago Press. Brenner, R. (1994). Labyrinths of Prosperity: Economic Follies, Democratic Remedies. Ann Arbor: University of Michigan Press. Bresnahan, T., and A. Gambardella (eds) (2004). Building High Tech Clusters: Silicon Valley and Beyond. Cambridge, MA: Cambridge University Press. Chwang, R. (2003). ‘Venture Investment in Greater China: Opportunities and Challenges’, presentation at Stanford University, 29 May. Desai, A.V. (2003). ‘The Dynamics of the Indian Information Technology Industry’, Center for New and Emerging Markets, London Business School. Available at: www.london.edu/cnem/Faculty/S_Commander/india27603.pdf (accessed 6 September 2004). Hobday, M. (1995). ‘East Asian Latecomer Firms: Learning the Technology of Electronics’, World Development, 23(7): 1171–93. Kurian, T. (1997). ‘In the Footsteps of Giants’, Siliconindia, November. Mahmood, I.P. and J. Singh (2003). ‘Technological Dynamism in Asia’, Research Policy, 32: 1031–54. Mathur, R. (2002). Presentation at Forum on Local and Global Networks of Immigrant Professionals, Public Policy Institute of California, San Francisco. Parthasarathy, B. (2000). ‘Globalization and Agglomeration in Newly Industrializing Countries: The State and the Information Technology Industry in Bangalore, India’, PhD dissertation, Department of City and Regional Planning, University of California, Berkeley. Piore, M.J. (1979). Birds of Passage: Migrant Labour and Industrial Societies. Cambridge: Cambridge University Press. Rapaport, H. (2002). ‘Who is Afraid of the Brain Drain? Human Capital Flight and Growth in Developing Countries’, SIEPR Policy Brief, April, Stanford Institute for Economic Policy Research, Palo Alto, CA. Santa Clara County Ofﬁce of Human Relations (2000). Building Borders in Silicon Valley: Summit on Immigrant Needs and Contributions. San Jose, CA: Santa Clara County Ofﬁce of Human Relations. Saxenian, A. (2006). The New Argonauts: Regional Advantage in a Global Economy. Cambridge, MA: Harvard University Press. Saxenian, A. and C.-Y. Li (2003). ‘Bay-to-Bay Strategic Alliances: Network Linkages Between Taiwan and US Venture Capital Industries’, International Journal of Technology Management, 25 (1–2). Schram, A. (2001). ‘Venture Guru’, Siliconindia, September: 66–8. Shankar, P. and K. Sundaram (2003). ‘The Cross-Border Nadkarni’, Siliconindia, February. Sowell, T. (1996). Migrations and Cultures: A World View. New York: Basic Books. Thurm, S. (1998). ‘High-Tech Firms Big and Small Go Global’, The San Jose Mercury News, 9 May.

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Case Studies Todaro, M.P. (1985). Economic Development in the Third World. New York: Longman. Trajtenberg, M. (2000). ‘R&D Policy in Israel: An Overview and Reassessment’, NBER Working Paper, 7930. Cambridge, MA: National Bureau of Economic Research. White, S., J. Gao, and W. Zhang (2002). ‘China’s Venture Capital Industry: Institutional Trajectories and Systems Structure’, paper prepared for UNU-INTECH International Conference on Financial Systems, Corporate Investment in Innovation and Venture Capital, 7–8 November, Brussels. Xiao, W. (2002). ‘The New Economy and Venture Capital in China’, Perspectives, 3(6): 1–11.

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6 International Mobility of Researchers and Scientists: Policy Options for Turning a Drain into a Gain Kristian Thorn and Lauritz B. Holm-Nielsen

6.1 Introduction Building and maintaining a stock of researchers and scientists able to generate knowledge and innovate are key elements in increasing productivity and global competitiveness. For this reason, countries at the innovation stage of economic development commit signiﬁcant resources to graduate education and compete intensely to attract top scientists and researchers. Although mobility is not a new phenomenon, evidence suggests that a high demand for researchers and scientists has lead to an increase in skilled migration in recent years. The number of foreign scholars employed by universities in the US provides an illustrative example. Between 1993 and 2003 this number rose over 70 per cent from about 60,000 to 84,000 scholars, the majority of which were in the hard sciences. A high proportion of these came from developing countries such as China and India (Open Doors 2004).

6.1.1 Developing Countries Not in a Strong Position to Compete Much has been written about the emergence of an international labour market for knowledge and talent, its underlying dynamic, and its political and economic impact (e.g., see Jonkers 2004). Notably, the weak position of developing countries in the market for talent has been examined under the heading of ‘brain drain’. The problem is both one of stock and 145

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ﬂow. According to UNESCO data, developing countries on average feature about eight times fewer researchers in R&D per population unit than does the OECD (UNESCO 2004). Moreover, the average tertiary enrolment rate among low income countries is about 10 per cent, which should be compared to the OECD average of 56 per cent (World Bank 2005). Hence, the effects of an outﬂow of researchers and scientists could potentially erode the science base of low income countries without prospects of them quickly being able to replace skilled migrants with young researchers.

6.1.2 Brain Circulation as a Resource Traditionally, the literature has discussed skilled migration as a loss of human capital and production capacity. In the 1970s this led to proposals such as a tax on brain drain imposed on nationals accepting employment overseas (Bhagwati 1976). However, the debate has since developed to include such issues as ‘brain gain’ and ‘brain circulation’. Although remaining a concern, skill outﬂow is increasingly being regarded as a potential resource for the source country. Migrants returning with cutting edge knowledge and networks of nationals abroad are considered important transmitters of technology and tacit knowledge (Davenport 2004). Drawing on this resource promises to increase source country productivity and develop new markets. This chapter is not intended to contribute to the extensive academic debate on assessing the impact of brain drain and gain on the source country. Rather, it rests on the assertion that—all else remaining equal— return migration and collaboration with nationals living in a foreign country is of beneﬁt for developing countries. The focus of the chapter is to try to better understand some of the push-and-pull factors affecting the migration decisions of researchers and scientists from developing countries. These decisions are not well understood and documented empirically, especially as regards researchers and scientists compared to other highly skilled migrants. The goal is to tentatively identify and discuss various policy options for maximizing the potential gains associated with the decision of researchers and scientists to migrate on a temporary or permanent basis. The chapter is structured in the following way. Section 6.2 examines the determinants of migration and return migration drawing on the literature and data from the US. Section 6.3 discusses policies for boosting return migration by analysing individual-based and systemic approaches. 146

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Section 6.4 proﬁles how permanent migration can be used as a resource for technology transfer and the establishment of knowledge networks. Section 6.5 concludes the chapter.

6.2 Determinants of Return Migration of Researchers and Scientists There are no clear answers in the literature on the pull-and-push factors for return migration. Return migration is a multifaceted and heterogeneous phenomenon. Despite a very large literature on brain drain and migration surprisingly few facts have been established about the pull-andpush factors guiding the decisions of individuals going abroad or returning home. Among frequently sited push factors for migration are such phenomena as an oppressive political system, lack of job opportunities, and social problems such as crime, insufﬁcient healthcare, and low quality education. These are counterbalanced by a number of factors that pull migrants back to their countries of origin. Among these are commitment to home, economic growth, and increased demand for skills (Marks 2004). There have been few attempts to measure the relative magnitude of these and other factors. Due to lack of comparative data—particularly in regard to mobility of researchers and scientists as a group—our understanding of who returns when and why remains hazy. A deeper understanding of what motivates highly skilled individuals would be essential to designing effective policy responses.

6.2.1 Neoclassical Approach: The Importance of Wage Differentials As discussed by Cassarino (2004) the debate on return migration can for the sake of simplicity be captured in at least three major schools of thought. A ﬁrst such ‘school’ is the neoclassical approach to migration. A key variable in this approach is the economic gains an individual can achieve by migrating from a low to a high income country. Individuals are regarded as agents who maximize not only their earnings, but also the duration of their stay abroad. Hence, wage differentials are at the heart of understanding why talented people migrate (Todaro 1969: 147). It follows from this approach that decisions to return are predominantly motivated either by diminishing income difference between home and host country or failure to obtain the income expected in the host country. 147

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6.2.2 Transnationalism: Strong Ties to Home Country The transnationalist approach is based on the observation that expatriates keep close personal and ﬁnancial relationships with the source country and they retain a strong national identity even years after migrating. Driven by shared national identity, migrants establish social networks with other expatriates from the same source country. This common identity perpetuates a commitment to the source country that drives crossborder linkages among nationals and decisions to return. A migrant has thus a natural gravitation towards the home country and repatriation takes place once enough resources, whether ﬁnancial or knowledge, have been gathered and when the social and economic conditions at home are perceived sufﬁciently favourable. Hence, the main motivating factor is not one of personal utility but an identity marked by an attachment to one’s birthplace (Portes 2001; Al-Ali and Koser 2002; and Brand 2002).

6.2.3 Social Network Theory: Contextual and Institutional Factors When transnationalists emphasize the importance of personal linkages and ‘natural’ gravity towards home, then network theorists emphasize the importance of voluntarily created linkages that are targeted on speciﬁc objectives. Expatriates are not passive respondents to social and economic conditions in the home country, but social actors that are motivated by their linkages with home institutions and social capital from which they beneﬁted before migrating (Knoke and Kuklinski 1982). Not only are acceptable social and economic conditions important factors for returning, but opportunities that the home country provides for making use of the migration experience and established networks. Expatriates are thus regarded as well informed agents that gather information about context and opportunities in their countries of origin. EMPIRICALLY DIFFICULT TO EXAMINE DETERMINANTS OF RETURN MIGRATION The three perspectives outlined—neoclassical, transnational, and network theory—provide an important menu of factors expected to shape the decisions of researchers and scientists to return home. However, due to lack of comparable data, these and other factors have not systematically been the subject of empirical research. Drawing on data from the OECD countries, Docquier and Marfouk (2004) have constructed a dataset for skilled workers’ emigration rates for about 190 countries which incorporates 148

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information on immigrants’ educational attainment. However, it is not possible to isolate researchers and scientists as a group. The data lack occupational information and do not differentiate between tertiary degrees. There is signiﬁcant variance in stay rates among foreign PhD graduates in the US. One of the best available proxies for researcher repatriation is data from the US on return rates among doctoral graduates in science and engineering (Finn 2003). The data have been constructed using the social security number of foreign doctoral recipients and data from tax authorities. If a foreign doctoral recipient paid taxes on earnings of US$5,000 or more, they are considered to stay in the US. The data show that the proportion of foreigners receiving a doctorate in 1996 still working in the US in 2001 differs widely by country. Less than one out of ﬁve doctoral recipients from China and India had left the US. In contrast, more than 70 per cent did so from countries such as Indonesia and Brazil (see Figure 6.1). The data do not include information on the country of residence of doctoral recipients that left the US. Hence, it should be factored in that not all repatriates returned to their country of origin and that this phenomenon may vary by nationality. Interestingly, the data show that skilled migration is not just a north–south phenomenon, but a multidirectional process. PhD students from OECD countries such as Canada, New Zealand, and the UK show high stay rates in the US, and this is not a new trend. In fact, the term ‘brain drain’ was ﬁrst used in the 1960s to describe the movement of British scientists to the US. Income differential cannot be established as a strong predictor of return migration. With a cross-section of 26 countries, the available data are too weak to support strong conclusions based on statistical tests. Therefore, a simple bi-variant analysis was performed to tentatively examine the relation between income differential with the US and the return rates. Income differentials are obtained by dividing GDP per capita (PPP US$) in the US by the same variable for each country in the sample. The result is depicted in Figure 6.2. Based on the data available no simple correlation appears to exist between return migration and differences in income. A weak negative correlation is driven by two outliers—China and India. The available data do not allow an assessment of the impact of social and economic factors. A number of tests were performed to explore the assertion in the transnationalist approach that individuals with strong commitment to their country of origin will return when social and economic conditions at home are perceived sufﬁciently favourable. Different 149

Iran Canada Argentina New Zealand United Kingdom Greece Israel Turkey Germany Egypt South Africa Peru Taiwan

Italy Australia Spain Colombia France Mexico Chile Brazil Japan Korea, Rep.

Return rate

0

10

20

30

40

50

60

70

80

90

Indonesia

Source: Finn (2003).

India

Figure 6.1 Percentage of Temporary Residents Receiving a PhD in Science and Engineering in the US in 1996 Who Had Left the US by 2001

China

Researchers and Scientists

Return rate of doctoral graduates

90 Korea, Rep. Brazil Japan Mexico Colombia Spain South Africa Peru Germany Turkey Greece Argentina Canada

80 70 60 50 40

Indonesia

Egypt

Iran

30 20

India

10 0

China 0

2

4

6

8

10

12

14

16

GDP per capita in the US/GDP per capita in source country

Figure 6.2 Correlation between Return Rates and Income Differential with the US, 2001 Source: Finn (2003) and World Bank (2005).

bi- and multivariant models were explored using: (i) data from the World Development Indicators on economic growth rates; (ii) data from the WEF Global Competitiveness Report on the rule of law and the quality of public services; and (iii) OECD data on R&D expenditure as a percentage of GDP (WEF 2002; UNDP 2004; World Bank 2005). However, none of the tested models showed good ﬁt to the data. Consequently, the available data do not shed much light on what motivate researchers and scientists to migrate and return to their country of origin. DO RESEARCHERS AND SCIENTISTS CONSTITUTE A DISTINCTIVE GROUP? Mahroum (2000) introduces a number of useful distinctions when analysing the push-and-pull factors for skilled migration. He argues that large inter-group differences exist as to what guide decisions to move overseas. Engineers and technicians, for example, are reportedly pulled and pushed primarily by economic factors. They go where their skills are most needed and most rewarded. In contrast, mobility among researchers and scientists is a normal part of scientiﬁc life and a well established norm. Researchers and scientists are motivated mainly by the content of their work and the concrete conditions under which they conduct their research. This assertion is substantiated by Shapin (1998) who—as part of 151

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an analysis of the role of trust in science—ﬁnds that scientists are attracted towards expertise and the institutions that have a reputation for being cutting-edge. SURVEY DATA: RESEARCH ENVIRONMENT A KEY VARIABLE A 2003 survey of foreign researchers and scientists working in Italian research institutes provides interesting qualitative information on some of the pull-and-push factors for skilled migration. The data ﬁnd that professional pull factors—broader scope of research activities, job opportunities, access to cutting edge equipment and the ability to form networks—are among the most important reasons for mobility of researchers and scientists. 1 A reasonable salary level should be guaranteed but is, as suggested by Mahroum (2000), not a deciding factor. Although sketchy, evidence suggests that policies of brain gain should go beyond pecuniary rewards, highlighted by the neoclassical approach. Nuanced policies would have to take into consideration other factors such as those emphasized by the transnationalist approach and network theory—broad social and economic conditions and notably, concrete contextual and institutional factors tied to places of research (Choi 1995). The following will identify several policy options and discuss their viability for developing countries.

6.3 Policies of Return Migration A strong increase in the demand for skilled relative to unskilled labour has prompted countries to develop policies of return migration. As Table 6.1 shows, returnees bring with them networks established overseas, through which they can transfer technology, capital, and information. They may also have access to foreign markets or imports that have high value in the domestic economy (Zweig et al. 2005). Hence, signiﬁcant gains in 1 The survey included 241 researchers working at 131 institutes. About a third of the respondents came from countries in east Asia, Africa, the Middle East, and Latin America. The average age of respondents was 36 years. Asked to state their chief motivation for leaving their home country the largest number of respondents pointed to a desire to form contacts with other research environments (86 per cent of respondents). Similarly, the desire to get access to scientiﬁc equipment (75 per cent) and have great freedom in work and life (54 per cent) were cited as important factors. A considerable number of respondents also indicated as the chief deciding factor an ambition to specialize in a ﬁeld that was insufﬁciently developed in their country of origin (58 per cent). Very few of the respondents cited difﬁculty in ﬁnding work adequate to their qualiﬁcations in their home country as their main reasons for leaving (33 per cent). Economic considerations also came well down the list of priorities (41 per cent) (Todisco et al. 2003; and Avveduto and Brandi 2004).

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Brought in foreign visitors Helped establish international projects Imported foreign technology Imported foreign capital

Returnees

Domestically trained researchers

36.9 30.8 47.7 23.1

16.3 10.0 21.3 6.3

Notes: The table uses data from a survey carried out in ﬁve development zones: Suzhou, Guangzhou, Shanghai, Wuhan, and Hangzhou. N = 145. Source: Zweig et al. (2004).

productivity and competitiveness may be associated with luring back researchers and scientists from overseas. Analysing policies for return migration and their usefulness for developing countries, this section draws a distinction between ‘individualbased approaches’ and policies targeting the ‘environment for research’. Roughly, the ﬁrst can be characterized as a short-term policy response that seeks to shape the decisions of researchers and scientists individual by individual and the latter a medium- to long-term approach that aims to stimulate return by improving framework conditions and opportunities. The two approaches are complementary in the sense that effective policy responses are likely to combine several instruments as both approaches come with beneﬁts and drawbacks.

6.3.1 Individual-Based Approaches MECHANISMS AIMED AT ENSURING RETURN BY FORCING OR OBLIGING THE INDIVIDUAL A traditional policy instrument of return migration has been attempts to control the movement of individuals by preventing or restricting the ﬂow of skills or to cancel their negative effects through taxation. The assumption is that the only way to respond to the loss of human capital is to either restrict the outﬂows or to evaluate its monetary cost and get ﬁnancial compensation (Bhagwati 1976; Meyer and Brown 1999). From this perspective, excellence in science can be achieved by controlling the human capital component by means of forcing or obliging the individual scientist or researcher to remain in or return to the home country. A current example is Colombia’s support programme for overseas graduate 153

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studies which requires beneﬁciaries to return to Colombia within three months of graduation and remain in the country for a predeﬁned period. 2 INDUCING TALENTED INDIVIDUALS TO RETURN Several countries are providing economic support and inducements to lure researchers and scientists home. Malaysia, for example, is providing time limited tax exemptions to nationals in order to compensate the loss of salary resulting from their decision to return home (Lowell 2001). Another example is the Presidential Fund for Retention in Mexico. This fund aims to repatriate experienced Mexican-born researchers who reside abroad, or individuals who complete their PhD or postdoctorates in a foreign country. The fund covers salary expenses for the ﬁrst year and expenses of the researcher and his or her family to settle in the selected location. Between 1991–2000 more than 2,000 researchers were repatriated at a total cost of US$56 million (NSF 2000). Targeting individuals is expensive and inadequately addresses the root cause of skilled migration. Repatriation programmes may bring back some researchers and scientists, but come with an inherent risk that the sector issues that made the individual leave in the ﬁrst place still persist. In such cases, repatriated researchers and scientists are likely to migrate again at a later stage. Hence, considerable resources may be spent with little long-term impact. Attempts to lure skilled expatriates back to their home countries began in the 1970s but, reportedly, there was little success with these schemes (Mutume 2003; Marks 2004). More recent programmes mentioned above have not been subject to systematic impact evaluations. RISK THAT REPATRIATION PROGRAMMES BRING LITTLE ADDITIONALITY Migrants may indeed have a strong commitment to home as the transnationalist approach to return migration suggests (see section 6.2). A survey of highly skilled Colombians living abroad showed that three out of four respondents were considering returning to their home country. Only 2 COLFUTURO is a small programme that ﬁnances 120 Colombian professionals per year to pursue graduate studies abroad and return to Colombia thereafter. Each student receives a so-called scholarship credit of a maximum of US$25,000 per year for a maximum period of two years. The beneﬁciary must return to Colombia within 90 days of the completion of their studies and must stay a predeﬁned period. For students who return to Colombia, up to 45 per cent of the scholarships credit can be condoned. If the agreement is violated the full amount must be paid back under an accelerated amortization plan (Angel-Urdinola et al. 2004).

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20 per cent thought they would never again live in their country of origin (Meyer et al. 1997). If a majority of expatriates are expected to return, providing strong incentives to them may add little value. Ideally, programmes should be targeted at individuals whose preferences are such that he or she would return only if an inducement is offered. Governments typically have no means of identifying such individuals or assessing the required size of the inducement. Hence, imperfect information is expected to reduce the welfare gains associated with individual-based repatriation programmes.

ADVERSE SELECTION AND PROBLEMS OF CONFLICTING INCENTIVES Governments may also face adverse selection problems when trying to repatriate researchers and scientists individual by individual. There is reason to believe that the researchers and scientists abroad attracted by such programmes may be the individuals with the least opportunities and qualiﬁcations (Angel-Urdinola et al. 2004). Again, the more targeted the programme and the better the information, the larger the expected welfare gain. Another concern is conﬂicting incentives. Programmes of inducements attract researchers and scientists back, but they may paradoxically also provide an incentive for individuals to leave the country as a reward awaits upon their return. On the one hand governments want to repatriate skilled scientists, but on the other hand if a stay abroad becomes a condition for getting top positions or salaries in the home country it may encourage migration, which is exactly the problem that they are trying to solve (Dillon 2001).

6.3.2 Creating a Conductive Environment for Research In contrast to repatriating researchers and scientists individual by individual, systemic approaches draw attention to some of the general institutional and contextual problems that triggered skilled migration in the ﬁrst place. As such they are long-term policy responses that often integrate scientiﬁc, technological, and economic dimensions. It is beyond the scope of this chapter to cover all the measures developing countries can sensibly take to improve their national environment for research. Hence, the purpose of this section is to touch on a number of themes and raise questions for further investigation. 155

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RETAINING AND ATTRACTING RESEARCHERS AND SCIENTISTS BY STRENGTHENING NATIONAL INNOVATION SYSTEMS Several analyses point to the important role of national innovation systems in shaping the inﬂows and outﬂows of highly skilled people (e.g., Mahroum 2000). Strengthening each element of an innovation system— private enterprises, public research institutes, and universities—and articulating their relationship to one another is expected to create opportunities for research, innovation, and entrepreneurship (Lundvall 1992). As the survey data presented in section 6.2 suggests, such opportunities may—to a greater extent than individual economic inducements— stimulate an inﬂow of researchers and scientists. As pointed out by Meyer et al. (1997) it is not random that the most successful cases of return policies are found in countries such as Singapore, South Korea, and Taiwan, countries with S&T and industrial sectors already quite advanced, where the workforce may effectively be employed. However, the response lies not necessarily in massively boosting spending on R&D beyond the reach of many developing countries. Evidence suggests that much can be achieved by a ﬁrm commitment to formulating coherent sector policies, getting incentives and reward structures right, and strengthening public– private research linkages (Thorn and Holm-Nielsen 2005). COMPETITIVE FUNDING MAY IMPROVE THE ENVIRONMENT FOR RESEARCH Adequate funding of science and research is important, but equally important is the way resources are allocated. Many developing countries still manage research funds in a top–down fashion with allocations to universities and public research institutes on the basis of historical precedence and negotiation. The problem with such a system is twofold. First, the system is not based on research output and therefore does not encourage quality research. Second, the system tends to be bureaucratic and inﬂexible. Although no ‘magic bullet’ exists, competitive funding—awarding funding to the best research proposals—creates a far better environment for skilled scientists. Competition and transparent review criteria have several positive effects: they encourage quality research, reward the most productive researchers and increase the efﬁciency of research funding. The disadvantages of competitive funding are that it tends to encourage short-term ‘safe’ research as opposed to more creative, uncertain, longterm projects. Moreover, it generally favours top quality elite institutions and hence may cause a concentration of resources. 156

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COMPETITIVE FUNDING HAS TAKEN ROOT IN SEVERAL DEVELOPING COUNTRIES The Chinese research system—traditionally modelled on the centrally planned Soviet research system—provides an interesting example. Keen to lure back researchers and scientists, primarily from the US, the government has implemented a large number of measures to improve the efﬁciency of its research system. Among the initiatives is the establishment of a number of competitive funds that support research on the basis of transparently selected and peer reviewed proposals (Jonkers 2004). A similar approach has been adopted in Chile, Brazil, Mexico, Venezuela, and Vietnam through the Millennium Science Initiative. This programme supports the set up of mechanisms to competitively select high quality research teams working in science nuclei and centres of excellence. The objective is to demonstrate how to improve the quality of research and provide opportunities for post-graduate training. 3 LARGE MULTIPURPOSE GRANTS PROVIDE FOCUS AND STABILITY It is important for scientists to have the opportunity and security to engage in large scale ambitious research projects. However, the funding system in developing countries is often characterized by a high degree of fragmentation, which means that scientists have to apply for several relatively small grants to cover different costs categories. This is a time consuming process that takes focus away from core activities. A way to address this problem is to award large scale multipurpose grants, which provide the stability and freedom that scientists need to conduct quality research. It creates a scientiﬁc setting that gives the scientist opportunities to plan as well as engage in creative and innovative research. In addition, multipurpose grants given on a competitive basis facilitate the establishment of networks and hence a research environment where talented scientists can get together with a common goal (Thorn and Holm-Nielsen 2005). 3 The Millennium Science Initiative (1999–2002) was designed to revitalize Chile’s S&T system by supporting advanced training of human capital by world class scientists engaged in cutting edge research. The project provided competitive, merit-based grants to three scientiﬁc institutes and ﬁve scientiﬁc nuclei (selected from among 75 applicants). The ﬁnal evaluation report concludes that the programme helped establish a fair, open, and merit-based selection process, which was welcomed by the scientiﬁc research community. In addition to assuring that the grants went to the most qualiﬁed researchers, the established process inﬂuenced other scientiﬁc funding mechanisms in Chile, prompting them to conform more closely to international best practice. The possibilities to fund high quality research projects attracted several Chilean scientists of international repute back to Chile. Moreover, about 40 per cent of PhDs and post-doctorates in supported centres and nuclei were foreigners conducting their research in Chile. Although the initiative ended in 2002, its achievements were carried on through subsequent programmes (World Bank 2002).

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REWARD STRUCTURES ARE FUNDAMENTAL TO REVERSE MIGRATION In order to attract, retain, and motivate young skilled scientists, reward structures that focus on merits are needed. Universities in the US are particularly attractive because of their ﬂexible and open career structure. The tough but transparent and fair career structure provided by the US tenure track system, which lays out a clear path for advancement, is especially attractive for talented young researchers and scientists (Bosch 2003). In contrast, many developing countries reward seniority (Hansen et al. 2002). A pay scale based on age does not provide accountability for performance and undervalues young researchers. Regulation and enforcement of intellectual property rights also have bearing on the attractiveness of a research environment. Lack of clarity and weak protection of intellectual property lowers the expected private return for researchers and scientists engaged in innovation. CREATING JOB OPPORTUNITIES FOR YOUNG RESEARCHERS Young researchers are often faced with a lack of employment opportunities in their country of origin. Few jobs for individuals with advanced degrees may be available, and those that exist represent poor ﬁnancial rewards and inferior working conditions and facilities. To lure back researchers in their most productive years, several countries have launched initiatives to provide attractive opportunities for early career researchers and scientists. The strong focus by Taiwan in strengthening the island’s infrastructure for S&T together with the creation of science-based industrial parks has opened many new avenues for young researchers returning from overseas to begin new challenging careers. Most employees hired to work in the science-based industrial parks are junior professionals returning from the US. Moreover, the private sector plays an active role in recruiting young researchers working overseas (NSF 2000). UNIVERSITY–INDUSTRY COLLABORATION PLAYS A CENTRAL PART IN IMPROVING OPPORTUNITIES AND CONDITIONS FOR RESEARCHERS Many developing countries have little tradition of cross-sectoral research collaboration and private sector involvement in R&D. In some countries industry does not represent a signiﬁcant stimulus for the reform or

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expansion of graduate education in science and engineering (Thorn and Soo 2006). Links between academia and industry are essential for developing an entrepreneurial culture in education and research and for strengthening the private sector’s capacity to absorb knowledge (Cohen and Levinthal 1989). Diversiﬁed opportunities and possibilities to conduct cutting edge research in innovative settings may create strong incentives for young scientists to return from overseas. The São Paulo region in Brazil, for example, features a mature science cluster, which has fuelled the emergence of one of the largest and most diverse production centres in Latin America. While the reasons for this are many, the strengthening of advanced education and policies to break down barriers between sectors have undoubtedly contributed to the state’s economic success (Thorn and Holm-Nielsen 2005). Data are yet to show the impact of these efforts on return migration, although it should be noted that Brazil features one of the highest return rates among researchers earning their PhD in the US (recall Figure 6.1). STRENGTHENING TERTIARY AND, NOTABLY, GRADUATE EDUCATION Evidence suggests that return migration of researchers and scientists is closely linked to the quality of tertiary institutions. Institutions with a strong prestigious background and reputation of scientiﬁc openness can capitalize on its prestige to attract the best scientists from around the world (Mahroum 2000). In China, reverse migration is an integral part of the goal of establishing world class higher educational institutions and developing its scientiﬁc and research base. Over the past two decades, the Chinese government has strengthened graduate education and encouraged people trained overseas to return. The results are encouraging. Between 1995 and 1999, the number of graduate students returning from overseas increased at an average annual rate of more than 10 per cent (see Table 6.2). Since 1999, the return ﬂows have risen further. According to Zweig et al. (2004), the number of returnees almost doubled between 2001 and 2002, reaching close to 18,000 in 2002. While the general boom in the Chinese economy has been a driving force, the set-up of a well coordinated educational environment has played an important role. An example is the establishment of a special professorship system aimed at attracting outstanding young scientists. The goal is to boost teaching and research in Chinese universities and provide incentives for more diversiﬁed careers (NSF 2000).

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Case Studies Table 6.2 Return Rates of Chinese Graduate Students, 1957–99 Year

Number of graduate students graduating in China

Annual number of graduate students returning from overseas

1957 1965 1975 1985 1995 1996 1997 1998 1999

1,723 1,665 — 17,004 31,877 39,652 46,539 47,077 54,670

347 199 186 1,424 5,750 6,570 7,130 7,379 7,748

Source: China Statistical Yearbook (2000: 685).

6.4 Using Researchers and Scientists Overseas as a Resource People move because of their desire to exploit the best opportunities. Yet, having moved abroad they retain connections and networks back to their home country. Technology transfer is a little studied outcome of high skilled mobility, but one that theoretically can yield signiﬁcant economic beneﬁts. There are sizeable gains associated with technology transfer from high to low income countries. Recent research supports Gershenkron’s (1962) classic point about ‘advantages of backwardness’. Investments in R&D buy greater increases in productivity for countries far from the technology frontier than for countries at the innovation driven stage of economic development that must invent the new technologies that push the frontier forward. In a study on R&D and development, Lederman and Maloney (2003) ﬁnd that the return to R&D in the average OECD country is somewhere in the range of 20–40 per cent. For medium income levels, such as Mexico and Chile, the average return is around 60 per cent and for relatively poor countries, such as Nicaragua, the average return is closer to 100 per cent. Thus, evidence suggests that using existing knowledge and technology allow developing countries to ‘harvest low hanging fruits’. But tacit knowledge makes technology transfer difﬁcult. Knowledge in codiﬁed form—written down, and expressed in a formula or in a design— is relatively easy and almost freely transferable. For this reason, spillovers of codiﬁed knowledge are near to perfect. However, it is often impossible or too costly to codify all knowledge and part of it will remain tacit (Canton 2004). Transfer of tacit knowledge involves human interaction either by means of collaboration through personal interaction, research 160

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projects, networks and clusters, or by means of human mobility. Intrinsically knowledge moves with people and networks and clusters are formed by personal relationships. Hence, stimulating the formation of networks with expatriates may be an important ingredient in boosting the transfer of technology and knowledge from high to low income countries (Thorn and Holm-Nielsen 2005). REGARDING EXPATRIATES AS A RESOURCE FOR THE HOME COUNTRY No matter how well designed return migration policies are, some expatriates are not likely to return, at least not in the short term. Hence, there is a growing realization among developing countries that skilled workers will continue to migrate and that properly managed and harnessed, they can be a powerful and useful asset (Marks 2004). For this reason, developing countries increasingly depart from the traditional brain drain perspective, which treats emigrants as being irreparably lost to the home country. Instead, recent policies draw on the commitment and positive identiﬁcation to home among expatriates as highlighted by the transnationalist approach. Highly skilled migrants are believed to play an increasingly important role in establishing and maintaining long distance interactions between research and innovation systems. Saxenian (2003) for example identiﬁes a group of transnational entrepreneurs, consisting of skilled persons that commute back and forth linking high technology clusters in Taiwan and China to high-tech regions in the US. CREATING NETWORKS WITH NATIONALS ABROAD Diaspora policies are among the most recent initiatives that have come under full implementation in regard to skilled migration. They differ from return policies in the sense that they do not aim to physically repatriate nationals abroad. Diaspora policies aim at mobilizing the latent resource of nationals living and working in another country wherever they are located by creating formal, institutionally organized networks where ideas and knowledge can be exchanged. A promising perspective in such a strategy is that through the expatriates, the country may have access not only to their individual embodied knowledge but also to the socioprofessional networks in which they are inserted overseas (Meyer and Brown 1999). An advantage of the diaspora option is that international linkages and networking does not require large infrastructural investments, as it consists in capitalizing on already existing resources. Hence, in theory, diaspora 161

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policies may bring signiﬁcant beneﬁts to developing countries at relatively little cost. The Internet has played a key role in giving momentum to diaspora initiatives as it provides a forum for the exchange of information irrespective of geography and time. According to Lowell (2001), 41 new e-based expatriate networks were founded during the 1990s. EXAMPLES OF DIASPORA NETWORKING LINKING EXPATRIATES The South African Network of Skills Abroad (SANSA) established in 1998 is an example of an active diaspora network. SANSA has more than 2,200 members in 60 countries of which 85 per cent have received their education in South Africa. The goal of SANSA is to connect highly skilled expatriates in the ﬁeld of science and technology with their counterparts in South Africa to create an environment for collaboration and skills transfer. The network was initiated by the Science and Technology Policy Centre at the University of Cape Town. SANSA has enjoyed success through the creation of an online community of local and expatriate South Africans who share a concern and passion for the country’s development. This network is now managed by the National Research Foundation, a government supported research organization (Marks 2004). Other examples of diaspora networks are the Chinese Scholars Abroad (CHISA), the Colombian network of scientists and research professionals (Red Caldas), the Arab Scientists and Technologists Abroad (ASTA), and the Silicon Valley Indian Professionals Association (SIPA) (DESA 2004). COMMON CHARACTERISTICS OF DIASPORA NETWORKS Brown (2000) ﬁnds that diaspora networks are similar in terms of their organization and administration. They all have a website used to disseminate information and compile member data which members can use to search for potential partners and members in similar ﬁelds. Although generally perceiving themselves as independent organizations, most diaspora networks have links to government institutions such as departments of science and technology or education. These linkages suggest that some institutional support is necessary in order to stimulate action and concrete, purposeful activities that enable networks to fulﬁl their goals. There are few examples of diaspora networks in developing countries successfully making the transition from the initial start-up to a period of consolidation. Although CALDAS—an ambitious network of Colombian scientists and engineers abroad—showed a lot of promise at its inception as documented by Meyer et al. (1997), it eventually lost momentum 162

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and did not develop into the resource for Colombia originally envisaged. A key lesson learned is that researchers and scientists, situated next door or connected through international networks, must ﬁnd it professionally relevant to interact and exchange information. An inherent problem of diasporas is that they are heterogeneous and scattered. Hence, cognitive distances between potential partners make substantive collaboration difﬁcult. Another difﬁculty is the lack of rewards and incentives tied to diaspora networks. Expatriate researchers and scientists are accountable to institutions in their host country and may not have the time or energy to contribute to ambitious projects or network activities. Hence, developing countries are well advised to be realistic about their impact and use the diaspora option in combination with other policies.

6.5 Conclusion Based on three schools of thought—the neoclassical, the transnationalist, and the network approach—this chapter discussed determinants of return migration. The available data do not allow ﬁrm conclusions to be made on the basis of empirical tests. Anecdotal evidence suggests, however, that return decisions of researchers and scientists are shaped by factors such as the quality of the research environment, professional reward structures, and access to state of the art equipment. A reasonable salary level should be guaranteed but appears not to be a deciding factor. A deeper understanding of what factors inﬂuences international mobility of researchers and scientists would be essential for designing policy responses that effectively stimulate brain gain and brain circulation. Signiﬁcant gains in productivity and competitiveness are associated with attracting and luring back researchers and scientists from abroad. For this reason, countries at all levels of economic development are designing policies of return migration. Individual-based policy responses regulate the ﬂow of individuals or bring back researchers and scientists from overseas by providing an economic inducement. It was established that such policies are intrinsically difﬁcult to design due to imperfect information about the propensity of expatriates to return, problems of adverse selection, and conﬂicting incentives. Moreover, individual-based approaches do not address the systemic problems that motivated researchers and scientists to migrate in the ﬁrst place. 163

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Systemic approaches seek to attract and lure back researchers and scientists by strengthening the home country’s national innovation system. Their main weakness is that developing countries often are not in a position to boost investments in R&D. There may, however, be something to gain from getting incentives and reward structures right. An approach successfully adopted by several developing countries is to fund research through competitions based on transparent eligibility and selection criteria. Other ways to attract researchers and scientists include linking career progression to performance rather than seniority and diversifying employment opportunities by strengthening public– private research collaboration. Diaspora policies—creating formal, institutionally organized networks with researchers and scientists living overseas—are among the most recent initiatives that have come under full implementation. An advantage of the diaspora option is that it does not require large infrastructural investments, as it capitalizes on already existing resources. Hence, in theory, diaspora policies may bring signiﬁcant beneﬁts to developing countries at relatively low cost. Despite their intuitive appeal, diaspora policies are not a universal solution. Substantive collaboration is often made difﬁcult by a low degree of commonality among expatriates and lack of time and incentives for these to contribute to ambitious network projects and activities. This chapter has made a ﬁrst attempt to analyse return decisions among researchers and scientists and proﬁle policy options. As is evident from the analysis, there is a clear need for more policy related, evaluative research covering both high and low income countries. Much more could be known about the cost effectiveness of return migration policies. This is not an academic exercise. Turning a drain of researchers and scientists into a gain is central to diversifying economies and placing developing countries on the path to sustainable growth.

References Al-Ali, N. and K. Koser (eds) (2002). New Approaches to Migration: Transnational Communities and the Transformation of Home. London: Routledge. Angel-Urdinola, D., T. Takeno, and Q. Wodon (2004). From Brain Drain to Brain Gain: Selected Policy Options, mimeo. Washington, DC: World Bank. Avveduto, S. and M.C. Brandi (2004). ‘Le migrazioni qualiﬁcate in Italia’, in S. Avveduto, M.C. Brandi, and E. Todisco (eds), Le migrazioni qualiﬁcate tra mobilità e brain drain: Studi Emigrazione, 156 (December): 771– 1016.

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Researchers and Scientists Bhagwati, J.N. (1976). The Brain Drain and Taxation: Theory and Empirical Analysis. Amsterdam: North-Holland. Bosch, X. (2003). ‘Brain Drain Robbing Europe of its Brightest Young Scientists’, The Lancet, 361 (June). Brand, L. (2002). ‘States and Their Expatriates: Explaining the Development of Tunisian and Moroccan Emigration-Related Institutions’, Center for Comparative Immigration Studies Working Paper, 52. La Jolla, CA: Center for Comparative Immigration Studies, University of California-San Diego. Brown, M. (2000). Using the Intellectual Diaspora to Reverse the Brain Drain: Some Useful Examples. Cape Town: University of Cape Town. Canton, E. (2004). Science-to-Industry Knowledge Spillovers: Theory and International Experiences. The Hague: Netherlands Bureau for Economic Policy Analysis (CPB). Cassarino, J.-P. (2004). ‘Theorizing Return Migration: The Conceptual Approach to Return Migrants Revisited’, International Journal on Multicultural Societies, 6(2): 253–79. China Statistical Yearbook (2000). China Statistical Yearbook 2000. Beijing: China Statistical Press. Choi, H. (1995). An International Scientiﬁc Community. London: Praeger. Cohen, W.M. and D.A. Levinthal (1989). ‘Innovation and Learning: The Two Faces of R&D’, Economic Journal, 99: 569–96. Davenport, S. (2004). Panic and Panacea: Brain Drain and Science and Technology Human Capital Policy. Wellington: Victoria Management School. DESA (2004). World Economic and Social Survey 2004: International Migration. New York: UN Department of Economic and Social Affairs. Dillon, N. (2001). ‘Tackling the Postdoc Brain Drain’, EMBO Reports, 2(9): 746–7. Docquier, F. and A. Marfout (2004). Measuring the International Mobility of Skilled Workers (1990–2000). Lille: CADRE University. Finn, M.G. (2003). Stay Rates of Foreign Doctorate Recipients from US Universities, 2001, Science and Education Program, Oak Ridge Institute for Science and Education, Oak Ridge, TN. Gerschenkron, A. (1962). Economic Backwardness in Historical Perspective: A Book of Essays. Cambridge, MA: Belknap Press of Harvard University Press. Hansen, T.N., N. Agapitova, L. Holm-Nielsen, and O.G. Vukmirovic (2002). ‘The Evolution of Science & Technology: Latin America and the Caribbean in Comparative Perspective’, LCSHD Discussion Paper, 80. Washington, DC: World Bank. Jonkers, K. (2004). ‘The Role of Return Migrants in the Development of Beijing’s Plan Biotechnological Cluster’, paper prepared for the Second Globelics Conference Innovation Systems and Development, 16–20 October, Beijing. Knoke, D. and J.H. Kuklinski (eds) (1982). Network Analysis. London: Sage Publications. Lederman, D. and W.F. Maloney (2003). R&D and Development: World Bank Policy Research Department Working Paper, 3024. Washington, DC: World Bank.

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Case Studies Lowell, L.B. (2001). ‘Policy Responses to the International Mobility of Skilled Labour’, International Migration Papers, 45. Geneva: International Migration Branch, ILO. Lundvall, B.-A. (1992). National Systems of Innovation: Towards a Theory of Innovation and Interactive Learning. London: Pinter Publishers. Mahroum, S. (2000). Highly Skilled Globetrotters: The International Migration of Human Capital. Seville: Institute for Prospective Technological Studies. Marks, J. (2004). Expatriate Professionals as an Entry Point into Global KnowledgeIntensive Value Chains: South Africa. Washington, DC: Knowledge for Development Program, World Bank Institute, World Bank. Meyer, J.-B., J. Charum, D. Bernal, J. Gillard, J. Granés, J. Leon, A. Montenegro, C. Murcia, N. Narvaez-Berthelemot, L.S. Parrado, and B. Schlemmer (1997). Turning Brain Drain into Brain Gain: The Colombian Experience of the Diaspora Option. Bogota: Universidad Nacional de Colombia. Meyer, J.-B. and M. Brown (1999). Scientiﬁc Diasporas: A New Approach to the Brain Drain, paper prepared for the UNESCO–ICSU World Conference on Science, 26 June–1 July, Budapest. Mutume, G. (2003). ‘Reversing Africa’s ‘Brain Drain’, African Recovery, 17(2): 1. NSF (2000). Graduate Education Reform in Europe, Asia and the Americas and International Mobility of Scientists and Engineers, proceedings of a NSF Workshop, Division of Science Resources Studies, Directorate for Social, Behavioral, and Economic Sciences, National Science Foundation. Open Doors (2004). Report on International Education Exchange. New York: Institute of International Education. Portes, A. (2001). ‘Introduction: The Debates and Signiﬁcance of Immigrant Transnationalism’, Global Networks, 1(3): 181–93. Saxenian, A.L. (2003). Brain Circulation and Capitalist Dynamics: The Silicon ValleyHsinchu-Shanghai Triangle. Ithaca: Center for Economics and Society, Department of Sociology, Cornell University. Shapin, S. (1998). ‘Placing the View from Nowhere: Historical and Sociological Problems in the Location of Science’, Transactions of the Institute of British Geographers, 23: 5–12. Thorn, K. and L. Holm-Nielsen (2005). Science & Technology in Latin America: Policy Options and Lessons Learned. Washington, DC: World Bank. Thorn, K. and M. Soo (2006). ‘Latin Amercian Universities and the Third Mission: Trends, Challenges, and Policy Options’, World Bank Policy Research Department Working Paper 4002. Washington, DC: World Bank. Todisco, E., M.C. Brandi, and G. Tattolo (2003). ‘Skilled Migration: A Theoretical Framework and the Case of Foreign Researchers in Italy’, Fulgor, 1(3): 115–30. Todaro, M.P. (1969). ‘A Model of Labor Migration and Urban Unemployment in Less Developed Countries’, American Economic Review, 59(1): 138–48. UNDP (2004). Human Development Report 2004. New York: United Nations Development Programme.

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Researchers and Scientists UNESCO (2004). UIS Survey of Science and Technology Statistics. Available at: www.uis.unesco.org (accessed 20 September 2005). WEF (2002). Global Competitiveness Report 2001–2002. Geneva: World Economic Forum. World Bank (2002). Implementation Completion Report on a Loan to Chile: Millennium Science Initiative. Washington, DC: World Bank. World Bank (2005). World Development Indicators. Washington, DC: World Bank. Zweig, D., C. Changgui, and S. Rosen (2004). ‘Globalization and Transnational Human Capital: Overseas and Returnee Scholars to China’, The China Quarterly (September): 735–57. Zweig, D., W. Vanhonacker, C.S. Fung, and S. Rosen (2005). ‘Reverse Migration and Regional Integration: Entrepreneurs and Scientists in the PRC’, Center on China’s Transnational Relations Working Paper, 6. Hong Kong: Hong Kong University of Science and Technology.

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7 Student Migration to the United States and Brain Circulation: Issues, Empirical Results, and Programmes in Latin America Diego F. Angel-Urdinola, Taizo Takeno, and Quentin Wodon

7.1 Brief Review of the Literature: Brain Drain or Brain Gain? 7.1.1 Early Theoretical Work The work on ‘brain drain’ can be said to have started with standard neoclassical trade models used to analyse the effect of labour migration. With a simple model that assumes labour as the only input producing output, Grubel and Scott (1966) analysed the extent to which the marginal product of labour is affected by migration. They showed that a small (inﬁnitesimal) amount of labour emigration causes neither a gain nor a loss in aggregate social welfare due to emigration. The intuition is simply that one’s marginal product of labour remains unaffected by small changes of labour emigration. If on the other hand, migration is non-negligible in magnitude, Tobin (1974) noted that the economywide marginal product of labour will be affected, despite the fact that the individual’s marginal product of labour remains unchanged, and this will lead to a welfare loss associated with emigration. Kenen (1971) showed that even inﬁnitesimal migration may potentially cause a brain drain effect. He supported his argument by using a two factor, two product model in which only one factor is allowed to emigrate. The analysis invoked the Rybczynski theorem. In an economy in which labour and capital are used as factors of production, the 168

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Rybczynski theorem predicts that emigration leads to a fall in the output of the labour intensive product and a rise in the output of the capital intensive product. This, in turn, induces a fall in the relative price of the capital intensive product. If preferences are such that a society prefers the labour intensive product over the capital intensive product (so that the economy imports the labour intensive product and exports the capital intensive product), then the fall in relative price of the capital intensive product implies a terms of trade deterioration and a welfare loss. Of course, if the preferences are reversed, emigration may lead to a welfare gain by the opposite reasoning. A caveat to this result is that if the economy is small and therefore world prices are given, then the terms of trade do not change, in which case emigration of labour does not alter the welfare of those who remain at home (since the marginal productivity does not change and the prices are ﬁxed at world price levels). Instead of allowing only labour to migrate, Johnson (1967) allowed capital to migrate as well. The assumption adopted did not require the existence of a capital market. Rather, it was assumed that the labour force migrates abroad taking whatever capital they are endowed with. Consequently, the model identiﬁed two groups, one constituted by emigrants and the other constituted by those who stay at home. Not surprisingly, depending on the relative size of these two groups and the relative amount of capital each group is endowed with, there can be either brain drain or brain gain. The aforementioned authors only considered migration of labour with uniform quality in terms of skill levels. Grubel and Scott (1977) considered both skilled and unskilled labour. Both types of labour as well as capital are necessary to produce output, and the skilled labour utilizes capital. The effect of emigration of both types of workers is examined. The results, as may be anticipated, can be drawn from the underpinnings of the models presented earlier. If unskilled labour emigrates, then the result is similar to the case of the ‘one factor, one product’ case, so that inﬁnitesimal migration does not alter the marginal product of labour and there is neither brain drain nor brain gain. If on the other hand skilled labour emigrates, then the result is similar to the one obtained by Johnson (1967) so that emigration of labour is associated with a loss of capital that can no longer be utilized at home. Results from the aforementioned models assume no distortions in the economy. If some kind of distortion were embedded in the models, so that they interact with labour emigration, this could lead to adverse consequences (i.e., brain drain). 169

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To compensate for the detrimental effect of brain drain, Bhagwati and Dellafar (1973) suggested that a tax be paid by the emigrants to the government of their origin. The detail of this tax proposal stated that such tax be either collected by the host government and then handed over to the source government, or collected by the United Nations and transferred to the government of their origin through UN’s programmes for economic development. Such proposals have never been implemented however, and are not likely to be.

7.1.2 Early Empirical Work While the early theoretical work mentioned above provided a framework for thinking about the impact of migration on social welfare, most of the hypotheses were not empirically testable, or at least not easily so. Consequently, empirical work took its own route in analysing brain drain by attempting to explain observed patterns of migration, and by aiming to assess the social loss of migration in ways different from those formulated by the theory. Grubel and Scott (1966) adopted the idea of a welfare loss from emigration, which had been suggested by Schultz (1960) and Becker (1964). They tried to assess the magnitude of the loss associated with emigration from OECD countries into the US, or equivalently, the gain that the US obtained from such migration. The social loss from migration was measured as the value of human capital that emigrated. Speciﬁcally, they collected data on educational attainment and the age of immigrants, and calculated the resources that would have to be spent on instructing a person in the US until that person reaches the education level of the immigrant. They also took into account the amount of earnings foregone by that person while acquiring their education. Based on these criteria, the authors found that the beneﬁt brought to the US was US$144 million, which was equivalent to 13 per cent of US merchandise imports. Agarwal and Winkler (1985a, b) and Huang (1988) conducted crosssectional and time series analysis on students not returning to their home countries after completing their studies in the US. Their data indicated that economic conditions at home, as well as the immigration policy of the US towards their particular country of origin, were signiﬁcant elements accounting for the students becoming permanent migrants into the US. Because they could not observe the actual number of students who did not return, the estimates were based upon the aggregate number of 170

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visa status adjustment. Brastberg (1995) proposed an alternative approach to study the phenomenon of student nonreturn. The data used in his paper were obtained from the Immigration and Naturalization Services (INS) and allowed for a more accurate enumeration of nonreturning students by country of origin as well as by time of entry. Moreover, Brastberg’s (1995) data contained information about the skill acquired by the students while in the US. Borjas et al. (1992) developed a model that asserted that if the skills acquired in the US were valued more (less) by the students’ home country than in the US, then the students would be more (less) likely to return due to skills sorting. Data on F1 visas issued during the 1970–75 period and adjustments from F1 visas by 1986 were obtained for 69 source countries to estimate a probability model of returning to the source country, with key independent variables being the wage rate, per capita GDP, geographic distance between the source country and the US, a civil rights index, and an income inequality index. The covariates are intended to capture the political and economic conditions at the source, among others. The main ﬁnding, not surprisingly, was that adverse political and economic conditions at home increased the probability of nonreturn (i.e., the probability of remaining in the US). Moreover, skills sorting was also found to be present. Psacharopoulos (1975) attempted to examine whether the wage differentials between developed and developing nations accounted for part of the observed rates of migration. The basic idea is that a higher wage abroad should serve as an incentive for highly skilled labour to emigrate away from developing nations (this was formally addressed in more recent work both theoretically and empirically, and will be summarized in the next section). Psacharopoulos gathered data from INS in 1969 on immigrants from 23 countries coming to the US. He used the ratio of the number of immigrants over the total number of skilled labour as the dependent variable, and the wage differentials and geographical distance as independent variables. Income differentials were used as well. The results suggested that the wage differential had explanatory power on the migration rate, while the geographical distance and the income differential were not statistically signiﬁcant. From the obtained estimates, the author calculated the effect of Bhagwati type taxes on the rate of emigration. He concluded that levying taxes on emigrants would not signiﬁcantly deter them from actually emigrating, so that the tax could be used as a source of government revenue by source countries. 171

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7.1.3 More Recent Work The more recent literature presents a different approach to brain drain by using a multiperiod framework to take into account the effect of the prospect of migrating on an individual’s decision to invest in human capital in the source country. Stark et al. (1997) provide a model of this kind. The prospect of migration affects the incentive for individuals to invest in human capital, because of the higher expected wage under a nonzero probability of migration. The model assumes that the stock of total human capital available in the economy matters in such a way that the higher the total quantity of human capital, the higher total output of the economy. As such, an economy’s total human capital may become higher with a possibility of migration, even if some people migrate, if the rate of migration is sufﬁciently small, and also if many individuals invest more than they would have done if there had not been a possibility to migrate. Beine et al. (2001) provide a similar analysis. Individuals must decide the level of education to acquire. The acquisition of education is costly and this cost differs from one individual to another. On the other hand, individuals face a nonzero probability of migration, which allows them to earn higher wages than those offered domestically. Therefore, the expected wage when there is a possibility of migration is higher than when there is no such possibility. As a result, more individuals will invest more heavily in their education (see Box 7.1). If the level of education acquired by individuals becomes higher than it would otherwise have been without the possibility of migration, and if the migration rate is not 100 per cent, some individuals with a higher level of education who intended to migrate will remain at home. This phenomenon may lead to brain gain, if the growth rate of the stock of highly educated individuals at home compensates for the impact of higher emigration (see Box 7.1).

Box 7.1 CONDITIONS FOR BRAIN GAIN In the upper graph, popular density is plotted with respect to ability to learn, denoted by a. The area under the curve (which sums to one) represents all individuals in the economy. Individuals whose ability exceeds a1 will choose to invest in education, so that X: F (a1) represents people who do not invest more in education, and 1 − F (a1) represents people who do. Of those who do invest in education, some individuals migrate while others don’t. Let m1 be the probability that individuals migrate. Then Y : m1∗ (1 − F (a1)) denotes people who migrate, and

172

Student Migration: Latin America–US Z : (1 − m1)∗ (1 − F (a1)) denotes people who have invested more in education, but remain at home.

f (a)

X: F (a1) Y: m1∗(1−F(a1)) Z: (1−m1)∗(1−F(a1))

Y X Z a a1

f (a)

X: F (a2) Y: m2∗(1−F(a2)) Z: (1−m2)∗(1−F(a2))

Y

Z X a a2

Consider now a higher probability of migration, m2 > m1. Since a higher probability of migration increases the expected return on education, more individuals invest in education. According to the deﬁnition of Beine et al. (2001), the growth rate of human capital, g, is captured by a ratio g = Z/(X + Z) in the lower graph. This is a ratio of educated individuals to all the individuals in the economy after some people have migrated. The ratio depends on the change in the rate of migration, m1 to m2. If the derivative of this ratio is positive, we have a case of brain gain, while a negative derivative implies a case of brain drain. (Source: Beine et al. 2001)

173

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Beine et al. (2001) then conduct a brief empirical study using a dataset constructed by Carrington et al. (1998), which consists of a proﬁle of migrants from over 50 different countries to the US that identiﬁes the level of education attained prior to their arrival (this is a crucial variable to account for human capital). The authors regress the growth rate of human capital against the rate of migration along with other control variables such as political stability in the source country, public education expenditure, ethnic diversity, and so forth. Because the rate of migration and the growth rate of human capital may be endogenously related, the authors instrument the migration rate with the stock of migrants of the same origin in the US, population density, and racial diversity in the countries of origin. The results obtained not only show that migrants tend to be more educated, but also that, for some developing nations, the stock of human capital at the source country was larger than it would have been had there not been a prospect of migration (i.e., there may be brain gain). Countries reported to have beneﬁted from allowing migration include Indonesia, Ghana, China, and Pakistan among others, while countries reported to be hurt by migration (brain drain) include Ecuador, Korea, Philippines, and Costa Rica among others.

7.2 Student Migration to the US and Brain Gain: Model and Basic Statistics In this section, we brieﬂy present an alternative approach to analysing brain gain. Details are given in Angel-Urdinola et al. (2005). The intuitive argument of the approach presented here is similar to that in Beine et al. (2001), but the model is different (see Box 7.2 for an outline of the model). The possibility that we intend to test empirically is whether a prospect of migration that allows individuals to earn a higher wage abroad encourages individuals to pursue higher education than they would have pursued otherwise and thereby leads to brain gain. The model hinges upon two assumptions. First, we assume that acquiring a higher level of education increases the possibility for individuals to migrate which in turn allows them to earn a higher income than at home. Second, we assume that the acquisition of education is costly and this cost differs from one individual to another. With these two assumptions, we note that there is a trade off upon pursuing a higher level of education. Pursuing a higher level

174

Student Migration: Latin America–US

Box 7.2 A MODEL OF BRAIN DRAIN Consider an economy with N risk-neutral individuals with identical preferences. Assume labour is the only factor of production. Individuals invest in human capital, denoted by e, to be productive. There are two options: secondary education (e =S) and tertiary education (e =T). Secondary education is less costly and yields a lower level of productivity than tertiary education. Individuals differ from one another in terms of learning skills. The skill, denoted by „i for individual i , is a random variable that admits a uniform distribution with support [0,1]. An individual choosing secondary education pursues domestic employment. For those with tertiary education, there is a probability p of migrating to a foreign country, where the individual can earn a higher wage than in the home country. We assume that individuals’ output takes the form: k(e) =

S if e = S T > S if e = T

The cost of acquiring education takes the form: ci (e) =

„i · C S if e = S „i · C T , C T > C S

if e = T

A lower „ implies a higher skill level and a lower cost of acquiring education. Without loss of generality, we normalize the production and the cost of acquiring education for secondary education to unity. Since labour is the only factor of production, utility may be represented as production minus cost, so that ui (e) = k(e) − ci (e). Individuals maximize their utility by choosing their education level. Individuals pursue tertiary education if and only if doing so results in a higher level of utility than otherwise, i.e., if and only if ui (T ) ≥ ui (S). Having normalized the production and cost of acquiring secondary education to unity, the above inequality holds if „T = (T − 1)/(C T − 1). It can be shown that there is a critical value „T so that ui (T ) > ui (S) ∀ „i < „T and ui (T ) < ui (S) ∀ „i < „T . If individuals’ skill level „i exceeds „T , the cost of acquiring tertiary education is too high. For individuals with „T ≥ „i , the cost is not too high. The equilibrium is characterized by the threshold „T such that the optimal decision of individuals is e∗ i =

S T

iff „i > „T iff „T ≥ „i

where

„T =

T −1 CT − 1

Suppose now that individuals who pursue tertiary education can, with probability, p, migrate to another country where they attain higher utility than at home u(T ; ·) ≡ · · T − „i · C T , · > 1. Individuals then pursue tertiary education if and only if the expected utility of doing so exceeds u(S); that is, p · u(T ; ·) + (1 − p) · u(T ) ≥ u(S). We then ﬁnd a threshold level of skill level, denoted as „ M = [T · (1 + p · (· − 1)) − 1]/(C T − 1) under which individuals are indifferent between pursuing either level of

175

Case Studies Box 7.2 (Continued) education. The optimal decision rule for individuals is then: ⎧ ⎨ S iff „i > „ M T · (1 + p · (· − 1)) − 1 ∗ e i = where „ M = ⎩T iff „ M ≥ „ CT − 1 i

The expression F („ ) − F („T ) = [ p · T · (· − 1)]/(C T − 1) > 0 represents the impact of the possibility of migrating on tertiary enrolment. The expression is always positive: with a prospect of migration, there will always be more individuals pursuing tertiary education than without such a prospect of migration. The value of p · F („ M ) = p[T · (1 + p · (· − 1)) − 1]/(C T − 1) represents those individuals who pursued tertiary education and migrated abroad. This is the drain effect. The net effect of the migration prospect on tertiary education enrolment is the sum of the aforementioned effects, namely (1 − p) · F („ M ) − F („T ). The ﬁrst term represents the fraction of individuals who pursue tertiary education because of the prospect for migration but remained in the home country. The second term is the fraction of individuals who pursue tertiary education in autarky. If this expression is positive (negative) then tertiary enrolment is higher (lower) when there is a prospect of migrating (as well as actual migration). There exists a critical value of p with which the expression takes the value zero (i.e., the net effect is zero). This is given by: M

p∗ =

1 + T · (· − 2) T · (· − 1)

If the numerator of this expression is positive, then the expression is bounded between zero and one. This is so for sufﬁciently large values of · (namely for · > 2 − 1/T ). It is straightforward to verify that for p ∈ (0, p∗ ) the above ratio is positive, and therefore the net effect is positive (brain gain), while for p ∈ ( p∗ , 1], the above ratio is negative so that the net effect is negative (brain drain). Thus, for developed nations, allowing migration to developed nations does not necessarily lead to brain drain in source countries, provided that the rate of migration is not too high, and that there are incentive effects in source countries due to the prospect of migration. (Source: Angel-Urdinola et al. 2005)

of education is costly for individuals, but the expected reward is also higher. Now those individuals who can bear the cost of education would pursue a higher level of education. Therefore, the prospect of migration increases the potential beneﬁt of pursuing a higher level of education for those individuals, since it increases their expected wage, while the cost remains unchanged. Correspondingly, more individuals are able to afford higher levels of education thanks to higher future wages. This is the key underpinning of the model. It follows, then, that more people would pursue a higher level of education when there is a possibility to migrate than when there is not. This is referred to as the ‘pull effect’. The 176

Student Migration: Latin America–US 4.1 3.9 3.7 3.5 3.3 3.1 2.9 2.7 2.5 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01

Figure 7.1 F1 Visa Holders as a Share of All Students Enrolled in the US Source: Authors using IIE data.

net effect to the economy as a whole of migration, however, is ambiguous. The reason is that, although more people would pursue a higher level of education, some of them actually do migrate from the country (which is known as the drain effect). 1 To test whether migration leads to brain drain or brain gain requires a dataset that is not readily available, and constructing such dataset is beyond the scope of the present work. Instead, we will focus on student migration, and test a reduced form relationship between tertiary enrolment in the source countries and student migration to the US. Before outlining our approach (detailed in Angel-Urdinola et al. 2005), it is worthwhile to brieﬂy present some basic statistics on student migration to the US. During the 1990s, the ratio of foreign students to total tertiary school enrolment increased in the US. According to the Institute of International Education (IIE), the ratio increased from 2.8 per cent in 1990 to 3.8 per cent in 2000 (see Figure 7.1). A similar trend can be observed for workers. While only 300,000 highly skilled workers emigrated from all developing countries to Western nations during 1961–72 (UNCTAD 1975), according to the US 1990 census report more than 2.5 million highly educated immigrants from developing countries had emigrated to the US.

1 Of course, those who leave may come back one day, or they may contribute in a form of remittances or business connections, leading to a higher beneﬁt for the source country. Here however and in the empirical work that follows, we conﬁne our attention to the direct impact on brain gain of leaving the country.

177

Case Studies

The increase in F1 students during the 1990s has coincided with a series of economic crises in developing countries, including the Asian Crisis, the tequila Crisis in Latin America, and more recently the Argentina Crisis. For the US, on the contrary, the 1990s was a decade of economic boom. Another reason for these trends is that for the past two decades there has been an increase in the US in the demand for high skilled labour (Katz and Murphy 1992; Autor et al. 1998; Card and Lemieux 2000). This is sometimes referred to as ‘skill-biased technological change’. Under such circumstances, foreign students may ﬁnd it less attractive to move back to their country of origin once they complete their studies in the US. More generally, students and skilled professionals today have stronger incentives to permanently migrate, if possible to an economy that demands their skills and can afford highly competitive pay regimes. How large are student migration ﬂows from Latin America to the US? According to IIE, during ﬁscal year 1999–2000, 12 per cent of all international students in the US came from Latin America. This makes Latin America the third largest region, after Asia and Europe, in terms of sending students abroad (see Figure 7.2). According to IIE data, in 1999–2000 alone, some 65,000

Oceania and Canada 6%

Africa 6%

Latin America 12%

Europe 16%

Asia 60%

Figure 7.2 Share of International F1 Students in the US by Region Source: Authors using IIE (1999/2000) data.

178

Student Migration: Latin America–US 12000

1993/94

1999/00

10000 8000 6000 4000 2000 0 Mexico

Brazil Colombia Venezuela Jamaica Argentina

Peru

Ecuador

Chile

Panama

Other

Figure 7.3 Number of F1 Students by Selected Latin American Countries Source: Authors using IIE data.

Latin American students came to the US. Of those, 95 per cent pursued tertiary education (73 per cent at the undergraduate level, 22 per cent at the graduate level). The number of Latin American students moving to the US has increased by 40 per cent between 1993 and 2000, while tertiary enrolment rates in most source countries have increased only mildly. Many of the main sending countries are now facing (or have recently been facing) either a political crisis or an economic downturn. This includes Argentina, Brazil, Colombia, Venezuela, and to a lesser extent Mexico. Due also to their sheer size, these are countries with the largest number of F1 students in the US as indicated by Figure 7.3. As shown in Table 7.1, most of these countries are ranked among the top 25 countries with the highest number of F1 visas registered in the US (Mexico takes 9th place, Brazil 13th, Colombia 18th, and Venezuela 22nd). Figure 7.4 provides data on the total number of foreign students admitted in the US during the period 1993–2000. In percentage terms (as a proportion of each region’s gross tertiary enrolment rate), Latin America was the largest source of students, followed by Asia and Africa. Not surprisingly, while the region constituted by Europe, Canada, and Australia has a high absolute share of students into the US, it has the lowest relative share because its population is much better educated. This makes Latin American countries more vulnerable to the risk of brain drain associated with student migration. Furthermore, a signiﬁcant share of all Latin American students who pursue their education in the US are enrolled in PhD courses. These are 179

Case Studies Table 7.1 Top 25 Countries with the Highest Number of F1 Visas in the US Ranking

Country

1 2 3 4 5 6 7 8 9 10 11 12

China Japan India Korea, Rep. of Taiwan Canada Indonesia Thailand Mexico Turkey Germany Malaysia

Number of F1 students

Ranking

54466 46872 42337 41191 29234 23544 11300 10983 10607 10100 9800 9074

13 14 15 16 17 18 19 20 21 22 23 24 25

Country

Number of F1 students

Brazil United Kingdom Hong Kong Russia France Colombia Pakistan Kenya Saudi Arabia Venezuela Sweden Spain Singapore

8600 7990 7545 7025 6877 6277 6107 5684 5156 5125 4994 4337 4250

Source: Authors using IIE data.

presumably talented individuals who may have better opportunities in the US and thereby lower incentives to go back to their country after completing their degree. As shown in Figure 7.5, Brazil and Mexico are two of the countries with the largest number of foreign individuals earning a PhD in the US.

2500000

0.040% 0.035% 0.030% 0.025%

1500000

0.020% 1000000

0.015% 0.010%

Student migration rate

Thousands of students

2000000

500000 0.005% 0

0.000% Africa

Asia

Europe

Latin America Oceania

Figure 7.4 Foreign F1 Students in the US by Region, Aggregate 1993–98 Note: Thousands of students—Aggregate 1993–98; age bracket)—Aggregate 1993–97. Source: Authors using IIE data.

180

Students/(ter. enr. rate∗ pop in

Student Migration: Latin America–US

Brazil

Mexico

Turkey

Taiwan

India

China 0

0.5

1

1.5

2

2.5

Figure 7.5 Number of Foreign Students Earning a PhD in the US Note: Thousands. Source: IIE, US Bureau of Census, University of Chicago, and Urban Institute.

Finally, although we will not discuss this in the empirical work to follow, Latin America is also a region with a high share of skilled workers temporarily admitted to the US under the H visa category. While Latin America’s share of F1 visas as a per cent of total F1 visas stands at 12 per cent, its share of H visa is nearly double at 20 per cent (Figures 7.2 and 7.6). Because the majority of these temporary workers from Latin America Asia 21%

Europe 28%

Canada and Oceania 4%

Latin America 20%

Africa 27%

Figure 7.6 Share of H1 Visas in the US by Region Source: Authors using IIE (1999/2000) data.

181

Case Studies 9000 8000 7000 6000 5000 4000 3000 2000 1000

Honduras

Argentina

Venezuela

Bolivia

Trinidad and Tobago

Jamaica

Colombia

Ecuador

Guatemala

Peru

Brazil

El Salvador

Mexico

0

Figure 7.7 Status of H1 visa Holders in the US, 1997–99 Notes: H1 Non-professionals; Source: Authors using IIE data.

H1 professionals.

are professionals rather than nonprofessionals (which essentially means that they have completed their tertiary education), the risk of brain drain among Latin American countries is all the more likely (Figure 7.7).

7.3 Testing the Impact of Student Migration on Brain Drain In this section, we report results for testing whether student migration leads to brain drain or brain gain; more details are available in AngelUrdinola et al. (2005). We use data available on foreign students in the US from IIE. The data provides information about the total number of foreign students in the US (F1, J1, M, and other) by country of origin, from ﬁscal year 1993–94 to ﬁscal year 1999–2000. From ﬁscal years 1998– 99 and 1999–2000 we have information on the share of graduate and undergraduate students and on the number of F1 students who become US permanent residents, but this is not used here. For convenience, we aggregate the data into ﬁve world regions: Africa, Asia, Europe and Canada and Australia, Latin America, and Oceania. Also, using available data among others from the World Development Indicators (WDI hereafter), we use as explanatory variables a range of 182

Student Migration: Latin America–US

macroeconomic, education and other variables. Because of data availability, and in order to keep enough degrees of freedom, some of the education variables (secondary enrolment rate and secondary completion rate) were interpolated using growth rates when data were missing. Country data on population by age group were downloaded from the Ofﬁce of the Census Bureau (IDB census pyramids). The list of right hand side variables include the logarithm of per capita GDP and its square in the home country, the logarithm of per capita GDP in the US, regional dummies, an index of political freedom, a law and order index, the logarithm of the unemployment rate in the home country and its square, the secondary enrolment rate in the home country, secondary completion rate, the rate of urbanization, the rate of foreign direct investment, the rate of remittances, the number of telephone mainlines (as a proxy for technological development), the exchange rate, the distance from the US and its square (which is time-invariant), the degree of openness of the source economy, and a linear time trend. According to the theoretical framework we presented earlier, student migration may contribute to brain drain or brain gain in the source country. That is, an increase in the proportion of students going abroad need not be associated with a decrease in domestic school enrolment ratio. In other words, even if more students are going abroad, an equal or even greater number of students may still be enrolling into domestic schools, and thereby generate human capital, because of a pull effect. Our econometric model to test the reduced form relationship between the number of students going abroad at time t-1 and domestic school enrolment rate at t is outlined in Box 7.3. Results obtained with the world panel are presented in Table 7.2. The columns present the ﬁrst and the second stage regressions of the model (with standard or jack-knife estimation taking into account clustering in the data). Hausman tests suggested that random effects models should be estimated and these are reported in Table 7.2 (only coefﬁcients that are statistically signiﬁcant are shown, with ‘NS’ standing for not statistically signiﬁcant). While a higher level of real GDP per capita does not have a statistically signiﬁcant impact on student migration (there may be less need to study abroad in richer countries because they have a more developed education system, but at the same time the richer a country is, the easier it is for its graduates to study abroad), it increases tertiary enrolment, although the effect is not linear. Borjas (1987) and Bratsberg (1995) found somewhat similar results. Controlling for other variables, non-US OECD countries have a lower rate of student migration. A higher lagged 183

Case Studies

Box 7.3 EMPIRICAL MODEL TO TEST THE IMPACT OF STUDENT MIGRATION ON BRAIN DRAIN The empirical model regresses country i ’s gross tertiary enrolment rate at time t (TERi,t ) on the student migration rate at time t − 1 (SMRi,t−1 ) and a set of controls represented by a vector X i t . The student migration rate is deﬁned as the number of students abroad (in the US) divided by the number of students who are qualiﬁed to be abroad, as proxied by the tertiary enrolment rate in the source country times the population 20 to 24 years old: SMRi t =

#Studentsi t TERi t × POP[20 − 24]i t

In order to correct for the possibility of endogeneity between TERi,t and SMRi,t−1 , namely the pull effect, we instrument SMRi,t−1 using a vector of instruments Zi t , which we describe in the text below. Our empirical model is described by the following equation: log(TERi t ) = ‚0 i t + ‚1 log SMRi t + X i t ‚ j + εi t , with

i = 1. . .I, j = 2. . . J and t = 1. . . T

log SMRi t = „0 + „1 disti + „2 disti ˆ2 + „3 opennessi t + „4 x_r atei t + X i t „k

In the above, dist and distˆ2 represent country i ’s distance and distance squared from the US, while openness is deﬁned as (exports + imports)/(current GDP) and x_rate denotes country i ’s year-to-year percentage change in exchange rate relative to the US dollar. (Source: Angel-Urdinola et al. 2005)

secondary gross enrolment rate and a higher secondary completion rate both increase tertiary enrolment. The density of telephone mainlines is positively correlated with student migration (this could have gone both ways theoretically). The variables capturing the cost of student migration, namely the distance to the US, the openness of the economy, and the exchange rate all affect student migration with the expected signs, hence the instrumentation appears to be working. The key parameter in Table 7.2 for looking at the impact of student migration on brain drain is the impact of the lagged F1 student migration ratio on the level of tertiary enrolment in the source country. This coefﬁcient is statistically signiﬁcant and negative, which may suggest brain drain if the students do not return upon the completion of their studies. This result does not prove that the outcome of student migration is negative from a brain drain perspective, but it does suggest that at least some countries may indeed be vulnerable to international human capital mobility towards the US if no policies are implemented in order to provide incentives for students to come back. In the next section, we look 184

Student Migration: Latin America–US Table 7.2 Determinants of Student Migration and Tertiary Enrolment, World Panel 1st stage Lag F1 ratio Lag F1 ratio Log real per capita GDP in the US Log real per capita GDP Log real per capita GDP squared Region = Africa Region = Asia Region = Europe, Canada, and Australia Political freedom index Law and order index Log unemployment rate Log unemployment rate squared Log-lag (3) Secondary enrolment rate gross Urbanization index Secondary completion rate Log FDI as % of GDP Telephone mainlines per 1,000 people Time trend Distance from the US (∗ 1000) Distance squared (∗ 1,000,000) Openness index % Change in exchange rate Constant Number of observations and countries R-squared

NS NS NS NS NS −1.374 NS NS NS NS NS NS NS NS 0.003 NS −0.387 NS 0.004 −0.212 NS 212/55

2nd stage Jack-knife −0.108 NS 3.496 −0.177 NS NS NS NS NS NS NS 0.220 NS 0.083 NS NS NS

NS 212/55 0.88

Notes: NS = not statistically signiﬁcant. Coefﬁcients in italic are signiﬁcant at the 10 per cent conﬁdence level. Other coefﬁcients are signiﬁcant at the 5 per cent conﬁdence level. Source: Angel-Urdinola et al. (2005).

at the types of incentives that have been implemented in Latin American countries for this purpose.

7.4 Promoting the Return of International Students: Examples of Three Programmes When individuals who have acquired higher education abroad return home, they often come back not only with a higher level of education, but also with various human capital assets that are not easily obtainable at home. These may include language skills, technical know-how, and a network of business relationships that may lead to new opportunities, to name a few. The return of skilled labour is therefore an important asset for economic development. Often, however, we observe that those 185

Case Studies

individuals who migrate as students, or as temporary workers, do not return home. The ever increasing number of skilled emigrants as well as the increase in the number of students studying abroad is raising concerns of brain drain for developing nations. The emigrants may ﬁnd better employment opportunities in the host country. But this may be to the detriment of growth and development in the source country. Individual emigrants will typically choose to return home if and only if doing so is their best course of action. Preventing outﬂows of workers and students is not easy. It also prevents the acquisition by these individuals and to some extent by the source country of knowledge available abroad. In fact, from a policy point of view and at least in the short run, promoting emigration by workers and students (the latter probably more than the former) in order to acquire higher levels of education and skills may very well be a cost efﬁcient way to improve the quality of domestic human capital, as opposed to establishing, say, universities or research institutes in the source country. In this section we focus on the following policy challenge: how could a government in a source country make the best of the fact that students want to go, or are already going, abroad? Our approach is practical as we provide a review of three programmes that have been implemented in Latin American countries in order to minimize brain drain, or maximize brain gain. The ﬁrst programme is implemented by the Consejo Nacional de Ciencia y Tecnologia (CONACYT hereafter) in Mexico. The programme has a repatriation component for scientists (i.e., recent PhDs). CONACYT also implements a separate initiative, called the Sistema Nacional de Investigadores, in order to provide higher pay for productive researchers in order to make it more attractive for them to remain at home (and, more generally, in order to encourage their research productivity). The second programme is Colombia’s COLFUTURO whereby a contract is signed with students going abroad. The students receive a stipend that allows them to pay for part of their studies, but in return they must come back home after the completion of their study. This is somewhat similar to the Fullbright programme implemented between the US and other countries. In that programme, grantees are expected to spend at least two years in their country of origin after the completion of their studies in the US. Finally, we also review the experience of Colombia’s Caldas Network, an example of a diaspora programme. In this third programme, the objective is to build bridges between those undertaking research at home, and Colombian nationals residing in the US, for example in universities. 186

Student Migration: Latin America–US

It should be clear at the outset that we do not evaluate these three programmes, nor do we have at our disposal good evaluations done by others (in some cases, partial evaluations are available). Therefore, we do not endorse any one of these examples. Our objective is more mundane: we simply want to describe the various programmes so as to highlight a few key features. The choice of the three programmes was dictated solely by the information available to us. There may be other, possibly better programmes in other Latin American countries. But even if this is the case, simply describing the three above programmes will already provide useful insights for the more general issue of the repatriation of skilled emigrants, or the establishment of networks if repatriation is not feasible or desirable.

7.4.1 Mexico’s Programme to Repatriate Researchers CONACYT has developed a programme ﬁnanced by Mexico’s federal government in order to repatriate qualiﬁed researchers who work abroad or who have just completed their degrees abroad. The programme has been operating since 1991 and its purpose is to expand and strengthen scientiﬁc output in Mexico by providing incentives to Mexican-born researchers who reside abroad, or who completed their graduate studies in foreign countries, to come back. The programme is targeted to experienced scientists as well as to doctoral and post-doctoral students. The beneﬁts of the programme include a one-year grant to the university employing the researcher in order to cover for the researcher’s salary and beneﬁts (those are speciﬁed by law), a monthly research grant (the amount of this grant is calculated based on a classiﬁcation by levels of research that we will mention below), and the transportation cost of bringing the researcher and their family, with their belongings, from the foreign country back into Mexico. The amount of the grant that is given to the university is calculated based on the researcher’s qualiﬁcations and past productivity—the amount is deﬁned by the Committee for Repatriation Evaluation. In cases where the researcher was previously working at an academic institution in Mexico, and is coming back to that institution after completing higher studies, the programme covers the difference in salary and beneﬁts between the former and the new research positions (for one year). Once researchers are repatriated, they are required to apply to become members of the Sistema Nacional de Investigadores (SNI hereafter). In order to become a member of the SNI, researchers must meet eligibility 187

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Figure 7.8 Repatriations by Year, Mexico, 1991–2001 Note: Programmed—Dec 2001. Source: Data from CONACYT. For more recent information on the programme, see www. conacyt.mx

criteria in terms of academic level and research experience. Candidates must have a PhD degree and they must also be published, at least during the three years preceding their application to the programme. Candidates should also give proof of substantial academic work for the 12 previous consecutive months and they must have published at least one journal article or a book chapter (or two co-authored articles). Finally, they must have ﬁnished a dissertation or thesis. Between 1991 and 2000, CONACYT funded the repatriation of 2,093 researchers at a total cost of US$56.95 million. 2 The annual repatriation ﬁgures are presented in Figure 7.1. On average, 205 researchers were repatriated each year at an annual cost of US$5.5 million. The number of repatriations was particularly high in 1992 and 1994, but dropped in 1995, probably due to the economic crisis that hit the country that year (making it less attractive for researchers to come back). By 2001 the programme was back to its 1992–94 level, as shown in Figure 7.8. See also Figures 7.9A and 7.9B on repatriations over 1991–2001. In terms of research ﬁeld, Figure 7.10 indicates that 35 per cent of all repatriated individuals do research in the ﬁelds of engineering and biology; 21.7 per cent in natural sciences; 15.5 per cent in exact sciences; 2 The amount was $569.50 million constant 2001 pesos. For calculations we are using the average 2001 exchange rate (10 pesos/US$). For more recent information on the programme, see www.conacyt.mx

188

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Others

Health

Engineering and biology

Social sciences

Exact sciences Natural sciences

Figure 7.9A Repatriations by Field of Research, Mexico, 1991–2001 Source: Data from CONACYT. For more recent information on the programme, see www. conacyt.mx

Others Germany Canada

United States

Spain

France Great Britain

Figure 7.9B Repatriations by Country of Origin, Mexico, 1991–2001 Source: Data from CONACYT. For more recent information on the programme, see www. conacyt.mx

189

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Figure 7.10 Repatriations by Year by SNI Status, Mexico, 1991–2001 Notes: SNI members; non-SNI members. Source: Data from CONACYT. For more recent information on the programme, see www. conacyt.mx

9.9 per cent in social sciences; 8.7 per cent in health; and 5.4 per cent in agriculture. As illustrated in Figure 7.10, although the researchers have been brought back from 33 different countries, 90 per cent of them came from the following six countries: the US (40 per cent); the UK (15 per cent); France (15 per cent); Spain (10 per cent); Canada (5 per cent); and Germany (4 per cent). Out of the total number of researchers who have beneﬁted from the repatriation programme, 94 per cent have joined public universities and the remaining 6 per cent have joined private universities. The repatriation programme beneﬁted 142 institutions of superior academic studies across all 32 Mexican states. The Universidad Nacional Autónoma de México (UNAM) was the institution with the highest number of repatriated researchers during the period of study (434, or 21 per cent of all beneﬁciaries), followed by the CINVESTAB-IPN with 122 beneﬁciaries, the Universidad Autónoma Metropolitana (UAM) with 96, the Instituto Nacional de Investigaciones Forestales, Agrícolas y Pecuarias (INIFAP) with 85, and the Universidad Autónoma de Nuevo León with 76 beneﬁciaries. The private institution with the highest number of repatriated researchers was the Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM) with 72 beneﬁciaries. All other academic institutions, both public and private, received less than 50 beneﬁciaries during the period of study. 190

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Repatriated researchers must in principle become members of the SNI. The purpose of the SNI, which is also managed by CONACYT, is to stimulate and foster quality research in Mexico. By 2000, the SNI had a total of 7,447 registered researchers, out of which 1,080 (15 per cent of all members) were enrolled via the repatriation programme over the period 1991–2000. However, according to CONACYT, only half (54 per cent) of all repatriated researchers become active members and beneﬁciaries of the SNI. To the extent that repatriates satisfy the standards set by SNI, the programme does indeed have the potential to contribute to the research conducted in Mexico. At the same time, the fact that almost half of all repatriated researchers do not become active members of the SNI suggests errors in the targeting of skilled individuals with research potential which appear to be high. Of course, this does not mean that the repatriated researchers who do not actively participate in the SNI do not have high qualiﬁcations and talent. It may simply mean that they may have chosen not to use their human capital in research oriented activities. Figure 7.10 shows the number of repatriated researchers that have been incorporated into the SNI during 1991–2000 (the numbers for 2000 are partial since some researchers repatriated in 2000 may join the SNI in 2001). Members of the SNI are classiﬁed into different levels according to research productivity, as measured by both the quality of the research and the experience of the researcher. The idea behind this classiﬁcation is to subsidize quality research by giving a monthly research grant to beneﬁciaries according to some predetermined criteria (this is thought to facilitate ﬁnancially full-time research, as opposed to, say, consulting). The classiﬁcation in levels is as follows:

r

r

SNI candidates and Level I: The individuals must have obtained a doctoral degree and participated actively in quality research. They must also have teaching experience and mentored at least one academic dissertation. The amount of the grant for SNI candidates is equivalent to three times the prevailing minimum wage, and for researchers of Level I it is equivalent to six times the prevailing minimum wage (note that the level of the minimum wage in Mexico is relatively low). Level II: Besides meeting the requirements speciﬁed for Level I, the researcher must have produced original research acknowledged by others. The researcher must have records of active participation in promoting science and technology. The grant for this level is equivalent to eight times the prevailing minimum wage. 191

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r

r

Level III: On top of the requirements for the Level II, the researcher must be a leader in their ﬁeld, nationally and internationally. They also must have contributed to the training of other researchers/scientists. The amount of the grant for this level is equivalent to 14 times the prevailing minimum wage. Emeritus beneﬁciary: the researchers must be at least 60 years old, have been classiﬁed in Level III, and been nominated by three other researchers of Level III. This award is meant to be given to the most distinguished Mexican scientists. Emeritus beneﬁciaries are subject to the evaluation and positive recommendation of the SNI commission. No members from the operating SNI commission can be nominated to become an emeritus researcher while they are on the commission.

Besides these general requirements, there might be additional criteria depending on the ﬁeld of specialization. Once a researcher is accredited, he/she receives the grant starting on the 1 July after the award is received. The length of the beneﬁt is three years for researchers of Level I and II, and four years for researchers of Level III. If a researcher is accepted to the SNI for three consecutive applications at Level III, the validity of the next grant is eight years. For emeritus beneﬁciaries, the grant is assigned for life. There are two exceptions in which the grant can be extended for ﬁve years: one is for SNI members who join the system for the ﬁrst time and who have come from abroad after acquiring their doctoral degree or who acquired their doctoral degree in an academic institution located in the federal district. The other exception is for researchers who are 65 years of age or more and who have been in the SNI for more that 15 years. One extra year can also be given to female researchers who become pregnant during their award. Currently, the SNI programme covers 7,000 researchers and it costs approximately US$50 million per year. (See Table 7.3.)

7.4.2 Colombia’s COLFUTURO Programme to Study Abroad and Return COLFUTURO is a small programme that ﬁnances 120 Colombian professionals per year to pursue graduate studies abroad and return to Colombia thereafter. The programme was established as a nonproﬁt foundation in 1991 and it operates through contributions from both the public and private sectors. The objective is to help students with high academic standards to pursue graduate studies abroad among the most prestigious 192

Student Migration: Latin America–US Table 7.3 Yearly Cost of SNI Grants and Number of Beneﬁciaries, Mexico, 1990–99 Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999∗

Cost (1999 pesos, thousands)

Number of beneﬁciaries

Cost US$/per person

436,995 445,899 456,476 488,756 585,589 500,066 478,391 563,318 546,085 573,279

5704 6165 6602 6233 5879 5868 5969 6278 6742 7252

5,890 5,560 5,320 6,030 7,660 6,560 6,170 6,900 6,230 6,080

Source: Data from CONACYT. Estimates for 1999 were preliminary at the time this study was written. For more recent information on the programme, see www.conacyt.mx

international universities. But the programme is in principle designed to beneﬁt those students who want to return to Colombia and live and work within the country after completing their degree. COLFUTURO operates by giving its beneﬁciaries a so-called ‘scholarship credit’ to cover part of the expenses of studying abroad. Beneﬁciaries are selected out of a pool of candidates according to academic abilities and other accomplishments. The programme funds only graduate studies or ﬁeld specializations (essentially master’s and PhD programmes). For the academic year starting in September 2002, for example, 163 students received grants selected out of a pool of 273 candidates by a committee including professors, entrepreneurs, and researchers. Each student receives a maximum of US$25,000 per year for a maximum of two years. The amount of the scholarship credit that is given to each beneﬁciary is determined according to the cost of the academic programme and the beneﬁciary’s own resources. Eligible expenditures include a round-trip plane ticket, installation costs for a maximum of US$2,000, tuition, medical insurance, and living expenses for as much as US$1,300 per beneﬁciary per month (if the beneﬁciary has dependants this amount may be increased by up to 25 per cent), books and materials such as computers, instruments, etc., for up to US$2,000 per year, and ﬁnally related taxes. A mandatory debt insurance is included in the scholarship credit in case the beneﬁciary is not able or willing to paying back his or her debt. Payments are normally made directly by COLFUTURO to service providers. The study period or PE (periodo de estudios) is the time during which the beneﬁciary completes his/her studies. This period must be speciﬁed 193

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by the beneﬁciary according to his/her own programme. The PE can be discontinuous but can not exceed 60 months from the ﬁrst disbursement. Any change in the PE must be reported in writing to COLFUTURO. The ordinary study period or POE (periodo ordinario de estudios) is the period for which COLFUTURO ﬁnances the beneﬁciary. This period lasts a maximum of 24 months and cannot be extended. All beneﬁciaries must accept the ﬁnancial terms and conditions of the COLFUTURO scholarship loans, but COLFUTURO may provide relief for up to 45 per cent of the debt. In order to become eligible for the relief, the beneﬁciary must return to Colombia within 90 days of the completion of their studies and their return must be formalized by a personal visit to COLFUTURO, at which time the beneﬁciary is interviewed by a delegate of the foundation. The beneﬁciary must remain in Colombia during some predetermined time, referred to as the PRC (periodo de residencia obligatoria en Colombia). The PRC is equivalent to the Standard Payment Plan, PAO (período de amortizacion ordinaria) or two times the POE plus 12 months, whichever ﬁgure is higher. The amount to be repaid by the beneﬁciary is deﬁned by COLFUTURO on the basis of the money that was disbursed during the POE minus an amount that is condoned. The condoned amount includes: (a) the interest accrued during the POE; (b) 25 per cent of the overall debt for beneﬁciaries who study for an MBA or any business related master’s degree; (c) 35 per cent for those who earn another master’s degree; and (d) 45 per cent for those who earn a doctoral degree. In addition, beneﬁciaries can receive an extra 10 per cent relief on their debt after they work for 12 consecutive months in the public sector, as researchers or in locations that are different from Bogotá, Cali, Medellín, Barranquilla, and their surrounding municipalities. There may also be some additional amounts condoned through joint programmes between COLFUTURO and academic institutions such as the British Council, Alberta University, University of Amsterdam, and some local universities in Colombia. In all cases, interest accrued during the PE, the POE, and the PRC is not condoned. The interest rate for COLFUTURO’s scholarship credit is low, at approximately 4 per cent a year in US dollars. The maximum amortization time is 60 months and the minimum monthly payment US$250. In cases where norms and regulations of the programme are violated by the beneﬁciary (for example if the beneﬁciary does not come back to Colombia), all beneﬁts and amounts condoned are suspended. This also means that the beneﬁciaries must remain in Colombia during the PRC, must give proof of good academic standing during the POE and must use the loan properly. Under 194

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violations of the agreement, the loan is under an accelerated amortization plan, which basically implies a full and immediate repayment of the debt. Any delays or failure to pay are treated according to the Colombian law.

7.4.3 Colombia’s Caldas Network for the Diaspora The presentation of the Caldas Network (or the Colombian Network of Scientist and Engineers Abroad, CN hereafter) given here follows closely the material gathered by Meyer et al. (1997). The CN was founded in 1991 by COLCIENCIAS, the governmental agency ﬁnancing research. Previous isolated initiatives took place before the CN came into operation, but many failed due to a lack of institutional backing. The CN has some key characteristics necessary for success, such as worldwide permanent communication, autonomous peers’ organization towards project organization, and institutional support. The CN was created when Colombia was particularly interested in opening up its economy after a decade of economic protectionism. During the ﬁrst years of the 1990s, there was a higher emphasis placed on science and technology with the aim to increase Colombia’s competitiveness. Expatriates, in particular those with access to knowledge and technology, became an institutional priority. COLCIENCIAS, which already ﬁnanced research projects within the country, became the agency in charge of organizing diaspora related activities within the National System of Science and Technology (NSST) and for ensuring that they developed in accordance with its planning. The ﬁrst step towards the creation of the CN was a communication process with experts living abroad in order for them to provide ideas and suggestions to their peers in the source country. Expatriates met informally in their country of residency, and these informal groups of Colombian scientists, students, and engineers, constituted what would soon becomes the ‘nodes’ of the CN. The groups ignored what others were doing in other parts of the world. The groups became better integrated later thanks to email. But already in 1990, an electronic list of Colombians abroad called ‘Colext’ was established. This list gathered a signiﬁcant number of expatriates connected to Bitnet, an exclusively academic electronic network. In the beginning, the list was used more for social than professional exchanges. At the end of 1990, the members on the list located in New York City decided to found PECX, the Association of Colombian Students and Professionals Abroad. PECX later became the ﬁrst node of the CN in the US. In 1991, the general manager 195

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of COLCIENCIAS built on these preliminary efforts to contact and prepare ﬁrst meetings with expatriates in Paris, Madrid, and Mexico. In 1993, the electronic list ‘R-Caldas’ was created for academic exchanges. A website was created later, with chat rooms about topics of interest, such as biology, biomedicine, physics, etc. Documents can be downloaded and participants can publish their views on the website. Some high quality messages are eventually published by Colciencias. Most messages are under ﬁve pages in length, but with rather dense material. Between 1993 to 1995, the number of participants in the CN nearly doubled every year, as did the number of messages posted. By 1995, there were 21 nodes in operation for the CN, mostly in OECD countries, but also in Latin America (Argentina, Brazil, Mexico, and Venezuela), and in Eastern Europe (Poland and Hungary). Nodes are autonomous, and they often start with high levels of enthusiasm. But this is often followed by a period of disillusion, especially when there is apparently a low level of impact and participation. Some nodes request funding from COLCIENCIAS, which is not always feasible; others prefer not to receive funding. In 1994 and 1995, an ORSTOM-UNC research team conducted a survey in order to establish the proﬁle and characteristics of the Colombian diaspora. Some 500 responses were obtained from 1,000 survey forms distributed to Colombian intellectuals abroad. The results of the survey indicated the presence of a diaspora mainly in the US, Canada, and Western Europe. Smaller groups were located in Eastern Europe and in the Asia-Oceania regions. The average time spent abroad was 5.5 years, and the mean age of the respondents was 37 years. Many respondents were enrolled in PhD or postdoctoral programmes, and 80 per cent had a master’s degree. Three out of four respondents declared that they had left Colombia to study abroad, with the rest mentioning professional or sociopolitical reasons. Emigration was not described as deﬁnitive, but rather as a step for professional and personal enrichment, with three out of four respondents declaring their intention to go back to Colombia one day. The survey suggested, however, a lot of dispersion in terms of the ﬁelds of scientiﬁc inquiry among the diaspora (a likely weakness in terms of building synergies). Most respondents stated that they liked their work and mentioned the value of international contacts and mobility, access to state of the art technology, and career perspectives. Some 90 per cent of the respondents knew about the CN, but only 68 per cent were participating. More generally, the survey identiﬁed three groups or statistical clusters, each representing roughly one-third of the sample. The ﬁrst group did not show interest in the diaspora. The second group 196

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showed some interest but did not want to participate actively. The last group wanted to be (and was) more involved. Ultimately, the purpose of the CN is the concrete realization of joint projects between researchers in the diaspora and Colombian research teams (see Box 7.4 for three examples of such projects, some successful and others less so). Clearly, relying on the diaspora is one option to transform brain drain into brain gain. However, while the option is in principle inexpensive and ﬂexible, in order to achieve its purpose effectively it does require commitment, strategic management and institutional participation. These three factors will be crucial to ensure the sustainability and success of the idea. Furthermore, without a more thorough evaluation of the impact of such programmes, it is difﬁcult to assess their impact, and decide whether more efforts should be put into expanding or changing them over time.

Box 7.4 DOES THE CALDAS NETWORK WORK? THREE EXPERIENCES It is very difﬁcult to assess whether structures such as the CN are actually working. Some experiences show the potential of the network, but others suggest difﬁculties in initiating and carrying out on a sustainable basis collaborative research projects between Colombian scientists at home and abroad. Below, following Meyer et al. (1997), we brieﬂy describe three experiences to illustrate both the potential and the limits of the network. Bio-2000. In 1993, Colombian researchers based in Europe and North America explored the possibility to launch a R&D project in biomedical applications of physics (physics of particle detection, electronics, informatics, biology, nuclear and molecular biomedicine). With the support of the Universidad del Valle in Cali, an electronic list originating from R-Caldas was put in place in order to deﬁne the project. The list initially mobilized several nodes (Switzerland, New York, Houston). After two years, the idea of a large collaborative project was abandoned in favour of smaller independent joint studies. Still, ﬁve Colombian universities participated along with the CERN and researchers outside Colombia. Exchange programme. The CN funds a short term exchange programme for researchers in which Jorge participated. A chemist, Jorge married a Swedish national and stayed in Sweden under contract with a medical lab. Jorge and a microbiologist based in Bogotá designed a collaborative project to be carried out in Bogotá during a six month stay. According to the two scientists, the CN was not necessary for establishing the connection between them since they knew each other before. But Jorge’s stay in Colombia was funded by the CN, and it led to the development of a user-friendly technique for separating proteins. The results were presented at international conferences and published in a reputable journal. The difﬁculties started when Jorge returned to Sweden. His lab was working on a completely different line of research and he had difﬁculties in catching up and submitting proposals in order to obtain research grants and thereby secure his salary. The CN-funded

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Case Studies Box 7.4 (Continued) project, while providing international recognition, nearly jeopardized his position in Sweden. Since his return, he has not been able to pursue the collaboration further with his Colombian friend. This example shows the difﬁculties in maintaining long term contacts. Technology transfer. The purpose of the collaboration between a university centre in Paris and one in Cali was to build in Colombia a robot for industrial purposes. As the expertise in this ﬁeld within Colombia was limited, the idea was to learn from the French. Pieces of a robot—to be assembled in Colombia—were transferred and the sophisticated know how in order to make it work was transferred as well. The Colombian engineer living in France managed to involve the manager of his institution and several French colleagues. He obtained funding from the French Government, which in turn convinced COLCIENCIAS to co-ﬁnance. Under joint direction for their dissertation (with one professor supervising the work in Colombia and another in France), the project enabled students to pursue a PhD (the Universidad del Valle had no independent PhD programme). The robot does work, and the project yielded unexpected developments in Colombia, since the country now has a dynamic group in automation and robotics that is able to initiate further cooperative projects. It has started to build programmes with German teams, for instance. (Source: Meyer et al. 1997)

7.5 Conclusion For developing nations, making the best of student emigration is a challenge. Countries would like to see the students return to be productive researchers at home, but this is not easy if the research infrastructure and the pay scale at home is not competitive enough. In this chapter, after a brief review of the literature on brain drain and brain gain, we have presented empirical results on whether student migration to the US leads to brain drain or brain gain. The results were from a reduced form model taking into account the cost of migration and its potential beneﬁts through a pull effect on tertiary enrolment at home (other beneﬁcial effects include the remittances that migrants send to their home country, and the advantage of having networks abroad, but these have not been investigated here). The basic idea is that if there were only a brain drain, an increase in the number of students going abroad would be negatively correlated with domestic tertiary enrolment ratios, after controlling for a range of variables and the endogeneity between the two variables of interest. The results from the analysis suggest that at the world level, student migration to the US may indeed generate a drain if the students who study in the US do not come back home. 198

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Thereafter, we described three programmes aiming to turn the risk of brain drain into a gain, or more generally, to optimize brain circulation. The ﬁrst programme is managed in Mexico by CONACYT. The programme targets researchers who have recently completed their PhDs. It pays to the university hiring the researcher one year of salary, and it also provides beneﬁts for the researcher (higher pay and repatriation expenditures). The programme is relatively large, and it is twinned with another programme providing higher pay to productive local researchers, whether they have studied abroad or not. Next, we described a stipend programme in Colombia, which is similar in spirit to the US Fullbright programme. Students wishing to study abroad can apply for loans, but they need to come back, in which case part of the loan is condoned. The programme is funded mostly by private donors. Finally, we described Colombia’s Caldas Network, a programme aiming to create links between Colombian researchers at home and abroad. According to a survey implemented in the mid-1990s, up to two-thirds of the Colombian researchers living abroad are not especially interested in working together with researchers back home, but this still leaves one-third who are interested in such collaboration. An attractive feature of the Caldas Network is that it does not require individuals to return home. However, this attractive feature has a drawback: it is often difﬁcult to sustain long-term active research collaborations. The evidence provided in this chapter is not conclusive in terms of assessing whether there is a deﬁnite brain drain or brain gain in developing countries from international student migration to the US, since we do not have data on return migration. What is clear is that international migration of students will continue, so that it will be important to conduct rigorous evaluations of the programmes put in place by countries in order to maximize the gains from brain circulation of some of their best educated citizens.

References Agarwal, V.B. and D. Winkler (1985a). ‘Foreign Demand for United States Higher Education: A Study of Developing Countries in the Eastern Hemisphere’, Economic Development and Cultural Change, 33(3): 623–44. Agarwal, V.B., and D. Winkler (1985b). ‘United States Immigration Policy and Indirect Immigration of Professionals’, Economics of Education Review, 4(1): 1–16.

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Case Studies Angel-Urdinola, D., T. Takeno, and Q. Wodon (2005). ‘Does Student Migration Lead to Brain Drain?’, mimeo. Washington, DC: World Bank. Autor, D., L. Katz, and A. Krueger (1998). ‘Computing Inequality: Have Computers Changed the Labor Market?’, Quarterly Journal of Economics, 113(4): 1169– 213. Becker, G.S. (1964). Human Capital: A Theoretical and Empirical Analysis, With Special Reference to Education. New York: National Bureau of Economic Research and Columbia University Press. Beine, M., F. Docquier, and H. Rapoport (2001). ‘Brain Drain and Economic Growth: Theory and Evidence’, Journal of Development Economics, 64: 275–89. Bhagwati, J.N. and W. Dellafar (1973). ‘The Brain Drain and Income Taxation’, World Development, 1: 94–101. Bhagwati, J.N. (1976). ‘The Brain Drain’, International Social Science Journal, 28: 691– 729. Borjas, G. (1987). ‘Self-Selection and Earnings of Immigrants’, American Economic Review, 77: 531–53. Borjas, J., S.G. Bronars, and S.J. Trejo (1992). ‘Self-Selection and Internal Migration in the United States’, Journal of Urban Economics, 32: 159–85. Brastberg, B. (1995). ‘Legal versus Illegal US Immigration and Source Country Characteristics’, Southern Economic Journal, 61: 715–27. Card, D. and T. Lemieux (2002). ‘Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis’, Quarterly Journal of Economics, 116(2): 705–46. Carrington, W.J. and Enrica Detragiache (1998). ‘How Big is the Brain Drain?’, IMF Working Paper, 98/102. Washington, DC: International Monetary Fund. Grubel, H.G. and A. Scott (1966). ‘The International Flow of Human Capital’, American Economic Review, 56: 268–74. Grubel, H.G. and A. Scott (1977). The Brain Drain: Determinants, Measurement, and Welfare Effects. Waterloo, Ontario: Wilfrid Laurier University Press. Huang, W.-C. (1988). ‘An Empirical Analysis of Foreign Student Brain Drain to the United States’, Economics of Education Review, 7(2): 231–43. Johnson, H.G. (1967). ‘Some Economic Aspects of Brain Drain’, The Pakistan Development Review, 7: 379–411. Katz, L. and Murphy, K. (1992). ‘Changes in Relative Wages, 1963–1987: Supply and Demand Factors’, Quarterly Journal of Economics, 107(1): 35–78. Kenen, P.B. (1971). ‘Migration, the Terms of Trade and Economic Welfare in the Source Country’, in J.N. Bhagwati et al. (eds), Trade, Balance of Payments and Growth. Amsterdam: North-Holland. Meyer, J.B. et al. (1997). ‘Turning Brain Drain into Brain Gain: The Colombian Experience of the Diaspora Option’, Science Technology Society, 2: 285– 315. Psacharopoulos, G. (1975). ‘Estimating Some Key Parameters in the Brain Drain Taxation Model’, Journal of Development Economics, 2(3): 309–18.

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Student Migration: Latin America–US Schultz, T.W. (1960). ‘Capital Formation by Education’, Journal of Political Economy, 68: 571–83. Stark, O., C. Helmenstein, and A. Prskawetz (1997). ‘A Brain Gain With A Brain Drain’, Economics Letters, 55: 227–34. Tobin, J. (1974). ‘Notes on the Economic Theory of Expulsion and Expropriation’, Journal of Development Economics, 1(1): 7–18. UNCTAD (1975). The Reverse Transfer of Technology: A Survey of its Main Features, Causes and Policy Implications. New York: UNCTAD.

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8 International Mobility of Health Professionals: Brain Drain or Brain Exchange? Stephen Bach

8.1 Introduction There is increased attention and widespread controversy surrounding the international movement of health professionals. One strand of debate considers the health workforce shortages affecting some of the world’s poorest countries, especially in Sub-Saharan Africa (SSA), which is most affected by the HIV/AIDS pandemic. The second strand of debate focuses on the destination countries of international migrants and explores the factors prompting the increased employment of overseas health professionals and the consequences for health systems. Underlying these developments is a recognition that the mobility of health professionals is an integral component of the globalization process whose consequences continue to be ﬁercely contested (Stiglitz 2004; Wolf 2004). The high proﬁle and politically sensitive nature of health professional mobility was reﬂected in the May 2004 World Health Assembly which passed a resolution urging member states ‘to develop strategies to mitigate the adverse effects of migration on health personnel and minimize its negative impact on health systems’ (WHO 2004). The World Health Organization (WHO) is not alone in focusing on this issue with a variety of international organizations concerned with development, employment conditions, human rights, and trade directing attention towards the migration of health workers (see ILO 2004; PHR 2004; Van Eyck 2004).

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The debate is polarized because at one end of a continuum advocates of international health mobility point to the beneﬁts for individuals in enhancing their career and earnings opportunities by moving to other countries, suggesting that source countries beneﬁt from remittances and other components of knowledge transfer. Moreover, free movement of labour is a fundamental and inalienable right of individuals, irrespective of the circumstances that they leave behind. For key custodians of the global economy, including the World Trade Organization (WTO), the migration of professionals forms an integral and beneﬁcial component of globalization (Adlung 2002). By contrast critics accuse the richer countries of the North as acting like a vacuum cleaner, unethically sucking in labour from some of the poorest countries in the world that can ill-afford to lose health sector staff (PHR 2004).

8.2 Health Service Professionals: A Special Case? There are several distinctive features of the debate concerning health professional mobility that suggest its social consequences may need to be considered as a distinctive case that requires different policy goals and interventions from the circulation of other professional occupations (Akire and Chen 2004: 3). In a number of countries, the migration of health professionals has exacerbated shortages, undermining the capacity of countries to deliver adequate healthcare for its citizens. In SSA, a shortage of nurses and doctors represents a major obstacle to scaling up AIDS treatment and is hindering the achievement of Millennium Development Goals (PHR 2004: 22). Health services frequently require health professionals to be located in the same physical location as their patients. This is not the case for many other services and manufactured goods. Consequently whereas health professionals migrate to employment opportunities, in other sectors more ‘source’ country employment has developed (e.g., call centres). Discussions of ‘brain circulation’ (the return of talented people) and ‘brain exchange’ (when two countries exchange highly skilled personnel) frequently draws on the experience of the information technology (IT) industry. Migration of IT professionals, however, has not undermined an existing industry in the source country but reﬂects strong growth in demand for IT professionals overseas. By contrast health services are an essential service that are needed in source and destination countries. Moreover, shortages in destination countries often reﬂect poor working 203

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conditions as much as an absolute numerical shortage of appropriately qualiﬁed staff. Finally, the mobility of health workers is distinctive because it is inﬂuenced strongly by the regulatory frameworks of individual governments that control the training, recruitment, and deployment of health professionals, which gives rise to particular national patterns of migration. The centrality of government regulation is a signiﬁcant difference from the migration patterns of, for example, IT workers and this provides greater scope for policy interventions. Health sector work is characterized by both a highly interdependent labour process and the proliferation of specialized professional roles with long lead times in terms of training. These features can jeopardize health provision because even small scale changes in migration ﬂows among specialist groups (e.g., intensive therapy unit nurses) can erode the capacity of a country’s health system. The movement of health professionals therefore produces externalities which inﬂuence the functioning of health systems that extend beyond the private costs and beneﬁts that accrue to individual health workers. This chapter considers the mobility of health professionals focusing on doctors and nurses that have been in the forefront of current debate about health worker migration. The chapter examines patterns of international health profession mobility; considers the main determinants of these patterns of mobility and the effects of this mobility; and outlines policy responses.

8.3 Patterns of Mobility 8.3.1 Data and Sources There is widespread agreement that statistics on doctor and nurse migration have been fragmentary and incomplete (OECD 2003: 19; Diallo 2004; WHO 2006: 98). The most common difﬁculties highlighted include the variety of sources used by countries to record migrants (e.g., work permits and population registers) and the absence of data linked to occupation. The establishment of accurate data on stocks and ﬂows of health professionals remains a major challenge that continues to inhibit effective migration management. Two main sources of data are used. A ﬁrst source is derived from immigration data in which entry visas and work permits provide insights into the ﬂow of health professionals by occupation and country of origin. 204

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Second, because of the educational and certiﬁcation requirements governing medical and nursing employment, indications of the ﬂows of migrant doctors and nurses can be gauged from the numbers of nurses or doctors registered to practice in a particular host country. Registration data indicates the intent to work rather than actual employment status (Buchan 2002: 10). Consequently some health workers join the professional register but work in less skilled ‘assistant’ roles or are employed as live-in care givers and nannies. In many countries registration applies to qualiﬁed health professionals and excludes assistant nurses and auxiliaries which are an important component of the health sector workforce (Diallo 2004: 605). For example, in the majority of Latin America countries between 60–80 per cent of the nursing workforce is comprised of nursing auxiliaries with only basic training (Malvarez and Castrillon 2005: 20–1). Despite these limitations because registration data has usually been compiled on a consistent basis over time, it is a widely used source of trend data on ﬂows of professional staff. Similarly veriﬁcation data, which refers to when an overseas regulator checks that an individual is on their home country’s professional register, is often used as an indicator of intention to work overseas. Veriﬁcation data provides insights into which countries are actively recruiting overseas (NMC 2004: 12). There is little systematic analysis or agreement about the degree to which health professional mobility represents a temporary or permanent phenomenon. Mobility is a complex process in which professionals shift from country to country. For example, a Filipino nurse may move initially to the Gulf States, obtain a job in the UK in the private sector, transfer to the National Health Service (NHS), and ultimately move to Canada or the US. The duration of migration has become an integral element of the policy response to health professional migration as policymakers seek to convert permanent brain drain into temporary brain circulation. A second distinction relates to the supply side characteristics of the home country’s labour market and the degree to which the migration of health professionals represents a systematic attempt to train a surplus of doctors and nurses who are encouraged to seek ‘voluntary’ employment abroad. The Philippines is the best known example of this approach, but is being emulated by India, Indonesia, and Malaysia (Kingma 2006: 21). In this type of case migration does not necessarily undermine the existing health system, although it may create longer term workforce imbalances if demand from overseas declines. By contrast for countries that have a scarcity of health workers the ‘involuntary’ movement of health professionals has a more detrimental impact on the health system 205

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(Forcier et al. 2004: 6). Aggregate date, however, needs to be treated with caution because surpluses may coexist with shortages, for example between rural and urban areas, between private and public facilities, or because of insufﬁcient health service resources to fund posts. There is an increased awareness of the important role that gender plays in international migration (UNFPA 2006). This reﬂects the increased proportion of women that are migrants alongside increased recognition that the experience of migration differs for men and women (Taran and Geronimi 2003: 10). It has also been argued that structural adjustment programmes and other forms of health sector restructuring have a disproportionate effect on women’s employment and working conditions which provides the context for increased mobility in female dominated care occupations (Van Eyck 2004: 9–11). The migration of women reinforces what Hochschild (2000: 131) has termed global care chains, ‘a series of personal links between people across the globe based on the paid or unpaid work of caring’. The implication is that policy analysis of migration has been gender-blind, ignoring the emotional labour expended by women and the stress they confront as part of transnational families in which ﬁlial obligations are altered rather than severed. Women migrants are not a homogenous group, however, female migrants tend to be more reliable remitters, despite being deskilled in employment (IOM 2002: 10).

8.4 Dimensions of Health Professionals’ Mobility In the 1950s and 1960s many countries expanded their welfare states rapidly and this was accompanied by increased mobility. Fears of a brain drain prompted WHO to undertake a detailed study of the ﬂow and stocks of physician and nurse labour force in 40 countries (Mejia et al. 1979). They concluded that in 1972 about 6 per cent of the world’s physicians (140,000) were located in countries other than those of which they were nationals. Signiﬁcantly approximately 86 per cent of all migrant physicians were found in ﬁve countries: Australia, Canada, West Germany, the UK, and the US. For nurses, the stock of those overseas was estimated to be lower at about 5 per cent, but the main recipient countries were the same as for physicians with the exception of Australia (Mejia et al. 1979: 399–400). Since the Mejia study the mobility of health professionals has increased. Although much recent analysis focuses on the ﬂow of health professionals, it is important not to lose sight of the cumulative 206

Health Professionals Table 8.1 Origins of Foreign-Trained Physicians in Selected OECD Countries Country (year)

% of foreign-trained physicians

Top 3 countries of origin (as a proportion of foreign-trained physicians, %)

Australia (1998)

21.4

UK (39) Asia (28) New Zealand (12)

Canada (1998)

20.0

UK (32) South Africa (9.7) India (9.6)

Switzerland (2001)

19.1

Germany (59.7) Yugoslavia (13.1) Belgium (7.4)

United Kingdom (2001)

12.6

India (18.3) Ireland (15.2) South Africa (7)

United States (2001)

27.0

India (19.5) Pakistan (11.9) Philippines (8.1)

Source: EUROSTAT Labour Force Survey cited in Forcier et al. (2004).

impact on the stock of health professionals as illustrated in Table 8.1 for physicians. It is among registered nurses, rather than physicians, that increased mobility is most marked and is having the greatest impact on source and destination countries. It is the health crisis in SSA in particular that is galvanizing policymakers to place a high priority on managing migration. This brief synthesis of general trends in health professional mobility needs to recognize that a relatively small number of countries have a disproportionate impact on patterns of mobility.

8.5 Source Countries The Philippines has a central role in the political economy of migration and has ﬁgured prominently as a source country for nurses and to a lesser degree, physicians. The Philippine government has actively promoted labour migration and the 2001–04 Medium Term Philippines Development Plan, views overseas employment as a key source of economic growth (Go 2003: 350). This policy is based on the premise that migration eases domestic unemployment, brings in substantial dollar remittances and increases productivity by enabling skill transfers (PSLINK 2003: 22). During a period when there has been increased sensitivity about ethical 207

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recruitment of health sector staff, deliberate overproduction of nurses has allowed host governments to view recruitment from the Philippines as compatible with ethical guidelines (Aiken et al. 2004: 75). During the mid-1970s, 13,480 physicians worked in the Philippines compared to 10,410 Philippines-trained physicians that were employed in the US (see Goldfarb et al. 1984: 1–2). Overseas employment of nursing staff started slightly later but has increased markedly, stimulated by the expansion of nurse supply and the strong demand for Filipino nurses because of their proﬁciency in English and their college-based education. In 1970, there were almost 40,000 registered nurses in the Philippines, but by the end of 1998 this total had increased to approximately 306,000 registered nurses, reﬂecting the increase in the number of schools of nursing from 63 in the 1970s to 198 in 1998 (Corcega et al. 2002: 3). The number of schools of nursing has continued to expand rapidly, to 305 by 2003, raising questions about quality assurance and the degree to which all nurse graduates have gained sufﬁcient hands-on practice (PSLINK 2003: 21). The Philippines government is considering tighter regulation to ensure that the standing of Filipino nurses is not jeopardized by the increasing number of nursing schools. These trends have enabled a massive increase in overseas employment, to the extent that an estimated 85 per cent of employed nurses (over 150,000) are working internationally (Aiken et al. 2004: 75). Over 70 per cent of nurse graduates leave the country each year and this contributes to the annual estimated outﬂow of 15,000 nurses per annum with Saudi Arabia, the UK, the US, Singapore, and Libya being the most common destinations for Filipino nurses (Adversario 2003; PSLINK 2003: 9). Approximately 2,000 doctors are retraining as nurses because of the relative ease in gaining employment in the US compared to the complete retraining and expense associated with gaining employment as doctors (PSLINK 2003: 16). This outﬂow is reinforced by unattractive home working conditions and funding shortages which contributes to the estimated 30,000 unﬁlled nursing positions in the Philippines, despite substantial levels of underemployment among registered nurses in the Philippines (OECD 2003: 75). The Philippines is not the only country within the Asian region that is an important source of health professionals. During the 1970s, India was the largest source country of doctors (Mejia et al. 1979: 277). This has ensured that Indian trained doctors continue to make up a substantial proportion of the stock of doctors in Canada, the UK, and the US (see Khadria 2002: 32; and Table 8.1). Since Mejia’s study, India has become a 208

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more important source country for nurses as indicated by the Department of Health in the UK’s agreement with the Indian government to recruit from India (especially mental health nurses). During 2003, the US’s Commission on Graduates of Foreign Nursing Schools (CGFNS) opened a new examination centre in Cochin, Kerala state, India (CGFNS 2002), facilitating entry to the US labour market. It is among African countries that the effects of brain drain have exacerbated a deepening health sector human resources crisis. This catastrophe is reﬂected in the extent to which the proportion of health workers to the population has stagnated or declined in nearly every African country since 1960 (see Liese et al. 2003; PHR 2004). In conjunction with other aspects of the working environment, migration has been a contributory factor to the problems faced by African health systems, as signiﬁed by high vacancy rates. In Ghana, the medical vacancy rate in the public sector was 47 per cent in 2002 and was even greater (57 per cent) for registered nurses (Dovlo 2003: 2). Data from Zambia and Zimbabwe indicate a similar picture of attrition from public health employment, with losses of 15– 40 per cent per annum. During the 1990s, 1,200 physicians were trained in Zimbabwe; only 360 were still practising in the country by 2001. Pharmacists comprise another professional group that are emigrating from African countries in increased numbers (PHR 2004: 19–20). The scale of South African migration has increased substantially in recent years, with many registered nurses moving to the UK (see Table 8.3). Conﬁrmation of this trend can be gleaned from the number of nurses seeking veriﬁcation of their qualiﬁcations prior to applying for overseas employment which increased from 511 in 1995 to 2,543 in 2000 (Xaba and Phillips 2001: 2–3). South Africa has also been a signiﬁcant host country for health professionals from other parts of Africa and there are 450 Cuban physicians practising in South Africa. Since October 2001, however, South Africa has committed itself not to recruit nurses or physicians from other countries that face shortages, except under speciﬁc agreements with source country governments, which has provoked criticism in South Africa (Dumont and Meyer 2004: 134). In Europe, historical links play a part in explaining ﬂows of physicians between North Africa and France. The European Union (EU) has promoted the free movement of labour within the EU but the liberalization of labour markets and the mutual recognition of qualiﬁcations is a necessary but not sufﬁcient condition to stimulate mobility. The movement of nurses and physicians between countries remains at a relatively low level partly attributable to linguistic and cultural barriers 209

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(Jinks et al. 2000). The context is altering, however, since the enlargement of the EU to incorporate ten countries from Central and Eastern Europe in April 2004. Enlargement is encouraging more mobility, for example, from Poland and the Czech Republic, especially among physicians. In Latin America, public sector restructuring, the social and economic crisis in many countries, and divergent economic performance between countries, has stimulated increased mobility within Latin America (Solimano 2003: 57; Keeling 2004: 12–13). In the health sector there is considerable movement between poorer countries such as Ecuador and Peru to countries with higher levels of per capita income, notably Chile. Jobs in the public sector are being made available to migrant workers because increased numbers of Chilean health professionals are moving out of municipal employment into the private sector (Van Eyck 2004: 32). Latin American and Caribbean countries also comprise an important source of health workers for the US, especially as nursing aides. In 2000, Mexican immigrants comprised the largest group of overseas born nursing aides in the US (13 per cent) followed by Jamaica and Haiti (22 per cent). By contrast these countries are relatively under-represented among overseas physicians and registered nurses employed in the US (Lowell and Gerova 2004: 485). Overall, although analysis of mobility of health professionals in Latin America has been less comprehensive than in other regions there are signs of increased mobility. In comparison to some regions, such as SSA, there is less attention focused on shortages of nurses and more concern with imbalances between rural and urban areas, public and private institutions, and between higher and lower income countries within Latin America (Malvarez and Castrillon 2005).

8.6 Destination Countries The US is regularly identiﬁed as the favoured destination for nurses and physicians seeking employment abroad (e.g., Khadria 2004: 23–9; Van Eyck 2004: 22) and the US with a rapidly growing and ageing population, a history of migration, and unrivalled levels of health expenditure has proved to be a major destination country for overseas trained health professionals. Ofﬁcial Bureau of Labor statistics projections suggest that between 2002–12 health services will comprise the greatest source of employment growth in the US (see Lowell and Gerova 2004: 474). More than a quarter of physicians in the US are overseas trained (see Table 8.1) 210

Health Professionals Table 8.2 Country of Medical School of Sub-Saharan African International Medical Graduates (IMGs) in the US and Canada Country of training

Number of Number of Number of % of total African African trained trained IMGs in physicians remaining trained now in USA IMGs in USA Canada in home country or Canada

Nigeria South Africa Ghana Ethiopia Uganda Kenya Zimbabwe Zambia Liberia Other 12 countries∗

2,158 1,943 478 257 133 93 75 67 47 83

123 1,845 37 9 42 19 26 7 8 35

22,894 23,844 1,210 1,564 722 4,001 1,694 676 72 12,912

9 14 30 15 20 3 6 10 43 1

Total/average

5,334

2,151

65,589

10

Note: ∗ other 12 countries with at least one graduate in the United States. Sources: Hagopian et al. (2004: 5).

and although the proportion of overseas registered nurses is much lower, at 5–6 per cent of the workforce, this proportion is increasing steadily (Brush et al. 2004: 79–80). Overseas trained nurses are likely to play an increasingly important role in the provision of nursing care in the US (Buerhaus et al. 2003). Since the late 1960s there has been a switch in recruitment from Canada and the UK towards the Philippines and other Asian countries (e.g., Sri Lanka). There has been a relaxation of immigration restrictions on skilled labour, including some specialist nurse categories, which could be expected to continue (OECD 2003: 21). Among physicians some commentators have predicted shortages, encouraging in-migration (see Cooper et al. 2002). A recent analysis of African trained international medical graduates (IMGs) indicated the substantial proportions of medical professionals from a few African countries that are resident in the US (see Table 8.2). The United Kingdom has historically been a major destination country of doctors and nurses. In 2002 over 200,000 doctors held provisional, full, and limited registration. In terms of full registration over half were doctors trained outside the UK especially from outside the European Economic Area (General Medical Council 2004). Overseas trained nurses have accounted for a substantial proportion of the 660,000 nurses on the register at March 2005 (Table 8.3). In the year to March 2005, there were more than 11,000 overseas trained 211

Case Studies Table 8.3 Overseas-Trained Nurses Registered per Annum in the UK 1998–2005 (Excluding the European Union) Country

1998/99

1999/2000

2000/01

2001/02

2002/03

2003/04

2004/05

India Philippines Australia South Africa Nigeria West Indies Zimbabwe New Zealand Ghana Pakistan Zambia US Mauritius Kenya Botswana Canada Nepal Swaziland China Malawi Others

30 52 1335 599 179 221 52 527 40 3 15 139 6 19 4 196

96 1052 1209 1460 208 425 221 461 74 13 40 168 15 29 — 130

289 3396 1046 1086 347 261 382 393 140 44 88 147 41 50 87 89

994 7235 1342 2114 432 248 473 443 195 207 183 122 62 155 100 79

1830 5593 920 1368 509 208 485 282 251 172 133 88 59 152 39 52 21

3073 4338 1326 1689 511 397 391 348 354 140 169 141 95 146 90 89 43 81

1

15

45

75

57

64 637

3690 2521 981 933 466 352 311 289 272 205 162 105 102 99 91 88 73 69 60 52 495

Total

3,621

5,945

8,403

14,122

11,416

15,064

12,730

Note: Listed by most numerous country applicants in 2004/05. Source: NMC (2005).

nurses registered, a signiﬁcant fall of 19 per cent from the previous year. The Philippines is no longer the primary source country with numbers from India exceeding those from the Philippines (NMC 2005). The decline in overseas nurse registrants has been attributed to a number of factors. First, the UK government has invested considerable efforts in growing its own workforce, increasing the numbers of student nurses entering the register and encouraging healthcare assistants to enter nurse training. Second, overseas nurses have been used primarily to ﬁll entry level nursing posts (Grade D) and this has proved successful, requiring fewer overseas recruits. There are blockages within the system with overseas nurses having difﬁculty ﬁnding supervised practice placements. Consequently there is a backlog of some 50,000 overseas trained nurses seeking to enter the UK register (RCN 2004; NMC 2005). Finally, the NHS has experienced unprecedented levels of investment since 2000 enabling a substantial increase in staff numbers, but this growth is stabilizing, reducing the demand for internationally recruited professionals. 212

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8.7 Discussion Countries that in the past would have been relatively immune to the migration of health professionals are being incorporated into a more integrated global labour market in which international mobility is a more signiﬁcant and volatile component of the human resource planning context. Each country’s pattern of migration reﬂects context speciﬁc factors that relate to the level of economic development, the inﬂuence of structural adjustment programmes, civil war or other forms of civil unrest, and the impact of HIV/AIDS. Focusing exclusively on the ‘pull’ factor of shortages in developed countries risks ignoring the ‘push’ factors, diverting attention away from the full spectrum of policy interventions. In many countries the ﬂows of health professionals are in both directions. For example, while recent attention in the UK has focused on the recruitment of overseas staff, many UK trained nurses and doctors work abroad (Goldacre et al. 2001). The number of veriﬁcations (checks) of UK nursing qualiﬁcations by nursing regulatory authorities overseas has been on an upward trajectory. During 2003–04, the Nursing and Midwifery Council (NMC) register indicates that 7,610 checks were sought by overseas regulators, of which nearly two-thirds were from Australia (36 per cent) and the US (27 per cent) combined. The number of veriﬁcations from the US has risen fourfold since 2000–01 (NMC 2004: 12–13). This data provides an indication of recruitment drives by other countries, but it does not distinguish between UK and non-UK trained nurses so it is not possible to establish whether some nurses are using the UK as a ‘staging-post’ before moving to another country. Historical links and associated cultural ties, including language, play a role in explaining migration pathways between Australia, Canada, India, and the UK. Portugal has links with Mozambique and the Netherlands has looked to former colonies like Surinam or Dutch speaking countries such as South Africa as a source of health professionals (Tjadens 2002: 35). In Latin America it is reported that nurses from Argentina, Peru, and Uruguay are often recruited by Italian recruitment agencies to work in Italy and Spain (Malvarez and Castrillon 2005: 26). Nevertheless these historic ties are loosening as destination countries become more utilitarian in encouraging migration primarily on the basis of economic requirements rather than historical or family connections. These historic patterns are also in decline as migration management shifts from bilateral agreements between governments—the dominant pattern of the 213

Case Studies

1950s and 1960s—towards unilateral management in which destination countries signal their willingness to accept migrant workers, but do not enter into agreements with source countries (ILO 2004: 15). This enables migrant workers to be drawn from a wider range of countries than the more targeted state-led migration of the past, facilitated by the growth of private recruitment agencies, the Internet and networks of out-migrants.

8.8 Causes of International Mobility of Health Professionals It is acknowledged that there are a variety of factors that shape international mobility of labour. Three distinctive perspectives on the origins of international migration have been utilized to analyse the mobility of health professionals. First, neoclassical economic analysis suggests that migration ﬂows stem from the existence of geographical wage differentials which are governed by the laws of supply and demand. Individuals seek to maximize their utility and undertake a form of cost–beneﬁt analysis in terms of expected wage returns, taking account of the probability of obtaining a job (Todaro 1969: 139). Workers from labour surplus, low wage, countries migrate to labour scarce, high wage countries to restore equilibrium and at that point migration should cease. This model assumes that migrants act rationally according to a logic of individual economic self-interest and that there are no barriers to mobility. This model has been developed to consider the economic disparities between source and destination countries often expressed as ‘push-and-pull’ factors. Push factors correspond to inﬂuences on labour supply and the forces of expulsion which stimulate migration, whilst pull factors are equated with the demand for labour and direct attention to the factors that attract migrants to move to other countries. With its intuitive appeal that migration can be explained by the location and intensity of push–pull factors, particularly disparities in wage levels, it has become the dominant framework for explaining health worker mobility (e.g., Aiken et al. 2004: 71). Push factors focus on those pay, working conditions, and broader management and governance factors that encourage health professionals to exit their own health systems. More comprehensive analyses incorporate factors that push health professionals to shift from rural to urban areas, from public to private sector employment, and at times out of the profession altogether as part of the interplay between internal and

214

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out-migration. Pull factors direct attention to the factors that encourage health professionals to move to other countries, including shortages and active recruitment from high income countries. This framework, with its roots in neoclassical economic orthodoxy, and its focus on the individualistic calculations of migrants has been criticized because of the exclusion of the household and family networks which inﬂuence migrant behaviour. This second approach is orientated to kinship networks in which individual family members are assigned speciﬁc labour market roles to maximize utility and minimize risk (Stark 1984). Analysis of the popularity of nursing in the Philippines indicates that decision making in households encourages girls to become nurses, in order to gain employment abroad, spreading risk and bolstering household income (Ball 2004: 125). Finally, the current preoccupation with migration as a deﬁning feature of globalization has its origins in the historical–structural tradition within migration studies. This approach suggests that migration arises from the insertion of countries into an international division of labour in which cheap labour from source countries is mobilized to advance the interests of employers in ﬁrst world countries (Sassen 1988). Globalization is frequently referred to as an explanation for the migration of health workers. Van Eyck (2004: 10) surveyed 600 health professionals in 12 countries and argued that nurses are reluctant migrants whose ‘choices are shaped by the ways in which nation-states are integrated into the global economy’. Poor working conditions are exacerbated by privatization and marketization which ‘facilitates the global integration of healthcare labour markets’ (emphasis in original). The case of Ghana has been used to illustrate how its health professionals have become integrated into a global labour market. This integration process is indicated by: potential migrants being able to make informed comparisons of wages and conditions across countries; increased private investment in employment agencies to facilitate international recruitment; information on migration processes being widely available; and the existence of feedback effects in terms of upward pressure on wages and conditions in the source country (Mensah et al. 2005: 16–19). To summarize, health professional mobility has been explained in terms of neoclassical theories of wage differentials, utility maximization of households and more recently as a part of structural changes in the world economy associated with globalization (for a fuller discussion of the application of migration theories to health worker mobility see Bach 2007).

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8.8.1 Remuneration and Employment Opportunities The scope to enhance earnings remains a key push factor in explaining the propensity to migrate, albeit with important differences between occupations and countries. It has been estimated that source–destination country wage differentials can be in the order of 3–25 times with very large wage differentials in Southern Africa, for example, between Zambia and South Africa (see Vujicic et al. 2004: 7). Among doctors and nurses in Ghana, low salaries were invariably mentioned as a primary motivation for migration (Mensah et al. 2005: 20). In Poland, doctors in public hospitals typically earn US$362 per month after tax, which is not enough to live on (Bala and Lesniak 2005: 235). Kenyan nurses report that they earn US$70 a month, which does not constitute a living wage (ICFTU 2004: 4). Even if staff feel that they earn sufﬁcient to meet their current ﬁnancial needs, they often cite the inability to ensure the long-term security of their family and children, for example, an inability to purchase property as a motivating factor (Mensah et al. 2005: 28). Finally the availability of employment opportunities within the source country has been identiﬁed as an important inﬂuence encouraging exit. Programmes of structural adjustment, promoted by the IMF, in conjunction with policies implemented by ﬁnance ministries which aim to ensure macroeconomic stability have been implicated in restrictions of health sector expenditure with direct consequences for the recruitment of health workers (WHO 2006: 147). In Mozambique, it required pressure from the Clinton Foundation to persuade the IMF to reduce temporarily restrictions on health sector employment (see PHR 2004: 80). These constraints are acknowledged in a report from the World Bank on the human resources crisis in SSA, which documents the impact of structural adjustment programmes on the health sector in Cameroon and Ghana (Liese et al. 2003: 8–9).

8.8.2 Professional Development and Training For health professionals, continuous professional development is an integral component of individual career planning and progression. Among doctors in New Delhi, the availability of better training or training not available in India was the most important factor motivating out-migration. Gaining more academic qualiﬁcations and exposure to advanced professional infrastructure were viewed as crucial for long-term career advancement (Khadria 2004: 22). Kingma (2001: 209) 216

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reports similar priorities among nurses with a strong emphasis placed on the scope for learning opportunities. This includes access to specialist training or the chance to use technologies that are not routinely available in the home country. The absence of opportunities for professional development reinforces the attractiveness of overseas employment. South African nurses have complained about the lack of opportunities for promotion within hospitals and the difﬁculties of being granted study leave (Xaba and Phillips 2001: 5). There has also been criticism levelled at both medical and nurse training that there is a disjuncture between the curricula of many training institutions (in Africa in particular) and the actual opportunities to utilize such training in the prevailing circumstances. This leads to medical and nursing staff becoming frustrated at the lack of opportunities to use the knowledge in their local circumstances, encouraging them to seek employment abroad. It has also been argued that the medical school culture in many African countries encourages graduates to practice abroad, not least because it afﬁrms the standard of training and is prestigious for the institution concerned (PHR 2004: 47–51).

8.8.3 The Working Environment and Human Resources Management Poor working conditions, including heavy workloads are factors that entice health professionals to seek employment outside their country. The inﬂuences that are frequently cited in this context relate to violence, whether in the work environment or the external context, and among health professionals in SSA the devastating toll reaped by the HIV/AIDS pandemic (Shapiro 2002). The lack of protective clothing (e.g., gloves) reinforces these concerns and more generally the toll from HIV/AIDS adds to the workload of those that remain in post (PHR 2004: 40–1). Similarly war, civil unrest, and crime are common factors encouraging health professionals to seek employment abroad (Kingma 2001: 207; Dumont and Meyer 2004: 128). Low stafﬁng levels in relation to the volume of patients leads to heavy workloads for health professionals. Interviews with nurses in Kenya and Sri Lanka have highlighted the negative consequences for job satisfaction that derives from the inability to provide proper care because of the numbers of patients waiting (Van Eyck 2004: 18). Wider access to healthcare and uneven distribution of human resources has resulted in similar workload concerns in South Africa (Dumont and Meyer 2004: 129). There is also increased willingness to acknowledge that poorly designed and operated human resource management systems reinforce low morale, 217

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foster out-migration and make it difﬁcult for returnees. The lack of opportunities for further education and development in conjunction with traditional and dated teaching methods are often mentioned as symptomatic of poorly speciﬁed HR systems (Padarath et al. 2003: 21). The lack of recognition of international experience, arising from promotion systems based on length of experience in the home country, has served to discourage returnees (Martineau et al. 2004: 7). The positive impact of schemes such as the Additional Duty Hours Allowance (ADHA) in Ghana that substantially boosted take-home pay for health professionals has been undermined by poor governance. Arbitrary local decision making led to grievances among nurses provoking a ten-day country-wide strike in September 2004 (Mensah et al. 2005: 23). Poor human resource management practices therefore remain a powerful constraint on the effectiveness of health sector effectiveness, contributing to out-migration (Bach 2003).

8.8.4 Staff Shortages and Relaxation of Immigration Rules The renewed interest in the mobility of health professionals since the late 1990s has been viewed as ‘primarily demand led with workforce shortages in some destination countries (such as the US and the UK in particular) triggering active overseas recruitment strategies’ (Stillwell et al. 2004: 597). The dominant dynamic in recent years has therefore been the pull factor of targeted international recruitment that helps to account for why policy attention has focused on the ethical responsibilities of employers (Buchan 2004: 15). Due to a changing demographic proﬁle—an ageing population (including an ageing health workforce); increased demand for healthcare; raised expectations of patients; and difﬁculties in recruiting and retaining nurses—the US, the UK, and Canada have recruited actively on an international basis. The labour market for physicians is distinctive but many of the same difﬁculties arise, especially in rural areas and less attractive specialties. A variety of immigration regimes exist that enable health professionals to gain temporary or more permanent residency. In the case of the UK, applicants from outside the EU have to apply for a work permit before being allowed to take up UK employment. A visa is issued for a limited period of time, frequently two years in the ﬁrst instance. The US has a more diverse and complex system. International medical graduates in the US can gain three year H-1B visas for a pre-arranged job, usually renewable for one three-year period. An exchange visitor visa (J-1) is commonly used for graduates of overseas medical schools to gain access to medical 218

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education, usually residency programmes, with a requirement that they return to the home country for two years. The only exception to the twoyear home residency rule is when a waiver visa is received (J-1 waiver programme), which requires sponsorship by a government agency. In return for a service commitment in a rural area, permanent residency may be gained. The overall trend within OECD countries has been towards the relaxation of quotas and other mechanisms to attract highly skilled labour in shortage occupations while restricting entry among low skilled workers. The opportunity for health professionals to be more mobile has been facilitated by the growth of commercial recruitment agencies and an increasing role for the Internet. It is important, however, not to lose sight of the signiﬁcance of social networks drawn upon by newly arriving migrants in reducing the costs and risks associated with migration (Massey et al. 1993). This implies that once migration pathways are established this will stimulate further migration. This is an important issue that is rarely acknowledged in the analysis of health professional migration. The growth of overseas nurse associations and other support networks in the destination country, for example, of Filipino, Guyanan, Jamaican, Nigerian, and South African nurses in the UK comprise an important element in networks that foster further migration. A very high proportion of the doctors interviewed in New Delhi reported the existence of overseas friends as a key source of inspiration for out-migration (Khadria 2004: 20). There has been increased awareness of the key role that recruitment agencies play in facilitating international recruitment, but it differs between occupations and countries. In a highly centralized health system like the UK, the recruitment of doctors is centrally coordinated by the health department that facilitates entry to NHS posts. Recruitment specialists therefore play a limited role not least because many doctors continue to draw on personal contacts and the examination and registration process is clearly deﬁned and transparent. For nurses a more devolved system exists in which NHS employers (termed NHS trusts) or the independent sector have recruited groups of nurses, drawing on the specialist advice within the health department and often using the services of recruitment agencies. In source countries, nurses frequently respond to advertisements by recruitment agencies and register with the NMC. The recruitment agency assists the nurse to gain a work permit and to ﬁnd a placement (which can be very difﬁcult) which they have to complete before they are able to work as a registered nurse. This places many nurses in a highly dependent position, for example their accommodation is provided by their employer, making them vulnerable to exploitation. 219

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The fees charged by recruitment agents are substantial. In Ghana, agents charge about GB£2,500–3,500 to assist nurses moving to the UK which excludes accommodation, visa fees and airfares (Mensah et al. 2005: 17–18). In the US employers typically pay recruitment agencies US$5,000– 10,000 per nurse recruited (PHR 2004: 55). Consequently the recruitment of nurses has become more formalized and commercialized, but although the direct costs of out-migration have increased substantially this has not discouraged it. Out-migration remains a highly attractive option and only systematic policy responses to tackle push-and-pull factors in source and destination countries are likely to inﬂuence patterns of international mobility.

8.9 Impact on Health Systems There has been a shift of emphasis in the analysis of health professionals’ mobility from a concern to quantify the ﬂows of migrants and to assess the reasons for these movements towards a preoccupation with the consequences of these ﬂows and the measures that can be taken to manage migration more effectively. There is increased awareness and political sensitivity about the degree to which it is ethical to recruit internationally substantial numbers of health professionals, weakening health systems in these source countries. There has been a noticeably more critical stance adopted by the WHO and the resolution passed at the 2004 World Health Assembly raised the issue of receiving countries examining methods to ‘offset the loss of health workers, such as investing in training of health professionals’ which some commentators interpreted as shifting debate from whether reimbursement to source countries was appropriate to a question of how it should be accomplished (PHR 2004: 61). Other signs of an altered climate include the UK government’s revised and more restrictive code on ethical recruitment issued in December 2004 (Department of Health 2004a). The working conditions of internationally recruited nurses and physicians, their career development, and the degree to which they confront discrimination at work has attracted some attention. A common experience among overseas nurses has been the lack of recognition of their skills and previous experience, leading to a feeling that their competence as a nurse is being questioned (RCN 2003). Overseas nurses in Canada often perceived that they were treated very differently with more intensive supervision exercised over them than their colleagues (Hagey et al. 2001). 220

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The working lives of health professionals, although a prominent concern of professional associations and trade unions, has been less prominent than more macro level debate about the efﬁcacy and ethics of internal recruitment, centred around the consequences for the source country.

8.9.1 Implications for the Source Country The mobility of highly skilled labour is associated with a number of positive feedback effects as skilled emigrants continue to affect the economy of their origin country. The main beneﬁts are associated with the remittance of income, the knowledge and skills acquired by returnees, and spillover effects when migration increases the incentives to obtain higher education, increasing the stock of education in the source country, with only a proportion of this accumulation of skills ‘lost’ to out-migration (see Mountford 1997). An illustration of these spillover effects is the degree to which the educational level of applicants to nursing schools in Ghana has risen to the equivalent of university entrance level and the number of applicants has also risen sharply, as applicants start to view a nursing qualiﬁcation as an investment in leaving the country (Mensah et al. 2005: 19). Much attention has focused on remittances. It is difﬁcult to estimate the scale of remittances because of the often informal manner in which they are returned but there is little doubt of their contribution to the national income of many countries. India (US$11.5 billion), Mexico (US$6.5 billion) and Egypt (US$3.5 billion) received the largest share of remittances (IOM 2003: 2). There are few studies of remittances speciﬁcally related to the health sector. An exception is a study of Filipino physicians practising overseas in which it is suggested that the volume of remittances was sufﬁcient to compensate for the associated economic losses of emigration (Goldfarb et al. 1984). Nonetheless the study is far from conclusive because as the authors acknowledge their analysis is weakened by data limitations and the questionable assumptions incorporated into their model. A number of caveats have been raised about their impact because remittances beneﬁt the families of migrant health professionals rather than the health systems that they leave behind and are therefore used to boost private consumption rather than investment (ICFTU 2004: 2). A number of factors inﬂuence the consequences for source countries. A ﬁrst consideration relates to the degree to which education and training of health professionals is funded by the state or by private funds. For example, in the Philippines the nursing colleges are predominantly 221

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private establishments. Nonetheless, the state still provides the resources to fund primary and secondary education and loses the tax revenue that would have accrued from these earnings streams in the Philippines. There is a requirement in many countries for doctors to undertake a period of community service, often in rural areas, before being allowed to work in other parts of the country or abroad but as discussed below there are many difﬁculties associated with these type of mandatory schemes. A second issue relates to the employment situation within the source country and the degree to which health professionals would have been gainfully employed in their home country. This is crucially dependent on the degree to which individual states have planned their workforce requirements effectively. Poor workforce planning has regularly created imbalances in the health sector workforce with many countries confronting shortages of health sector personnel (see Zurn et al. 2002). International mobility has therefore been viewed as exacerbating shortages in source countries. It cannot be assumed, however, that health professionals would have been retained within the public health sector in their own country. Shortages may co-exist with underemployment because of budgetary restrictions or complex administrative requirements which lead to long delays before vacancies can be ﬁlled, as reported in parts of the Caribbean (Van Eyck 2004: 30–1). In addition to poor working conditions, the exit of doctors to an expanding private sector has been noted in many countries including Angola, South Africa, and Thailand (Wibulpolprasert 1999). A third issue relates to the impact on the health sector of international mobility in terms of the impact on workers that remain and also for other stakeholders. Some of the most visible negative impact relates to these questions. Nurses in many countries including South Africa have expressed their frustration and envy of those going overseas because they are confronted with increased stress to cover for staff that have left (Xaba and Phillips 2001: 6). There is also the knock-on effect of the erosion of a country’s human resources capacity in terms of its ability to plan and deliver education and training for its health workforce. Paradoxically, it may make sending countries more reliant on the inﬂow of specialist workers. In countries in which health professionals are explicitly trained for employment overseas there may be a mismatch between the training priorities of the source country’s health service (e.g., oriented to primary healthcare), compared to the competencies needed to work in a more technologically intensive model of care. 222

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8.10 Policy Responses to the International Mobility of Health Professionals The increased levels of nurse and physician migration are symptomatic of deep rooted structural imbalances in the planning and management of health professionals in source and destination countries. Increased attention has been directed at managing migration in conjunction with measures to address workforce shortages and working conditions that promote migration. It is evident that policymakers have concerns that ‘What is a godsend for the developed world [skilled worker migration], however, can be devastating for more impoverished countries’ (UNFPA 2006: 7). Three policy areas have been highlighted as mechanisms to inﬂuence health professional mobility:

r

r r

Measures designed to improve pay, working conditions and career prospects of health professionals in source countries to stem outmigration and to address related concerns about supply and retention issues in destination countries, to reduce the need for international recruitment. Reforms to the structure and training of health professionals in source countries, to include establishing new roles and altering the skill mix. Initiatives to manage migration more actively shifting from a unilateral to a bilateral approach that ensures the costs and beneﬁts of mobility are more evenly spread between source and destination countries. A variety of policy instruments have been promoted that include the establishment of codes of practice, bilateral agreements, forms of compensation, and incentives to encourage return.

8.10.1 Pay and Working Conditions There has been a legacy of underinvestment in the health services of many source countries, exacerbating out-migration, but there are signs of more concerted attempts to address workforce problems. Salary levels have been increased using a variety of incentive schemes and allowances (e.g., South Africa, see Dumont and Meyer 2004: 134). One of the most well-known schemes, established by Ghana at the end of 1999, is the ADHA which provides additional pay to health professionals exceeding normal working hours (160 hours per month). This measure initially slowed out-migration, but its effectiveness has been eroded by poor governance (Mensah et al. 2005: 23). Evidence from other countries, is also 223

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equivocal with increased salaries for nurses in Botswana having limited effect on retention (Dovlo 2003: 6). The difﬁculty is that many source countries have very limited scope for manoeuvre in raising salaries in a ﬁscal context of severe budgetary constraints and donor reluctance to sanction increases in salaries for health professionals (PHR 2004: 39). Overall, raising salary levels is a necessary but not a sufﬁcient condition in the absence of other improvements in working conditions to stem outmigration. Many countries as well as experimenting with positive incentives to retain staff also use ﬁnancial penalties to deter health professionals from out-migration. A contentious measure relates to forms of bonding. This requires graduates to post a bond of variable amounts which health professionals forfeit if they leave the country before a certain number of years have elapsed. Alternatively they may be required to pay back their training costs if they depart. Trinidad and Tobago, for example, has established a three-year requirement for nurses (Commonwealth Secretariat 2003: 11). This restrictive policy has been subject to considerable criticism. It has been argued, using Ghana as an example, that bonding policies in the absence of widespread legitimacy encourage evasion strategies, and have proved ineffective because of poor enforcement and monitoring. Bonding policies may also serve to discourage return (Mensah et al. 2005: 21). In general, restrictive measures to inhibit mobility have only limited effects or support, directing attention towards issues of recruitment and retention. In focusing attention on retention policies in source countries it is important not to ignore attempts by policymakers to improve recruitment and retention of health professionals in destination countries. An important consideration, however, is that employers in the UK have indicated that international recruitment is a relatively straightforward and cost effective method to address their stafﬁng requirements compared to other recruitment and retention methods (Buchan 2003: 22). Nonetheless government action can inﬂuence the acceptability and attractiveness of international recruitment as a primary method to address stafﬁng difﬁculties. In the US, for example, the 2003 Nurse Reinvestment Act authorized funds for a variety of nurse retention efforts and US$142 million was made available for the programme in 2004 (PHR 2004: 54). In the UK, the Labour government has assigned a high priority to making the NHS an ‘employer of choice’, and a wide range of measures including reforms of pay and grading structures, boosting the numbers of healthcare assistants entering nurse training, and improving the working lives of health service 224

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staff have started to remedy difﬁculties in recruiting and retaining health professionals (see Bach 2004). Source countries are also examining more systematically issues of recruitment and retention. In the Philippines, the health department has established a pool of doctors, nurses, midwives, and other key health professionals which are deployed in depressed areas. There are also wide-ranging consultations occurring on workforce planning to gauge the country’s need for nurses more effectively and to set up mechanisms to enable nurses to pursue professional development within the Philippines (PSLINK 2003: 19). Another mechanism to expand the workforce relates to the removal of compulsory retirement ages, enabling health professionals to extend their working lives from 60 to 65 (Dovlo 2003: 6).

8.10.2 Curriculum Reform and Skill Substitution Altering the curriculum and reducing the length of the training period required for nurses and doctors has been viewed as a mechanism to hasten entry into the workforce and deter out-migration. In South Africa active consideration has been given to reducing the degree of specialization of nursing and medical training thereby decreasing nurse training from four to three years. It is anticipated also that such measures would also reduce the attractiveness of South African health professionals to other OECD countries and place limits on the transferability of their skills. Predictably, such proposals have met with a hostile response from health professionals (Dumont and Meyer 2004: 133–4). Professional strategies of occupational closure are being challenged by the development of workforce strategies that involve the substitution and delegation of workforce responsibilities to other occupational groups. This approach alters the skill mix of the workforce and is designed to compensate for out-migration, establish occupational groups with less transferable skills, and ensure that the scarce skills of nurses and doctors are used effectively. A variety of such roles have been established. Malawi makes use of health surveillance assistants that require six weeks training, Mozambique utilizes a variety of surgical and medical technicians, Zimbabwe has introduced state enrolled nurses requiring two rather than three years of training, and a variety of other assistant roles have been established. Complementary to these initiatives are measures that extend the role of nurses, enabling advance practice nurses in some countries to prescribe medications and perform some invasive procedures (Dovlo 2004; PHR 2004: 70). 225

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8.10.3 Managed Migration With increased recognition that international mobility of health professionals is an inescapable feature of the health sector, policy responses have shifted from a reactive approach that focuses on stemming migration, towards a more ambitious and active agenda of managed migration. The aim is to regulate the ﬂows of health professionals to beneﬁt source and destination countries. Most attention has focused on the establishment of codes of practice and policy guidance that seek to inﬂuence the international recruitment of health professionals. The Commonwealth, at its meeting of Health Ministers in May 2003, endorsed a code of practice and associated companion guide on international recruitment which can establish a climate of international opinion. At national level, the UK government has proceeded further regulating international recruitment in a series of step-by-step measures. In reaction to criticism of its international recruitment activities, in 1999 the health department issued guidelines requiring NHS employers not to recruit actively from South Africa and the Caribbean (Department of Health 1999). In September 2001 a more detailed code of practice was issued which reiterated that NHS trusts should not target recruitment at developing countries unless the health department had a formal agreement with a particular country—during 2004, the department further strengthened the code of practice. The experience with the code has been subject to ﬁerce debate that relate to its scope and effectiveness. As Table 8.3 indicates, in recent years there have been continuing inﬂows of nurses from many countries that are prohibited by the code with substantial numbers of nurses from some of the poorest countries in SSA—Botswana, Malawi, and Swaziland. This does not in itself indicate that the code is being broken but does raise questions about its narrow scope. The code only applies to active recruitment by NHS trusts and does not cover individual health professionals who on an individual basis ‘may be considered for employment’ (Department of Health 2004a: 7). The 2001 code did not apply to the private sector, to recruitment agencies, and did not cover the employment of temporary staff. In relation to NHS employers in England, centralized systems of ﬁnancing and provision ensure that the health department exercises tight central control over the international recruitment practices of NHS trusts with international recruitment coordinators playing a key monitoring role. During 2003 the health department intervened when several NHS

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trusts were found to be recruiting directly from South Africa. To put it another way, because the health department views international recruitment as so pivotal to its human resources policies for the NHS, it has a strong incentive to ensure that international recruitment is carried out in an ethical manner to deﬂect potential criticism of international recruitment policies. In many other countries, however, in which the state has less control over the actions of healthcare providers and health services are less politically sensitive, the impact of ethical codes of practice, if instituted, would almost certainly, mostly, prove to be less effective. A major limitation in the effectiveness of the code relates to the regulation of the independent sector. There is strong anecdotal evidence that many nurses and midwives recruited to the private sector later move to the NHS for better pay and working conditions, a situation that allows NHS employers to argue that they are in compliance with government guidelines. In the 2001 code, private sector recruitment agencies were invited to sign up to the code of practice and by 2004, 178 agencies had signed up to the code (Department of Health 2004b) but major questions arise about the adherence of all these agencies to the code, especially when recruiting health professionals to the independent sector. In the light of these concerns the health department issued a signiﬁcantly strengthened code at the end of 2004 (Department of Health 2004a). This went further than the 2001 code because it required NHS trusts to only use recruitment agencies that complied with the code and it also partially incorporated the independent sector by making compliance with the code a contractual requirement of independent providers that supply (patient) services to the NHS. However, this still excludes the bulk of independent sector care which constitutes long-term nursing and social care. It is too early to assess the impact of the revised code but uncertainties remain about whether codes of practice are the most effective form of managed migration. There is a concern that prohibiting active recruitment from certain countries is discriminatory because it restricts the freedom of movement of health professionals from certain countries while allowing it to continue in others (Rowson 2004: 22). An additional dilemma is that strengthening codes of practice can alienate key stakeholders. This has been the experience of the Commonwealth code of practice with its emphasis on mutuality of beneﬁts for source and destination countries including compensation. According to the Commonwealth Companion Document (Commonwealth Secretariat 2003: 7):

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This proved to be a step too far for Australia, Canada, and the UK that declined to sign the code because of the inclusion of the phrases on compensation. The development of codes of practice can serve an important function in publicizing good practice for employers on issues such as induction and training and in inﬂuencing the climate in which international recruitment occurs. They also signal that recipient countries recognize that their actions impact on source countries. Nonetheless, voluntary codes of practice remain relatively weak regulatory mechanisms because they have no legal basis. However, they are likely to remain an attractive option for governments concerned to highlight the ethical character of their international recruitment activity and because there are few costs associated with them.

8.10.4 Bilateral Agreements A second key strand of managed migration concerns the development of bilateral agreements with particular countries. The UK’s Department of Health, for example, has a variety of accords with countries that extends beyond international recruitment to include cooperation on health systems development. In Egypt there is a programme to improve the care of the elderly, pathology, and mental health services as well as a fellowship programme for Egyptian doctors to come to the UK to gain additional experience (Amos 2001: 20). Most attention has focused on the recruitment agreements signed with the Philippines, Spain, and India. The agreement with the Philippines, signed in 2002, nominates the Philippine Overseas Employment Administration (POEA) to undertake the pre-recruitment with NHS employers interviewing the candidates in the Philippines. The agreement sets out in detail the requirements placed on the POEA and the NHS, designed to ensure transparency and eliminate potential for abuse. For example, it is stated that the NHS employer will pay the cost of initial application to the NMC (GB£70), entry visa application cost (GB£70), and the cost of initial airfare to the UK provided they remain in post for 12 months. Employers are also required to pay the POEA a processing fee per successful application of GB£140, GB£17 as contribution to the Worker’s Welfare Fund and GB£35 as a contribution 228

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to the Employee’s Guarantee Trust Fund administered by the POEA. These charges must not be passed on to the selected applicant. The agreement also includes requirements related to induction and other forms of good practice. Bilateral agreements potentially reduce the need to utilize commercial recruitment agencies. There are many well managed and responsible agencies but their image is tarnished by the poor practice of others. Recruitment agencies facilitate unmanaged migration, often charging high fees and misleading applicants about their ﬁnal employment destination and job. The bilateral agreement approach ensures a more predictable and transparent process for both parties. It also has the important effect of shifting the cost of migration from the individual migrant to the ﬁnal client. Bilateral agreements are a ﬂexible tool that can incorporate a variety of provisions. For a start they can include best practice guidance related to induction, training, etc.

8.10.5 Policies of Return Finally policies of return focus on attracting the temporary or permanent return of health workers from abroad. Policies of return are difﬁcult to manage effectively and the costs of assisted return programmes need to be considered in conjunction with investment in retention, which may be more cost effective. Incentive mechanisms are often used to encourage return, but difﬁculties often arise subsequently which leads to high levels of attrition. A key human resources challenge is ensuring that the returning health worker is placed in a job that uses the skills that they have acquired effectively. This is not straightforward because their skills set does not match the conditions under which they are working. The IOM has highlighted other difﬁculties of facilitating return in relation to African professionals abroad. The challenges they highlight included prolonged job search arising from cumbersome recruitment processes, lack of trust in African governments among the diaspora, and weak recipient government ownership (IOM, in WHO-World Bank 2002: 13).

8.11 Conclusion There have been very signiﬁcant changes in the scale and consequences of professional health worker mobility in recent years. The higher proﬁle attached to human resource issues within the health sector and the 229

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speciﬁc challenges of addressing staff shortages while not exacerbating problems of brain drain has ensured that the issue of health worker migration has rapidly climbed the health policy agenda. Although knowledge about stocks and ﬂows of health workers remains uneven, there is broad consensus that the mobility of health professionals has increased and that migration is frequently a symptom rather than a cause of the human resource difﬁculties that confront many health systems in source and destination countries. The importance of effective health provision for economic development has led commentators to be much less sanguine about health professional migration in comparison to other highly skilled occupations. As the Director General of the WHO has argued, ‘There is a chronic shortage of well-trained health workers . . . for a variety of reasons such as the migration, illness or death of health workers, countries are unable to educate and sustain the health workforce . . . ’ (WHO 2006: xiii). The implicit assumption is that it may be necessary to consider health professionals as a special case to avoid the effects of brain drain (UNFPA 2006: 7–8). In particular arguments about the positive feedback effects of mobility and related arguments about brain circulation may be less relevant for the case of health professional mobility. On the other hand there are opportunities within a highly regulated and high proﬁle sector like health to actively manage patterns of mobility in a way that is less applicable to other sectors. In particular, a relatively small number of nation states have a disproportionate impact on the global movement of health professionals because of their resources and the manner in which they have actively promoted the international recruitment of health workers. This chapter has shown that governments and employers have a key role in the mobility of health workers. In all countries a higher proﬁle for human resource management issues in the health sector would alleviate some of the push factors that encourage health worker migration and stem shortages of health professionals in many industrialized countries that have fostered increased international recruitment. Health worker migration is an inescapable feature of the health sector. Policy responses appear to be shifting from a reactive agenda, which focuses on stemming migration, towards a more active agenda of managed migration that brings some beneﬁts to source countries as well as destination countries. A central component of any such agenda is an enhanced recognition of the importance of improved working conditions and more effective human resources practice to encourage retention of health workers in both source and destination countries. 230

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Health Professionals ICFTU (International Confederation of Free Trade Unions) (2004). Migration: ‘Brain Drain’ and Unequal Development, ICFTU. Available at: www.icftu.org ILO (2004). Towards a Fair Deal for Migrant Workers in the Global Economy. Geneva: ILO. Available at: www.ilo.org/public/english/standards/relm/ilc/ilc92/pdf/repvi.pdf IOM (2002). The Migration-Development Nexus: Evidence and Policy Options. Geneva: IOM. IOM (2003). ‘Facts and Figures on International Migration’, Migration Policy Issues, 2. Geneva: IOM. Jinks, C., B. Ong, and C. Paton (2000). ‘Mobile Medics? The Mobility of Doctors in the European Economic Area’, Health Policy, 54(1): 45–64. Keeling, D. (2004). ‘Latin American Development and the Globalization Imperative: New Directions, Familiar Crises’, Journal of Latin American Geography, 3(1): 1–21. Khadria, B. (2002). ‘Skilled Labour Migration from Developing Countries: Study of India’, International Migration Papers, 49. Geneva: ILO. Khadria, B. (2004). ‘Migration of Highly Skilled Indians: Case Studies of IT and Health Professionals’, OECD Science, Technology and Industry Working Paper, 2004/6. Paris: OECD. Kingma, M. (2001). ‘Nursing Migration: Global Treasure Hunt or Disaster in the Making?’, Nursing Inquiry, 8(4): 205–12. Kingma, M. (2006). Nurses on the Move: Migration and the Global Healthcare Economy. Ithaca, NY: Cornell University Press. Liese, B., N. Blanchet, and G. Dussault (2003). The Human Resource Crisis in Health Services in Sub-Saharan Africa. Washington, DC: World Bank. Lowell, L. and S. Gerova (2004). ‘Immigrants and the Healthcare Workforce: Proﬁles and Shortages’, Work and Occupations, 31(4): 474–98. Malvarez, S. and C. Castrillon (2005). Overview of the Nursing Workforce in Latin America. Washington, DC: Pan American Health Organization. Martineau, T., K. Decker, P. Bundred (2004). ‘Brain Drain of Health Professionals: From Rhetoric to Responsible Action’, Health Policy, 70: 1–10. Massey, D., G. Arango, A. Hugo, A. Kououci, A. Pellegrino, and E. Taylor (1993). ‘Theories of International Migration: A Review and Appraisal’, Population and Development Review, 19(3): 431–66. Mejia, A., H. Pizurki, and E. Royston (1979). Physician and Nurse Migration: Analysis and Policy Implications. Geneva: WHO. Mensah, K., M. MacKintosh, and L. Henry (2005). The Skills Drain of Health Professionals from the Developing World: A Framework for Policy Formulation. London: Medact. Mountford, A. (1997). ‘Can a Brain Drain be Good for the Growth in the Source Economy’, Journal of Development Economics, 53(2): 287–303. NMC (Nursing and Midwifery Council) (2004). Statistical Analysis of the Register 1 April 2003 to 31 March 2004. Available at: www.nmc-uk.org

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Case Studies NMC (Nursing and Midwifery Council) (2005). ‘Overseas-trained Nurse Recruitment Falls’, NMC Press Release, 7 June. OECD (2003). Trends in International Migration: Annual Report 2002 Edition. Paris: OECD. Padarath, A., C. Chamberlain, D. McCoy, A. Ntuli, M. Rowson, and R. Loewenson (2003). ‘Health Personnel in Southern Africa: Confronting Maldistribution and Brain Drain’, Equinet Discussion Paper, 3. Available at: www.equinetafrica.org PHR (Physicians for Human Rights) (2004). An Action Plan to Prevent Brian Drain: Building Equitable Health Systems in Africa. Boston, MA: PHR. Available at: www.phrusa.org/campaigns/aids/pdf.braindrain.pdf PSLINK (2003). ‘Woman and International Migration of Health Workers: Country Report Philippines’, mimeo. Available at: www.world-psi.org RCN (2003). ‘We Need Respect’: Experiences of Internationally Recruited Nurses in the UK. London: Royal College of Nursing. RCN (2004). Fragile Future? A Review of the UK Nursing Labour Market in 2003. Available at: www.rcn.org.uk/publications/pdf/labour_market_review_2003.pdf Rowson, M. (2004). ‘The Brain Drain: Can it be Stopped?’ Health Exchange, August: 21–3. Sassen, S. (1988). The Mobility of Labour and Capital. Cambridge: Cambridge University Press. Shapiro, R. (2002). ‘Drawing Lines in the Sand: The Boundaries of the HIV/AIDS Pandemic in Perspective’, Social Science and Medicine, 55(12): 2,189–91. Solimano, A. (2003). ‘Globalization and International Migration: The Latin American Experience’, CEPAL Review, 80: 53–69. Stark, O. (1984). ‘Migration Decision Making: A Review Article’, Journal of Development Economics, 14: 251–9. Stiglitz, J. (2004). Why We are Paying the Price for the Greediest Decade in History. London: Penguin. Stilwell, B., K. Diallo, P. Zurn, M. Vuijicic, O. Adams, and M. Dal Poz (2004). ‘Migration of Health-Care Workers from Developing Countries: Strategic Approaches to its Management’, Bulletin of the World Health Organization, 82(8): 595–600. Taran, P. and E. Geronimi (2003). Globalization, Labour and Migration: Protection is Paramount: Perspectives on Labour Migration, 3E. Geneva: ILO. Tjadens, F. (2002). ‘Healthcare Shortages: Where Globalization, Nurses and Migration Meet’, Eurohealth, 8(3): 33–5. Todaro, M. (1969). ‘A Model of Labour Migration and Urban Unemployment in Less Developed Countries’, The American Economic Review, 59: 138–49. UNFPA (United Nations Population Fund) (2006). State of World Population 2006: A Passage to Hope: Women and International Migration. Available at: www.unfpa.org/ swp/2006/english/print/introduction.html Van Eyck, K. (2004). Women and International Migration in the Health Sector. Geneva: Public Services International. Available at: www.world-psi.org

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Health Professionals Vujicic, M., P. Zurn, K. Diallo, and M. Dal Poz (2004). ‘The Role of Wages in the Migration of Healthcare Professionals from Developing Countries’, Human Resources for Health, 2(3). WHO (2004). Fifty-Seventh World Health Assembly, Resolution WHA57.19, WHO, Geneva. WHO (2006). Working Together for Health: The World Health Report 2006. Geneva: WHO. WHO Regional Ofﬁce for Africa-World Bank (2002). Building Strategic Partnerships in Education and Health in Africa, Report on the Addis-Ababa Consultative Meeting. Available at: www.who.afro.who.int Wibulpolprasert, S. (1999). ‘Inequitable Distribution of Doctors: Can it be Solved?’, Human Resources for Health Development Journal, 3(1): 2–22. Wolf, M. (2004). Why Globalization Works. New Haven, CT: Yale University Press. Xaba, J. and G. Phillips (2001). Understanding Nurse Recruitment: Final Report. Pretoria: DENOSA. Zurn, P., M. Poz, B. Stilwell, and O. Adams (2002). ‘Imbalances in the Health Workforce’, Brieﬁng Paper. Geneva: WHO. Available at: www.who.int/healthservices-delivery/imbalances/Imbalances.pdf

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9 The International Mobility of Cultural Talent∗ Tony Addison

No man but a blockhead ever wrote, except for money. (Samuel Johnson, in The Life of Samuel Johnson, by James Boswell, 1791)

9.1 Introduction This chapter is being written at the kitchen table of my Helsinki apartment which abuts the Sibelius Academy, one of the world’s largest music universities. From the window I can see students, who come from over 40 countries, practising everything from classical music to jazz. But such mobility among talented people is not a recent phenomenon. Historically, musicians, painters, and writers have been some of the world’s most well travelled people. Among painters, Diego Velázquez (1599–1660) visited Italy twice, and hosted the visit to Madrid of the Dutch painter Peter Paul Rubens (1577–1640), himself a keen traveller. Nineteenth century Paris acted as a magnet for painters and sculptors from as far aﬁeld as Australia, Latin America, and Scandinavia (Fey and Racine 2000; Leininger-Miller 2000). And the twentieth century saw mobility accelerate. The career of the Chilean painter, Roberto Matta (1911–2002), is almost a perfect summation of the role of international mobility in forming talent; both ∗ This study was prepared for the UNU-WIDER project on the International Mobility of Talent, directed by Andrés Solimano of UN-ECLAC. A ﬁrst draft was presented at a project meeting, held at UN-ECLAC in Santiago Chile, 26–7 May 2005. I thank Andrés Solimano, Anthony D’Costa, and Dennis Rodgers for their insightful comments, and the conference participants for their observations. Very useful comments were also made by Diana Barrowclough. Lisa Winkler provided excellent research assistance. The usual disclaimer applies.

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his own and that of the artists (Salvador Dali, Marcel Duchamp, Jackson Pollock); writers (André Breton, Fredrico Garcia Lorca, Pablo Neruda); and architects (Le Corbusier) that Matta met—and shared ideas with—in his wanderings through Europe, the US, and Africa (before settling in Paris, and dying in Italy). Today talent takes many innovative forms with creative industries expanding globally, based on the marriage of new media technologies with the traditional arts. Outsourcing in the new media arts of animation, digital ﬁlm, website design, and computer gaming is in turn circulating talent between new and traditional media hubs, with cultural mixing giving rise to fresh forms of expression in literature, music, and the visual arts. In these ways, the present wave of globalization resembles that of the nineteenth and twentieth centuries, when international migration contributed to the birth of jazz, the motion-ﬁlm industry, and abstract expressionism in painting. This chapter discusses the international market for cultural talent, and its implications for development. The chapter is divided into six sections, each covering different dimensions of the issue. Section 9.2 discusses the nature of cultural talent and the creative industries and how these are evolving and generating new markets for talent. Section 9.3 sets out an analytical framework for understanding mobility and the market for cultural talent, emphasizing the strong clustering effects characterizing creative industries, and the mobility of talent between clusters. Section 9.4 discusses the impact of political upheaval on mobility, including talent’s ﬂight from repression and the surge in mobility associated with the wave of democratizations of the last 20 years. Section 9.5 assesses the policy implications for countries building new creative industries to compete in the global economy, as well as the importance of cultural talent to the quality of life more broadly. Section 9.6 concludes that countries which protect intellectual property rights (IPRs), educate and train their talent, and maintain politically open and liberal societies will have a head start in the global creative economy.

9.2 The Nature of Cultural Talent and Creative Industries The term ‘cultural talent’ is used here to describe people who work in the visual arts (painters, sculptors, new media, and multi-media artists), music, theatre performance and dance, literature (poets, novelists, biographers, etc.), crafts, design, architecture, fashion (clothing and textiles), 237

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and related ﬁelds. UNCTAD (2004: 4) makes a useful distinction between upstream activities—which are the traditional visual arts, literature, and performance—and downstream activities, such as advertising, design, publishing, and media related activities (labelled ‘the new media arts’ in the introduction to this chapter). The two streams have a symbiotic relationship. For example, the music and the visual elements of the upstream activity of a live concert performance can be captured in digital media, copyrighted, and distributed downstream by a media company. However, the emotional sensation of being in the concert hall in the presence of the performers cannot be reproduced digitally. Therefore while new technologies build new relationships between the two streams (the movement from vinyl to compact disc to downloading music, for example) the upstream activity can never be completely subsumed into the downstream. Thus while your downstream experience of music occurs via the movement of ‘bits and bites’, you need to be physically present in the concert hall for an upstream experience. Similarly, paintings and sculpture convey ideas and symbols and also generate emotions; they may be copyrighted and reproduced, but the original work of art by the creator’s own hand has a value all of its own. Note that the labels ‘upstream’ and ‘downstream’ do not imply that one is better than the other since taste is subjective. Quality is an elusive term in cultural practice, and those seeking to claim superiority for the traditional ﬁne arts are a dwindling minority; the distinction between ﬁne and applied art is becoming increasingly meaningless as far as the new media arts are concerned. As one participant in this vigorous new area puts it: What is the difference between an artist, a programmer, an architect, a researcher or a designer—all of whom work on new media/multimedia projects? Traditional divisions between the pure and the applied seem to fade . . . The expertise involved is not only artistic or technical. The skills or insights of a performance artist, for example, can create new means of computer–human interaction. (Cliche et al. 2002: 63)

Technology is increasingly part of creativity, although this represents an acceleration of a long-term trend; the ﬁlm industry is, after all, over 100 years old. These developments have brought the concept of the ‘creative industries’ to the fore and in a useful introduction to the area, UNCTAD sets out the ﬁeld as follows: The term ‘creative industries’ is of relatively recent origin. While there are obvious connections to and continuities with cultural industries, such as the performing arts and handicrafts, the designation marks a historical shift in

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Cultural Talent approach to potential commercial activities that until recently were regarded purely or predominately in non-economic terms . . . The concept of creativity [has moved] a long way from its common association with activities having a strong artistic component, to any activity producing symbolic products with a heavy reliance on intellectual property and for as wide a market as possible. (UNCTAD 2004: 4)

So much for deﬁnitions and terms, what of data? Unfortunately, the data in this area are highly problematic. We know something about stocks from labour force surveys and censuses but very little about ﬂows; either occupational mobility (ﬂows into and out of cultural occupations) or geographical mobility (movements within countries and international mobility). Moreover, multiple job holding is common, since many cultural workers must ﬁnd other income sources to sustain themselves. In addition a cultural worker may be active while registered as unemployed. Some 240,000 Americans give ‘painter, sculptor, printmaker, or craft artist’ as their prime occupation (Howkins 2002: 93). In the EU the music sector is estimated to provide employment (both full- and part-time) for some 600,000 persons; not only musicians, composers, and music teachers but also for all those engaged in the music industry, including distribution and publishing, etc. 1 But we do not know much about how many people enter the EU and US already active in this area, or intent on becoming so. Our knowledge about ﬂows of cultural talent from the developing world is even scantier. We therefore conﬁne ourselves in this chapter to the conceptual and policy issues, illustrating the main points with data when available.

9.3 Mobility and the Market for Cultural Talent This section sketches an analytical framework of how mobility ﬁts into the market for cultural talent. The framework mainly focuses on upstream cultural activities (and mostly the visual arts), although something is said about the new downstream creative industries as well.

9.3.1 The Spatial Distribution of Cultural Production To understand why cultural talent moves we have to understand the spatial distribution of cultural production. There are broadly two reasons 1

European Music Ofﬁce at: www.musicineurope.org

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why economic activities are not distributed evenly across geographical space (see Kanbur and Venables 2005). First, the world is not a ‘featureless plane’ and the existence of geographical features as well as differences in endowments of natural capital favours some activities over others. Second, producers have an incentive to cluster even when they compete (‘co-opetition’ describes this mixture of cooperation and competition) and clustering beneﬁts some activities more than others. This second effect is more important in determining the spatial distribution of creative industries than the ﬁrst; although variations in natural capital may still play a role (the early US ﬁlm industry located itself in Hollywood to take advantage of the abundant natural light of California, for example). Creative industries have a strong propensity to cluster together (Caves 2000; Callegati and Grandi 2005). Participants beneﬁt from forward and backward linkages to their suppliers and customers; ﬁrms and not-forproﬁt suppliers beneﬁt from large pools of skilled labour as well as specialist suppliers of key inputs; and ﬁrms and workers beneﬁt from observing (and copying) their competitors. Supportive public institutions, including academies specializing in the talent required by the local creative industry, further strengthen a cluster. Education in turn enjoys the philanthropy of industry, thereby attracting the best students who graduate into the local talent pool. In the ﬁlm industry, and now in the new digital media, producers also beneﬁt from the development of a specialized pool of ﬁnance (including venture capital) knowledgeable about the industry’s risks and willing to ﬁnance investment. These strengths consolidate over time, making a successful cluster a formidable competitor for any new localities attempting to break into the market. These clustering effects apply in upstream cultural activities as well. Take the case of painters. For them, clustering facilitates the rapid transmission and development of new ideas and modes of expression. Clusters of painters almost always emerge in large cities, in which incomes are high enough for spending on cultural products— the visual arts, music, dance, etc.—and for the philanthropic support of the arts including the construction of art museums, theatres, and concert halls (with large city populations providing the regular audience). Moreover, the higher income of cities, and a greater openness to new ideas among urban populations, stimulates a greater interest in the artistic avant-garde. These same factors support the creation in capital cities of what eventually become the best arts schools, attracting the best students, with an 240

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intimate link between the school and the principal market. In the art world of the nineteenth century the best route for an aspiring young painter such as the American John Singer Sargent (1856–1925) lay in Paris, and involved training at the highly selective Ecole des BeauxArts and then exhibiting at the annual Salon. Today, that young artist might choose the Royal College of Art or Goldsmiths College, both in London, giving them immediate access to a large number of collectors and art dealers. The market in capital cities is also the attraction for those trained in provincial academies: Pablo Picasso (1881–1973) and Andy Warhol (1928–87) might never have achieved fame if they had stayed in the cities of their student years (Barcelona and Pittsburgh, respectively) instead of moving to Paris and New York. Great art has been made in the provinces, but the painter is vulnerable to the fortunes of a thinner market than in a capital city. Thus Johannes Vermeer (1632–75) could make a career in Delft, and not in Amsterdam, but his income collapsed with the sudden death of his sole patron, whereas Amsterdam’s numerous and rich merchants competed to have their portraits painted by the city’s best artists. The dominance of a few cities in the global art market has increased over the last 40 or so years as more money has entered the market— the ﬁne arts (painting and sculpture) together with decorative arts and antiques generated world sales of some US$23.5 billion in 2001. 2 There were only a handful of art dealers in the New York of the 1930s, but their number grew rapidly from the 1950s onwards with the commercial success of abstract expressionism and pop art. Today, London and New York account for some 70 per cent of sales at auction and through galleries (Howkins 2002: 92). The work of living artists sells for the most at auctions in the USA (US$70,000 on average) followed by the UK (US$38,000). In 2003, New York accounted for over 60 per cent of all worldwide sales of over US$200,000, while the UK accounted for 27 per cent. 3 These cities accordingly attract a considerable amount of artistic talent, thereby reinforcing the pre-eminence of their academies. For young talent, exposure to the latest techniques and ideas is one of the primary reasons for studying abroad. Moreover, attendance at the best schools of art and music is, as we have argued, the student’s ﬁrst step into the network of patronage upon which their future livelihood depends. 2

Kusin & Company at: www.kusin.com Study by Kusin & Company for the European Fine Art Foundation (TEFAF) summarized at: www.cosmoworlds.com/tefaf-art_market_study_2005.htm 3

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In the world of painting and sculpture, students signal their potential to inﬂuential collectors with the best art schools providing a convenient screening device. For students from countries with little connection to the international art market, the best schools provide an especially large beneﬁt since collectors will mostly ﬁnd it too difﬁcult to seek out their talent otherwise. The life time earnings of, say, a Brazilian artist trained abroad in a major academy should therefore be higher than a Brazilian trained at home. There is, however, little empirical evidence on this issue. Indirect evidence comes from one study of Latin American painters by Sebastian Edwards, who calculates the real rate of return on investments in twentieth century Latin American art by collectors purchasing at auction (Edwards 2004). This is of course an imperfect indicator of returns to the artist from foreign training since the proﬁts from selling at auction accrue to collectors and dealers (very few artists sell directly at auction). If there is a resale tax such as the droit de suite which is collected in some European countries then the artist shares in the auction price but nearly all Latin American art is auctioned in London and New York which do not have the droit de suite system. 4 For Latin American works sold at auction during the period 1981–2000, the overall annual (real) rate of return was a substantial 9 per cent; but the works of foreign trained artists have only a slightly higher rate of return than those who received no training abroad (5.25 per cent versus 4.91 per cent) (Edwards 2004: 32). This small difference illustrates the importance of the tastes of collectors. Most collectors of Latin American art are from the region itself, and they favour a well established and conservative style, with only the bolder collectors valuing the latest innovations. Therefore moving abroad to get an avant-garde training has had less of a positive impact on the earnings of Latin American artists, although this may be starting to change as new and younger collectors, with more exposure to international art trends, come into the market. Young contemporary African painters may have an advantage over Latin Americans in the nature of their market. The market for traditional African ‘cultural goods’—largely produced for religious and ceremonial purposes—is much larger and more international than that for Latin American art, and indeed most of the major collectors (and collections) are based outside Sub-Saharan Africa, with the exception of South Africa. 4 The system of droit de suite is a tax on auction resales for the beneﬁt of the original creator of the work or their heirs. Initially in operation in six European countries, a common system was enacted across the European Union as of 1 January 2006.

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The average annual rate of return on African cultural goods coming to auction is considerable; 115 per cent according to estimates by Fongue (2002). Interest in African traditional art was stimulated by its impact on early twentieth century cubism, and the ﬁrst collectors bought both. This market characteristic continues, and should favour young African artists well versed in the ideas and techniques of contemporary art. Unfortunately, aside from South Africa (which dominates shows of contemporary African art) there are comparatively few young African artists capable of supplying the market. Expanding their opportunities for training and travel could therefore do much to push forward the development of the contemporary African art market. This would go some way to redressing the injustice done to Africa during the eras of slavery and European colonialism by the theft of much of the best traditional art objects from their original creators and societies. Whereas painters and sculptors aim to sell something scarce—the most successful are in effect monopoly suppliers of their own, unique, pieces— musicians aim for maximum dissemination (Howkins 2002: 91). IPRs are crucial to securing a musician’s income, and the South’s poorest countries—which typically have the weakest property rights—will often see their most successful musicians enticed away by the lucrative contracts and global marketing provided by the northern music industry. Artists will return home to undertake concerts for local audiences, but the global sales income (including that from sales in the artist’s home country) will be registered in the balance of payments accounts of the rich countries in which the music industry is based—and not in the poor country which has the cultural heritage in which the successful, but mobile, talent originated. This has been especially the case for many talented African musicians. Thus the Senegalese singer Youssou N’Dour (1959– ) reaches a global audience from his London base, while retaining a Dakar recording studio. South Africa’s music industry remains vibrant and attracts talent from across the continent, but the very best people head for Europe or the US. Hence clustering also occurs in the music industry, but for somewhat different reasons than in the ﬁne arts. Both experience a migration and circulation of creative talent to, and between, international creative clusters.

9.3.2 Mobility and the ‘Winner-Takes-All’ Market in Cultural Talent Mobility is also propelled by another characteristic of markets for cultural talent—at least in the upstream—namely the phenomenon of 243

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‘winner-takes-all’ whereby small differences in individual performance give rise to enormous differences in economic reward (Frank and Cook 1995). This phenomenon has been accelerated by new information technologies which facilitate the formation of a consensus on who are the best talents. With regard to the arts, Robert Frank sums up the resulting effect on earnings as follows: ‘Winner-takes-all’ markets have proliferated in part because technology has greatly extended the power and reach of the planet’s most gifted performers. At the turn of the [twentieth] century when the state of Iowa alone had more than 1,300 opera houses, thousands of tenors earned adequate, if modest, livings performing before live audiences. Now that most music we listen to is pre-recorded, however, the world’s best tenor can be literally everywhere at once. And since it costs no more to stamp out compact discs from Luciano Pavarotti’s master recording than from a less renowned tenor’s, most of us now listen to Pavarotti. Millions of us are each willing to pay a little extra to hear him rather than other singers who are only marginally less able or well known; and this explains why Pavarotti earns several million dollars a year even as most other tenors, many of them nearly as talented, struggle to get by. (Frank 1999: 38)

The winner-takes-all phenomenon in contemporary ﬁne arts has also been driven by the strategies and large resources of the dominant collectors; the markets for living artists are mostly small enough for wealthy collectors to act as a monopsonist, striking proﬁt sharing deals with young artists in exchange for pushing up their reputations and prices (putting an ofﬁcial stamp of approval on their work by means of prestigious exhibitions at public art museums is one popular strategy underlying philanthropic ﬁnancing). Not surprisingly, Charles Saatchi, one of the world’s most successful art collectors and dealers, also founded the UK’s premier advertising agency. And hedge fund managers are among the most active participants in New York’s contemporary art market (Frank 2005). The very best painters, musicians, and writers have skills that go beyond those that can be transmitted by education and training alone, and indeed ‘genius’ lies in creating something—be it a poem, painting, or song—that represents a radical break with tradition (the impressionist and surrealist movements in painting, for example). Not surprisingly, schooling’s impact on artist’s earnings is lower than for other professional and technical workers (Filer 1990). Indeed, some observers have argued that academic training can be a disadvantage in the visual arts, which may beneﬁt artists of exceptional talent, but born in poor countries with

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few educational opportunities (or born into poor immigrant neighbourhoods with bad schools in rich countries). The Nigerian writer Ben Okri’s description of the New York painter Jean-Michel Basquiat (1960–88) ﬁts this model: He was speciﬁcally ﬁtted for his genius. Born black, from Haiti (with its roots in voodoo, with its roots in Africa), unschooled (and so free from the limitations and stupidities of academicism, the full constriction of the right way to see, the proper way to be), a child of the streets (Dickens speaks of the best education coming from being street-wild and street-alive), and with a speaking disability. . . (Okri 2005: 65)

Basquiat’s paintings now command prices which are among the highest of post-Second World War American artists, although this is of little beneﬁt to Basquiat himself since his success accelerated even further his ultimately destructive drug addiction (and indeed his personal problems were exacerbated by ambitious art dealers and collectors intent on creating a winner-takes-all market for the artist’s work). The very high expected return from artistic success—where success has both pecuniary and nonpecuniary characteristics—together with the behavioural tendency of aspiring entrants to greatly overestimate their chances of success leads to an oversupply in many cultural markets. Much of the sector is therefore characterized by high levels of ‘search unemployment’, especially in the most attractive upstream areas, given the low probability that an entrant will achieve a place in the ‘pantheon of the arts’. Foreign artists can face as tough a time as locals, with the added disadvantages of less market knowledge and often fewer ﬁnancial resources. This was certainly true of painters trying to break into the US market of the early and mid-twentieth century. The Mexican painter, José Clemente Orozco (1883–1949) failed to progress on his ﬁrst visit (resorting to sign painting) and had only modest success on his second, eventually returning to Mexico and to fame as an outstanding muralist (Lucie-Smith 1999: 196). Similarly, the Dutch painter, Willem de Kooning (1904–97), entered New York illegally at the age of 22, worked as a house painter for many years while struggling to make his name, and eventually found fame in his mid-40s as a leading abstract expressionist (Stevens and Swan 2005). And of course we have no idea at all of how many lesser migrant talents failed completely. Some cultural markets segment into a formal sector where there are relatively full-time jobs, and an informal sector of casual work. For instance, in classical music the best funded state and city orchestras provide salaried

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full-time employment which is coveted. Only a minority of each year’s cohort of newly qualiﬁed musicians can get these jobs, and the remainder must either engage in temporary work as musicians, or combine this with some other job. At the high end of the market, the most talented international musicians may be recruited directly into the most prestigious orchestras. Thus Finland has carved out something of a niche for itself in the international market for orchestra conductors, reﬂecting the quality of the country’s musical education. As a result of these forces, the markets for ﬁne artists, musicians, and dancers are characterized by low mean earnings and a high skewness in the earnings distribution towards the lower end (Frey and Pommerehne 1989; Menger 1999; Caves 2000). The poverty rate is generally higher than among other professional and technical workers (see, for instance, Alper et al. 1996 on the US). Moreover, the incomes and employment of cultural workers exhibit a higher variance over time than other professional and technical workers (Menger 1999). Those who make unique pieces (painters and sculptors) may be ‘forced sellers’ while they are still establishing their reputation and, once that reputation is made, they will not share in the appreciating value of their early work unless they have withheld pieces from the market (although they will share in the resale value in European countries where droit de suite is in force). Musicians and novelists, whose output is reproducible, may sign over their royalties in their early years. Consequently, to make ends meet, artists have much higher rates of multiple job holding than other comparable professionals (Alper and Wassall 2000). In summary, given the high expected private return—which is rising with the spread of the ‘winner-takes-all’ phenomenon—domestic and international mobility of cultural talent has the characteristics of the migration process described in the classic Harris and Todaro (1970) model (which was created to explain rural–urban migration in developing countries). That is to say, there are a small number of very remunerative ‘slots’ in the high end cultural markets which attract aspiring artists— who also overestimate their chances of getting a slot. As a result, rates of unemployment and underemployment are high but these fail to deter the ﬂow of new entrants (many of them migrants given the concentrated spatial distribution of production in the arts) who are encouraged by the high expected returns. These market characteristics have several interesting implications for south–north migration of cultural workers. The migrant with average skill (relative to their profession) is likely to have: a low mean income 246

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(but probably a higher income than in their home country, reﬂecting a larger market for cultural products in richer countries); to work in the informal market rather than the formal market; and to hold multiple jobs. The formally trained migrant—who has no alternative but the informal market—may face intense competition from people who have no formal training (see below). However, the lack of educational opportunities which is typical of poor countries will not constitute as severe a barrier to very high levels of talent in this area, as compared with other professions. We can expect that the participation rate in the formal labour market will be even less than for nationals because many migrants will lack formal qualiﬁcations or their foreign qualiﬁcations will not be recognized (‘credentialism’). Migrants need to be young to succeed in music, dance, and some of the visual arts (on the latter, see Galenson 2001). Older migrants seeking careers in these areas are highly likely to fall into the bottom end of the earnings distribution for their talent. The rise of the new media industries may provide an alternative for those who fail to succeed in the world of upstream culture. Since many years can pass before success if achieved, entrants to upstream culture run the risk of a substantially lower level of life time earnings than their peers. In the past, when the new media industries did not exist, failed artists were left with few alternative jobs matching their skills; a problem compounded when alternative professions prefer younger workers that they can train. Today, there may be more possibilities for employment downstream for those failing to make it upstream. Indeed, cultural talent that is more risk-averse may well prefer to ﬁnd employment in the downstream, where there is a more stable job market with a deﬁned career structure. Success then depends on the deployment of the more conventional and widely distributed skills of organizational ability and management—rather than on the very speciﬁc and high-level talents (‘genius’) that deﬁne the upstream arts. Failed job seekers take refuge in noncultural employment, often hoping for better luck. Others will survive in the informal cultural market, but they face competition from entrants with no formal training. Thus African craft products are sold in streets and markets across Europe, traders sometimes being artists themselves, but often having no training. This provides an important survival livelihood for migrants who are otherwise unable to obtain employment (including illegal immigrants such as the sans-papiers in France, for example). Restrictions on immigration affect cultural workers along with all other migrants. French policy has 247

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gone through distinct phases of encouragement and discouragement, for example. During the Mitterand presidency (1981–88) the culture ministry promoted the idea of an expanded Francophone culture and helped visiting African musicians obtain visas, a contributing factor to the rise of ‘world music’ during the 1980s. But the subsequent years have seen a stricter immigration policy which has affected immigrant cultural workers along with everyone else, and the sans-papiers began to organize themselves politically to resist expulsion in the 1990s (Winders 2004). Their strategies included gaining the support of major artists, notably the actress Emmanuelle Béart. In summary, international mobility can be central to an artist’s chances of success. But this is not to say that it is always essential. The painters and sculptors of St Ives in Cornwall became internationally renowned from what was one of the most remote parts of England when they ﬁrst established themselves in the 1930s. Aboriginal artists have ﬂourished over the last two decades despite rarely leaving Australia or, indeed, their communities, being part of a value chain that extends from the outback of Australia to major galleries and museums in Sydney, London, and New York. Indeed, their work would lose some or all of the ‘authenticity’ so valued by the international art market if they did relocate. The counter-factual case of successful immobile talent should therefore caution us in being too exuberant about mobility being a precondition for success. Clearly more empirical research is needed on these issues.

9.4 Political Upheaval and the Mobility of Cultural Talent People move through choice, but also through fear. Today we see large numbers of people forced into migration as the result of social upheaval and violent conﬂict (Borjas and Crisp 2005). No doubt there is much cultural talent among their numbers, adding to the loss of their home country’s stock of talent. And aside from being victims of violent conﬂict alongside everyone else, artists are especially vulnerable by the nature of their work which can criticize the ruling order (and potentially reach a large audience to do so) or may simply be distasteful to rulers (Hitler’s hatred of modernism, for example). The Nazis in Germany persecuted ‘degenerate artists’, Nigeria’s military government imprisoned the musician Fela Kuti (1938–97) for his politics, while the Taliban regime in Afghanistan notoriously banned music. Albert 248

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Hirschman’s distinction between ‘voice’ and ‘exit’ is especially apt here (Hirschman 1970). Exclusion and discrimination are powerful forces driving ﬂight. Racial prejudice pushed African-American painters and musicians to France in the nineteenth and early mid-twentieth centuries. The colour of his skin denied Henry Ossawa Tanner (1859–1937)—who studied under Thomas Eakins at the Pennsylvania Academy of Fine Arts—a permanent teaching position in the US, but Tanner found success in France, eventually becoming a Chevalier de la Légion d’honneur. Gender persecution can also drive mobility. Djur Djura (1949– ), a Kabyle (Algerian Berber) singer rejected the traditional life that her community demanded, left Algeria, and has built an international career in which her songs express rebellion against the patriarchy and violence against women found in her homeland (Djura 1992). More recently, Africa’s political turmoil has created an exodus of artists and musicians. The musician Angélique Kidjo (1960– ) ﬂed Benin for Paris after refusing to conform to the dictatorship’s coercion of artists to make works praising the Marxist-Leninist leadership: ‘it was either stay there and shut my mouth or leave’ (quoted in Taylor 1997: 137– 8). Wole Soyinka (1934– ), the Nigerian playright and Nobel Laureate in literature, was imprisoned for his opposition to the 1969 Biafra war, and was exiled from his homeland for many years. Similarly, the Kenyan writer, Ngugi wa Thiongo (1938– ) was imprisoned and then spent 22 years in exile as a result of his opposition to the ruling party. One of the few positive outcomes of exiling cultural talent is the creation of new art, music and literature, as artists from very different backgrounds mix together. The Second World War, for example, caused a large scale migration of European painters to the US. Roberto Matta, whose example was cited in the introduction to this paper, went into exile in New York in 1939, and exercised considerable inﬂuence on the young New York School artists. One of the pioneers of post-war development economics, Albert Hirschman—himself a refugee from Hitler’s Germany— was part of an American-led network that helped artists, writers and musicians escape from Vichy France into neutral Spain and Portugal, and then onwards to the US (Marino 1999). They included the French poet André Breton who was the leader of the Surrealist movement, as well as the painters Max Ernst (German) and Yves Tanguy (French), among others. Their presence re-invigorated what had, up to that point, been the lonely existence of avant-garde artists in the US, a situation described by the critic Clement Greenberg in 1947 as ‘the dull horror of our lives’ 249

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in an isolation that was ‘crushing, unbroken, damning’ (Greenberg 1947). Robert Hughes, the Australian critic (and New York resident) sums up their profound impact as follows: . . . the Surrealists’ very presence was a tonic. The young Americans felt marginal, ignored by other Americans, provincial with respect to Paris. The Surrealist émigrés had brought the center with them. Their sense of mission, their belief in art and life were inseparable, heartened American artists who wished, above all, to believe in the value of an avant-garde. (Hughes 1997: 468)

Their sojourn in the US was a short one and, with the exception of Max Ernst, most were relieved to get back to Europe at the end of the war (André Breton never mastered English and the absence of a Parisian café life in New York impeded artistic collegiality). But surrealism not only gave conﬁdence to American artists embarking on abstract expressionism, it also permeated into the worlds of commercial art, advertising, and ﬁlm and gave rise to new and startling juxtapositions of images and words that we now take for granted in today’s media. The externalities arising from mobility are therefore signiﬁcant. They are not just artistic in nature, but include economic, social and political externalities as inﬂuential creative practices become embedded and in turn transform ways of thinking and doing in the migrant’s host country. Our own era has been one of similar mobility for the last 20 years or so have seen immense political change, including the end of the Cold War, the end of military rule and the reversion to democracy in Latin America, the spread of multiparty democracy in Africa (including the end of apartheid rule in South Africa), and political liberalization and democratization in Asia (notably in South Korea and Taiwan). This is not to imply that the ‘third wave of democratization’—the term used by Samuel Huntingdon to describe the political liberalization from the 1980s onwards (Huntingdon 1991)—has always created full democracies or is necessarily irreversible (and Goldstone et al. (2003) ﬁnd that new democracies have a higher risk of conﬂict). But for our purposes, it is certainly the case that these advances have done much to liberalize the international movement of cultural talent over the last 20 years. In the ﬁrst 40 years after the Second World War, much talent circulated from south to north, as artists and writers visited and settled in the cities of their former colonial masters leading to a new literature exploring the post-colonial world and the reality of immigration (see for instance the work of Derek Walcott (1930– ), the West Indian poet and dramatist). But movement between the Cold War’s ‘East’ and ‘West’ was largely conﬁned to ofﬁcially 250

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sanctioned ‘cultural exchanges’, although clandestine interactions between visiting writers and artists with their persecuted hosts was important in some eastern bloc countries, notably in the creation of the ‘Charter 77’ movement in Czechoslovakia. The third wave of democratization has generated greater possibilities for the circulation of talent through art, music, and literature festivals as well as commercial tours of music, dance, and theatre. In the visual arts this is evident in the new biennials that have emerged. The oldest biennials (Venice, Sao Paulo, and Documenta in Kassel, Germany) have been joined by Johannesburg (established in 1995 after the end of apartheid and the international cultural boycott against South Africa), Gwangui in South Korea (started in 1995 after South Korea’s democratization in the late 1980s), and Senegal’s Dak’Art established in 1992 (which has bravely soldiered on despite chronic underfunding). In the past these upstream cultural events, and the mobility of talent associated with them, were largely seen as worthy endeavours but ones that had few ramiﬁcations for a country’s economic development. However, the last ten years have seen a considerable change in attitudes; upstream creative activities are becoming more important to strategies and practices in the creation and encouragement of downstream creative industries. It is therefore to these policy issues that we now turn.

9.5 Policy Implications The last few years have seen rising interest in the role of the creative industries in development (Barrowclough and Kozul-Wright 2006). A notable recent initiative is that of UNCTAD with the support of the government of Brazil—in particular the culture minister (and celebrated musician) Gilberto Gil Moreira—which is seeking to establish an ‘international centre on creative industries’, in order to better understand the sector’s economic and development impact. Three major factors account for this new attention. First, the acceleration in the restructuring of the global economy has forced countries that have successfully developed on the basis of manufacturing to expand their service sectors (particularly internationally traded services) as manufacturing shifts to lower cost producers, principally China. Moreover, with the rapid and easy diffusion of technology, creativity is one of the few remaining sources of product differentiation and competitive edge; in the fashion industry 251

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its value-added far exceeds production and material costs (Santagata 2002: 4). And this is becoming evident in many other industries; Apple deﬁnes itself by a creative and design edge that gives its products a premium over rivals, even though the contents are often sourced from the same manufacturing plants. Some analysts, notably Richard Florida, have gone so far as to claim that creativity is now the decisive source of competitive advantage for companies and, by extension, for countries (Florida 2002: 4). Singapore is one country that has a clear strategy (called ‘Renaissance City’) to develop and encourage creative industries to reduce its dependence on traditional sectors—which are now under intense competition from new suppliers (Heng et al. 2003; Government of Singapore 2005). This includes encouraging upstream cultural interactions through: increasing scholarship funding to send local talent abroad (as well as foreign talent based in Singapore) for training; according greater recognition to Singaporean artists by making them cultural ambassadors for Singapore abroad; and upgrading the Singapore Youth Festival into an international event, including collaboration between schools in the arts (Government of Singapore 2000: 6). However, the creative sectors are less amenable to the successful government planning that Singapore and the other Asian success stories used in the heyday of their manufacturing development and success may yet prove elusive. Second, urban regeneration schemes increasingly look to the creative industries to ﬁll the gap left by the decline in traditional (often ‘smoke stack’) industries that led growth in the nineteenth and twentieth centuries (Bales and Pinnavaia 2001; McCarthy et al. 2005). Cultural capital such as concert halls and art museums is one of the ‘location speciﬁc’ factors that attract the ‘mobile factors’ of capital and talent (both domestic and foreign) into urban areas (Dunning 1997). Moreover, cultural industries are now seen as a potential driver of urban regeneration because many cultural products are made by small manufacturing enterprises (SMEs), and SMEs are in turn seen as an attractive replacement for declining large scale industries (not least in their more positive impact on the local physical environment). In addition, the market mechanism acts to attract cultural talent independently of any local government strategy or assistance since the fall in property values (associated with urban decline in major cities) provides cheap space for artists, writers, and others. The recent renaissance of the arts in the otherwise depressed economy of Berlin, and the resulting ﬂow of European and international talent into the city, is an example of this process at work. 252

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Recognizing the positive impact of the cultural sector the European Union is now encouraging the mobility of cultural talent across the region. Measures include reforms to eliminate the double taxation of incomes from the arts and to agree common standards on qualiﬁcations for employment, etc. (Audéoud 2002). A number of associations are now active in promoting global mobility in the arts, including the Informal European Theatre Meeting (IETM) (Staines 2004). There is also great scope for more philanthropic action to facilitate mobility. One example is the Pollock–Krasner foundation in the US, which is funded from the estates of Jackson Pollock and Lee Krasner. The foundation provides grants to artists from across the world, including travel funding to assist interaction between artists of different nationalities. In poorer countries with very limited budgetary resources and many competing priorities it may well have to be philanthropy that encourages mobility rather than state subsidy, and there is scope for more international philanthropic action in this area. Third, smaller low income countries need to diversify to reduce their dependence on traditional commodity exports for while commodity prices have recently risen (and commodity earnings provide valuable foreign exchange) commodity dependence has its drawbacks—notably the economic volatility associated with boom–bust cycles in commodity markets. At the same time they now face intense competition from China which is increasingly dominant in sectors such as clothing and textiles that traditionally provide the ﬁrst rung in the ladder of industrial development. This has re-awakened interest in service industries, and principally tourism where many low income countries have at least some location speciﬁc advantages. In addition, there is now an emerging interest in the potential for creative industries where national cultures—in music, dance, and the visual arts—are location speciﬁc factors. Knowing how to promote and nurture clusters in the developing world, particularly in the smaller and poorer countries, is a new but important policy issue. Importantly, any national strategy must recognize that the most talented cultural workers in low income countries are themselves highly mobile internationally. When attracted away from their home countries, their royalties ﬂow to international media companies. These show up in the ‘invisible’ earnings of the rich countries where the international media is headquartered (as well as in the public revenues of rich country states via corporation taxes), rather than in the balance of payments accounts (and ﬁscal accounts) of poor countries. For poor countries the fundamental task should be to improve the investment climate for 253

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small business, of which creative industries are just one part. Many poor countries have regulatory and tax environments that discourage small business creation and employment and these need major reform. And talent will not remain at home if political regimes remain repressive— democratization is therefore vital to the sector’s expansion in poor countries.

9.5.1 Cultural Talent and the Quality of Life In addition to its potential contribution to economic growth, cultural talent has a broader role in improving the quality of life (Nussbaum and Sen 1993) as well as human happiness, a metric of success of increasing interest to economists (Layard 2005). Cultural goods are similar to environmental assets in having an option and existence value in addition to their pure use value. Many people value the existence of the temples of Angkor, Cambodia, irrespective of whether they will ever get to see them, in the same way that they value blue whales, despite never having seen one in the ﬂesh—in both cases a contingent valuation study could estimate the option and existence value, and in monetary terms this would probably far exceed their use value. It follows that promoting the mobility of cultural talent, or at least reducing the impediments, would be welfare improving when it results in a more efﬁcient pattern of cultural production. Moreover, it must be emphasized that cultural mobility not only contributes to the production of existing types of cultural goods, it also changes the nature of cultural goods by giving rise to new forms of music, visual art, performance, and literature. The interaction between artists and musicians of different immigrant communities can be especially creative. The birth of jazz in early twentieth century America is a famous example. A contemporary example comes from the British music scene. ‘Apache Indian’, a British musician of Punjabi descent was inﬂuenced by the local Afro-Caribbean community in his native Birmingham to mix reggae into bhanga (itself a blend of dancehall and Punjabi traditional music) to create what the musicologist Timothy Taylor calls ‘a very British sound’ (Taylor 1997: 155–6). And travel by artists to experience new cultures is also another facet. Chris Oﬁli, a British-born artist of Nigerian descent was funded by the British Council to visit Zimbabwe while still a student, for example. The resulting African inspired images set him apart as one of the most innovative members of the Young British Artists movement that emerged in the early 1990s in the UK. 254

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The mobility of talent also brings different cultures into interaction with each other, and artists enrich our lives by explaining and interpreting the often hard life of the immigrant, a politically important counterbalance to racism and exclusion which feeds on ignorance about other people and their cultures. In Germany the second generation of the country’s largest migrant group—Turks who arrived as ‘guest workers’ in the boom years of the 1960s and 1970s—are now exercising a stronger inﬂuence on the national culture, notably in ﬁlm and in writing. A German-Turkish ﬁlm director, Neco Celik, sums it up in this way: ‘The second generation was always one of interpreters. Because we could speak German, we had to translate and ﬁll in forms. That gave us independence and cultural agility’ (Benoit 2005). Similarly, writers of south Asian descent such as Salman Rushdie and Hanif Kureishi have revitalized English literature since the 1970s. Culture also contributes to our understanding of the human experience of movement, and the interaction between different societies in each era of globalization. These themes have been especially important to African and African-American artists reﬂecting, as they do, Africa’s history—in particular the transatlantic economy in slaves—as well as today’s reality of refugees and displaced people attempting to reach Europe and a better life. Thus in his piece ‘Trade Routes’ the London-born Nigerian artist Yinka Shonibare (1962– ) recreated the parlour of a Victorian philanthropist upholstered with African batik. Colourful batik—seen everywhere in west Africa—is widely thought to have originated in Africa, but the technique and the basic designs come from Indonesia, with Dutch and British merchant ships ﬁrst carrying the cloth to west Africa during the era of the slave trade in the eighteenth century. Shonibare’s work has been exhibited across the world including the Venice Biennele—where, ﬁttingly, it was shown in a sixteenth century merchant’s house in a city that is the epitome of the early mixing of East and West through commerce and art. These broader effects of talent’s mobility imply that there may be considerable social returns to public action in the form of subsidies that aim to promote the international circulation of talent. Thus, when the governor of the Province of Veracruz awarded a travel scholarship to the young Diego Rivera (1886–1957) he advanced the career of an artist whose lifetime of travel contributed to enriching Mexican art and culture, notably in his great cycle of murals inspired by seeing the frescoes of the Italian renaissance masters during his European visits (Lucie-Smith 1999: 199). 255

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9.6 Conclusions Cultural talent is internationally mobile in many ways, and for many reasons, including the desire to be educated and trained in the chosen ﬁeld, the expectation of high rewards (both monetary and nonmonetary, including ‘fame’), and ﬂight from political repression and conﬂict. This chapter has explored a number of issues relating to the international mobility of cultural talent. It has only chipped away at the surface of what is a large and fascinating topic. Five main messages emerge from our discussion and analysis of the issues. Our ﬁrst message is the importance of the spatial concentration of cultural activity, both the upstream arts and the downstream creative industries, to understanding the mobility of talent. These are activities which beneﬁt from people clustering together, for reasons to do with having close to hand a large pool of talented labour, knowledgeable consumers, and ﬁnanciers willing and able to bear the risks. From this follows our second message, namely that the existence of these clusters attracts migrants, both temporary and permanent; to be the most successful painter, musician, or ﬁlm-maker you greatly increase your chances by heading for one of the main clusters of activity. International migrants obviously face greater costs and barriers to entry than national migrants, but both are propelled by much the same incentive, namely the high expected return from being employed at the heart of their creative industry. The third message is that markets for talent are undergoing profound change as new creative industries open up, and as increasing numbers of countries take the view that they have to expand their service sectors to offset the decline of traditional manufacturing industries—many of which are increasingly concentrated in the larger developing countries. There is a symbiotic relationship between the upstream arts and the downstream creative industries since the former attract foreign and domestic investment in the downstream. Hence any effective national strategy must encourage both, and countries which protect IPRs, have a good system of education and training, and which are politically open and liberal, will have a head start in the global creative economy. This is the fourth message. The ﬁfth and ﬁnal message is that the interaction and inﬂuence of cultural talents upon each other through mobility gives rise to new cultural products which can signiﬁcantly improve the quality of life. Therefore, the mobility of talent should not be viewed simply as a means

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to economic growth; it must also be seen as a contributor to human development more broadly.

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Cultural Talent McCarthy, K.F., E. Heneghan Ondaatje, L. Zakaras, and A. Brooks (2005). Gifts of the Muse: Reframing the Debate about the Beneﬁts of the Arts. Santa Monica: RAND. Menger, P.-M. (1999). ‘Artistic Labor Markets and Careers’, Annual Review of Sociology, 25: 541–74. Nussbaum, M. and A. Sen (eds) (1993). The Quality of Life. Oxford: Oxford University Press for UNU-WIDER. Okri, B. (2005). ‘On Basquiat’, Modern Painters, May: 62–7. Santagata, W. (2002). ‘Creativity, Fashion and Market Behaviour’, Institutions and Creativity (EBLA) Working Paper, 05/2002, International Centre for Research on the Economics of Culture, Institutions and Creativity (EBLA). Turin: University of Turin. Available at: www.eblacenter.unito.it/WP/5_WP_Ebla.pdf Staines, J. (2004). Global Roaming: Mobility Beyond Europe for Professional Artists and Arts Managers. Brussels: Informal European Theatre Meeting. Available at: www.on-the-move.org Stevens, M. and A. Swan (2005). De Kooning: An American Master. New York: Alfred A. Knopf. Taylor, T.D. (1997). Global Pop: World Music, World Markets. London: Routledge. UNCTAD (2004). ‘Creative Industries and Development’, paper prepared for UNCTAD Eleventh Session, 13–18 June, São Paulo. Winders, J.A. (2004). ‘African Musicians at the Crossroads of Contemporary Parisian Culture and Society’, paper presented at the European Social Science History Conference, 24 March, Berlin.

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Part III Additional Topics

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10 International Organizations as a Profession: Professional Mobility and Power Distribution∗ Jean-Marc Coicaud

10.1 Introduction The role of international organizations grows with the acceleration of globalization and the increasing importance of global governance. However, thus far, only limited and rather narrow research has been generated on the subject. It is a reality that reﬂects how broadly understood international studies are, as well as what the power realities of the world are. While international relations have traditionally focused on more political issues (Barnett and Finnemore 2004: vii–viii), and international law on an external description of international organizations, the internal analyses of international organizations, especially in terms of human resources, remain limited. 1 The failure to address more prosaic institutional and organizational aspects has left the study ∗ For Patrick Weil. The author wishes to thank Leila Laouadi and Jean-Marie Chenou for their research assistance. Jibecke Jönsson and Louise Bergström helped improve the style of the text. The author also wishes to thank the Human Resources Department of the United Nations system, the International Monetary Fund and the World Bank Group for their help. The comments of a number of colleagues helped improve the text; these include Tony Addison, Yves Dezalay, Martha Finnemore, Henri Fourcault, Arnaud Guillois, Makiko Koriyama, Giovanni Mastrogiacomo, Claude Sauveplane, Andrés Solimano, Rahul Sur, Juha Uitto, Vasu Vaitla, Roland Vaubel, and Thomas G. Weiss. Needless to say, the author takes responsibility for the errors that may exist in the text. 1 A sample of good academic studies on the international civil service include Krosney (1967); Jordan (1972); Weiss (1975); McLaren (1980); Beigbeder (1988, 1996); Cooker (1990); Mouritzen (1990); Dijkzeul (1997); Udom (2003); and Vaubel et al. (2006).

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of international organizations as a profession, and as a workplace, suffering from a striking lack of research. The way in which academic research tends to overlook the need to study international organizations, and more speciﬁcally the inﬂuence of the professional culture on the functioning and work of these organizations, can be explained by two ways, in which power impacts scholarship. First, it is more attractive to analyse power than the margins of power. Second, the study of power is itself shaped by the very power that it studies. International organizations are considered secondary institutions and, as a consequence, their marginal importance only leaves room for rather superﬁcial examinations. In addition, despite the growing interaction between academia and international organizations, a signiﬁcant gap remains between the two. Also, although there has been some improvement in both the collection and transparency of data on international organizations, they are neither systematic nor consistent from organization to organization. This chapter is an attempt to bring some clarity to these issues by examining why international organizations are an attractive workplace to professionals with skills marketable both internationally and nationally. In addition to the internal dynamics, this will also provide a better understanding of the links between international organizations, the people employed by these, and the distribution of power (economic, social, political, and even cultural) at the national and international level. Against this background, the chapter proceeds in three steps. First, it examines what leads people to join international organizations (including how they envision their work). Second, it shows that the marketability of international organizations and of the professionals working for them is an indicator of the power relations at the national and international level, and of the place that international organizations occupy in these. Moreover, this section reﬂects on the socioeconomic and educational proﬁles of international civil servants. Third and ﬁnally, this chapter draws some lessons from the analysis of the mobility of professionals in the context of international organizations and reﬂects on the questions that the ﬁndings leave pending for further research.

10.2 Professional Attractiveness of International Organizations To grasp the attractiveness of international organizations to skilled professionals, three questions will be considered: ﬁrst, what is the magnitude 264

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of international staff in international organizations, coming both from developed and developing countries? Second, what are the differentials of ﬁnancial beneﬁts among international organizations, as well as vis-à-vis national governments, universities, and the private sector, in developed and developing countries respectively? What role do these differentials play in the migration of professionals? Third, beyond ﬁnancial motivations, what factors (such as exposure to an international environment, interaction with qualiﬁed peers, and career development) have an impact on, and to what extent do they inﬂuence, the decision of professionals to join international organizations?

10.2.1 Magnitude of International Staff in International Organizations To account for the magnitude of international staff in international organizations, it is necessary in the ﬁrst instance to focus on who is employed by international organizations. MULTIPLICATIONS OF INTERNATIONAL ORGANIZATIONS With the widening and deepening of global governance and globalization, the number of international organizations is growing to cover more and more sectors—some organizations being more important than others. At the most basic level, an international organization is an institution established through an agreement made by three or more states, with a permanent secretariat that performs ongoing tasks. The US Federal Government’s Human Resources Agency identiﬁes ﬁve main categories of international organizations: 2 (i) United Nations with its subsidiary bodies, organs, and programmes; 3 (ii) UN specialized agencies; 4 (iii) international ﬁnancial institutions such as the International Monetary Fund (IMF) and the World Bank Group; (iv) regional organizations such as North Atlantic Treaty Organization (NATO) and the European Union (EU); and ﬁnally 2 Ofﬁce of Personnel Management, The Federal Government’s Human Resources Management (www.opm.gov/employ/internat/LIST.asp). 3 The United Nations Secretariat; the UN Children’s Fund (UNICEF); the UN Development Program (UNDP); the UN Environmental Program (UNEP); the UN High Commissioner for Refugees (UNHCR); the UN Ofﬁce of Drug Control and Crime Prevention (UNODCCP); the UN Relief and Works Agency for Palestine Refugees in the Near East (UNRWA); the UN University (UNU); the International Court of Justice (ICJ); and the World Food Programme (WFP). 4 Among the specialized agencies of the United Nations are: the Food and Agriculture Organization (FAO); the International Atomic Energy Agency (IAEA); the International Labour Organization (ILO); the UN Educational, Scientiﬁc and Cultural Organization (UNESCO); the World Health Organization (WHO); and the World Intellectual Property Organization (WIPO).

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(v) other international organizations including the International Criminal Police Organization (INTERPOL) and the World Trade Organization (WTO), formerly the General Agreement on Tariffs and Trade (GATT). GEOGRAPHICAL BREAKDOWN OF INTERNATIONAL STAFF IN INTERNATIONAL ORGANIZATIONS Given the difﬁculties in obtaining information and data on the human resources of international organizations, this chapter focuses on three international organizations, namely the UN, the World Bank Group, and the IMF. 5 In 2005, the staff employed by the UN Secretariat, its subsidiary programmes, funds, and organs worldwide amounted to 40,074 (UN 2005a). Adding to this number the staff of 27 of the most important international organizations in 2000, comes to 73,660 (Vaubel et al. 2006). Considering how many other international organizations there are, one could estimate that the total of people working for international organizations worldwide may amount to approximately 140,000. When it comes to the UN Secretariat, out of the total of 15,989 staff with appointments for one year or more in 2005, only 2,581 6 were recruited under the system of geographical distribution. 7 Beyond these, in the UN Secretariat (including all categories: directors, professionals, and general service staff) 24 of the 191 member states occupied almost three-quarters (72.2 per cent) of the positions. For example Ethiopia, France, Kenya, the Philippines, the UK, and the US, all had more than 400 nationals in the Secretariat. Including general service staff from those states that host UN facilities (Austria, Chile, Ethiopia, Kenya, Lebanon, Switzerland, Thailand, and the US) further increases their representation. Including all staff categories, 177 of the 191 member states were represented in the UN compared to 174 in the posts subject to geographical distribution. Fourteen member states remained unrepresented. 8 Turning to the staff of the World Bank Group, according to its Annual Report 2005, approximately 8,700 staff from 164 countries are posted in 5 More speciﬁcally, the focus will largely be on the UN due to the access of information of the author. 6 This number does not include all staff categories (see UN 2005a: 10). 7 The number of staff that each member state is entitled to have in virtue of the system of geographical distribution is based on the scale of assessments, i.e., on the amount of the member state’s ﬁnancial contribution to the regular budget of the UN. 8 Angola; Brunei Darussalam; Comoros; Kiribati; Liechtenstein; Marshall Islands; Monaco; Nauru; Palau; Samoa; Sao Tome and Principe; Timor-Leste; Turkmenistan; and United Arabs Emirates.

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more than 100 country ofﬁces worldwide (World Bank 2006). Internal geographical distribution of the Bank is categorized according to economic standing, as Part I and Part II countries. Part I countries are, by and large, developed countries, donors to the International Development Association (IDA) who pay contributions in freely convertible currencies. 9 Part II countries, essentially developing countries, may be donors and are entitled to pay most of their contributions in local currencies.10 Nationals of Part I countries account for 39 per cent of all staff, and 63 per cent of management and senior technical positions. Nationals of Part II countries account for 61 per cent of all staff and 37 per cent of management and senior technical positions. The 28 ofﬁcers in the senior management of the World Bank include nine Part II country nationals. For the IMF, 141 nationalities are distributed geographically (IMF 2005a: 89).11 According to the IMF Diversity Annual Report 2004 (IMF 2005b: 15–18), only 7 per cent of these originate from Africa (an increase of 0.6 per cent in the past ﬁve years) and they are increasingly concentrated in the lowest grade group. The Middle Eastern countries, especially the Arab countries, also suffer from an ever growing under-representation with only 4.1 per cent from this region, and the total of Arab staff being 9 For more information, and for statement of voting power, and subscriptions and contributions of IDA Members, see ‘Financial Statements’ (World Bank 2006). 10 List of Part I and Part II IDA member countries: Part I members: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Kuwait, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Russian Federation, Slovenia, South Africa, Spain, Sweden, Switzerland, United Arab Emirates, United Kingdom, United States. Part II members: Afghanistan, Albania, Algeria, Angola, Argentina, Armenia, Azerbaijan, Bangladesh, Barbados, Belize, Benin, Bhutan, Bolivia, Bosnia and Herzegovina, Botswana, Brazil, Burkina Faso, Burundi, Cambodia, Cameroon, Cape Verde, Central African Republic, Chad, Chile, China, Colombia, Comoros, Democratic Republic of Congo, Republic of Congo, Costa Rica, Côte d’Ivoire, Croatia, Cyprus, Czech Republic, Djibouti, Dominican Republic, Ecuador, Arab Republic of Egypt, El Salvador, Equatorial Guinea, Eritrea, Ethiopia, Fiji, Gabon, The Gambia, Georgia, Ghana, Grenada, Guatemala, Guinea, Guinea-Bissau, Guyana, Haiti, Honduras, Hungary, India, Indonesia, Islamic Republic of Iran, Iraq, Israel, Jordan, Kazakhstan, Kenya, Kiribati, Republic of Korea, Kyrgyz Republic, Lao People’s Democratic Republic, Latvia, Lebanon, Lesotho, Liberia, Libya, former Yugoslav Republic Macedonia, Madagascar, Malawi, Malaysia, Maldives, Mali, Marshall Islands, Mauritania, Mauritius, Mexico, Federated States of Micronesia, Moldova, Mongolia, Morocco, Mozambique, Myanmar, Nepal, Nicaragua, Niger, Nigeria, Oman, Pakistan, Palau, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Poland, Rwanda, St. Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Samoa, São Tomé and Principe, Saudi Arabia, Senegal, Serbia and Montenegro, Sierra Leone, Singapore, Slovak Republic, Solomon Islands, Somalia, Sri Lanka, Sudan, Swaziland, Syrian Arab Republic, Tajikistan, Tanzania, Thailand, Timor-Leste, Togo, Tonga, Trinidad and Tobago, Tunisia, Turkey, Uganda, Ukraine, Uzbekistan, Vanuatu, Vietnam, Republic of Yemen, Zambia, and Zimbabwe. 11 A9–A15 levels correspond to professional staff, B1–B5 levels correspond to more senior, and managerial, positions. As for A1–A8 levels, they are support staff, normally recruited locally except under particular circumstances (e.g., language skills requirements). However, within the local job market, efforts are made to recruit as diverse support staff as possible.

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as low as 2.4 per cent. In contrast to the African region, the Middle Eastern representation is stronger in the higher grades. The representation of transition countries (former communist countries) on the other hand has been steadily increasing to a 4.8 per cent representation of the total IMF staff, with a higher representation in the ‘economist career stream’ than in the ‘specialized career streams’.12 During the past ﬁve years, the IMF has hired 52 candidates from the region (compared to 11 in 2004), accounting for 6.7 per cent of all recruitment. However, none of them have yet reached the B grades, the senior and managerial positions. European transition countries comprise 16 per cent of Europe’s representation IMF wide (2 per cent of the B grades), compared to UK staff that alone comprise 19 per cent of Europe’s representation (32 per cent in the B grades) IMF wide. The 16.6 per cent representation of the Asian region is close to the regional quota of 18 per cent, but is unevenly distributed between India, Australia, New Zealand on the one hand, and the east Asian countries (ASEAN+3)13 on the other. The most over-represented country is India with 28 per cent of the Asian region’s representation (48 per cent in the B grades). For the Western hemisphere, US and Canadian staff comprise 67 per cent of all Western nationals IMF wide (74 per cent in the B grades). As for states other than the US and Canada, Peruvian staff comprise 18 per cent of all other staff from this region, the Brazilian staff account for 13 per cent, and, ﬁnally, Argentinean staff represent 12 per cent of this group’s representation IMF wide (28 per cent in the B grades) (IMF 2005b: 18).

10.2.2 Differentials in Financial Beneﬁts In light of the fact that differentials in ﬁnancial beneﬁts are generally considered critical to the decision of professionals to migrate internationally, what are these differentials in the context of international organizations? Where do they stand in comparison to ﬁnancial beneﬁts offered by national civil services, the private sector, and universities in developed and developing countries? 12 The ‘economist career stream’ refers to staff members employed as economists; it is by far the largest professional group within the staff. The ‘specialized career streams’ refer to noneconomist positions such as the department of human resources’ staff, library staff, secretaries, etc. 13 ASEAN+3 comprises Brunei, Cambodia, China, Indonesia, Japan, Korea, Lao (PDR), Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam (see IMF 2005b: table 22).

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FINANCIAL BENEFITS OF INTERNATIONAL ORGANIZATIONS The ﬁnancial beneﬁts of international organizations are not limited to salaries. They can include dependency beneﬁts, education grants, rental subsidies, pensions, family visit travels, annual leave, and others.14 However, for the sake of simplicity, and because they constitute a strong sample of analysis, the focus will here mainly be on salaries. When it comes to the UN, speciﬁc remuneration systems are applied to the general service (support staff) and related locally recruited staff, as well as to the ﬁeld service (in particular peacekeeping mission staff). But since the professional and higher categories are generally considered to set the common system of salary, the focus should be on these. The salary of the professional staff of the higher categories is made of two main elements: a base or ﬂoor (minimum) salary15 and a post-adjustment. Postadjustment, as an integral and signiﬁcant part of the salary, is a cost-ofliving adjustment designed to preserve equivalent purchasing power for all duty stations.16 It represents a signiﬁcant addition to the base salary. For instance, as of January 2006, a D1 post, the post of a principal ofﬁcer, in step 1 (out of 15 possible steps) without dependants in New York had a base salary of US$83,587. To this base salary in New York a postadjustment of US$53,244 was added. In Tokyo, one of the most expensive cities in the world, the post-adjustment amounted to US$74,141.17

14 For more on these beneﬁts, see United Nations Common System of Salaries, Allowances and Beneﬁts (http://icsc.un.org/resources/pdfs/sal/sabeng03.pdf). Also the United Nations General Assembly decided that international civil servants are tax relieved, and thus most member states have granted UN staff exemption from national income taxation on their UN emoluments. In the cases where member states still tax the emoluments of their nationals, the organizations reimburse the staff members. 15 Salary scales of the professional staff in the UN and its specialized agencies are determined by means of a comparison of the salaries of professional staff working at the UN in New York with the salaries of US civil servants in Washington, DC, plus a small differential or margin to take into account factors mostly related to expatriation (about 90 per cent of professional staff in the UN system work outside the home country). The practice of basing the salaries of international civil servants on those of a comparator civil service arose in 1921 when the League of Nations decided that to recruit highly qualiﬁed staff, representative of its member states, the salary scale for internationally recruited professional staff should compare favourably to the highest paid national civil service. Since that time, the Noblemaire Principle has served as the rationale underlying the salary system. In 1921, the comparator was the British civil service. Since the founding of the UN in 1946, one of the best paid national civil services has been that of the US. 16 Differences in living costs are measured through periodic place-to-place surveys conducted at all duty stations. Put in relation to the base of the system (New York), a postadjustment index is established for each duty station. 17 Post-adjustment calculated according to the ‘Consolidated Post Adjustment Circular’, ICSC/CIRC/PAC/377, International Civil Service Commission, 1 May 2006, United Nations, New York, in relation to the UN ‘Salary scale for staff in the Professional and higher categories,

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The ﬁnancial beneﬁts of international organizations show some differentials. Traditionally, the salaries of professionals at the World Bank and the IMF are signiﬁcantly higher than those of the UN. Salaries in these organizations are adjusted not only to the US public sector, but also to the salaries offered by the private ﬁnancial and industrial ﬁrms. Different classiﬁcation of posts complicates the comparison of salaries across these organizations, as does the difference of beneﬁts and post-adjustment as well as times of reference for data. Yet, taking the minimum salary of each position under the highest directing role in each of these three organizations from three reports published within the same 12 months, one can compare the following minimal salaries: the UN, assistant-secretary general, as of 1 January 2005, US$172,860; the IMF, department director, as of 1 May 2005, US$234,350; and the World Bank, managing directors and senior vice presidents, as of 1 July 2004, US$242,500.18 COMPARING THE FINANCIAL BENEFITS OF INTERNATIONAL ORGANIZATIONS WITH NATIONAL CIVIL SERVICES Traditionally the salaries of international organizations are calculated according to the best paid national civil service.19 Needless to say, this means that compared to the national civil service of developing countries, the ﬁnancial beneﬁts associated with a career in an international organization are considerable. The ﬁgures in Table 10.1, presenting the yearly employee wage of sample countries are, in this regard, a useful indication, although to be interpreted with caution.20 The differences of ﬁnancial beneﬁts between international organizations and the national civil services of developed countries are less clear. Surely, the post-adjustment makes the overall UN salary (base salary and showing annual gross salaries and net equivalents after application of staff assessment’, effective 1 January 2006. 18 See the International Civil Service Commission (http://icsc.un.org/resources/pdfs/sad/ ss/sal0501.pdf), IMF (2005a: 87), and World Bank (2006). For a more detailed salary structure of the UN, the World Bank, and the IMF, see annex 5 of Coicaud (2006). 19 For a recent overview of this issue, refer to UN (2005b: 39–57). 20 This table presents the average annual government wage during the 1990s in US dollars. Although incomplete, these ﬁgures give an idea of salaries of civil services in developing countries and allow a comparison with the salaries of international organizations. The data comes from the World Bank’s Public Sector Employment and Wages Database, and was prepared by Giulio de Tommaso and Amit Mukherjee during 2000–01 (it is available at http://sima-ext.worldbank.org/publicsector/). The wage ﬁgures, originally in Local Currency Unit (LCU), have been converted into US dollars for the sake of comparison. The wage ﬁgures of 1997 have been converted according to the rate of 1 January 1997. See also Civil Service Systems in Comparative Perspective (1997), papers presented at Indiana University, Bloomington IN, 5–8 April 1997, unpublished. The papers presented at this conference are available at: www.indiana.edu/∼csrc/csrc.html

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An International Profession Table 10.1 Average Government Employee Wage in Sample Countries Country

Argentina China Colombia Egypt India Indonesia Jordan Kenya Lebanon Mexico Morocco Pakistan Russian Fed.

Average government wage, 1997 price (US$)

Year

15,000 965 6,095 4,125 2,090 1,375 4,230 1,690 5,670 4,700 4,895 1,220 1,520

1996–2000 1996–2000 1991–95 1991–95 1996–2000 1996–2000 1996–2000 1991–95 1991–95 1996–2000 1991–95 1996–2000 1991–95

Notes and source: See text and footnote 20.

post-adjustment) more attractive ﬁnancially than most salaries in the national administrations of developed countries. But when one compares international organizations’ salaries with the total cash remuneration of national civil service expatriates (base salaries and expatriation allowance), especially in the foreign service, the differentials turn to the advantage of developed countries, where expatriation beneﬁts are substantially better.21

FINANCIAL DIFFERENTIALS BETWEEN INTERNATIONAL ORGANIZATIONS AND UNIVERSITIES When it comes to the ﬁnancial differentials between international organizations and universities, again, academic salaries are much lower in developing countries than in developed countries, leaving the former unable to compete with the latter.22 21 On this issue, the ﬁndings of a comparative study of the remuneration of the European institutions are quite telling, ‘The net remuneration levels of the British, Italian and Danish Permanent Representations are generally above that of the EU institutions. At the French Permanent Representation the remuneration level is higher, or at about the same level, than that at the EU for most of the grades’ (PLS Ramboll Management 2000: 12). 22 For academics’ working conditions and salaries in developing countries, see World Bank (2000: 23–4).

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The comparison between salaries in international organizations and salaries in academia in developed countries tends to favour international organizations. There are of course exceptions, especially in the US. The competitive character of the academic job market and the ability of top American universities to provide high salaries for world-class experts lead them to offer strong ﬁnancial beneﬁts. This is particularly the case for academic ﬁelds that compete with the private sector, such as science, technology, economics, or business. INTERNATIONAL ORGANIZATIONS AND THE PRIVATE SECTOR When comparing the differentials of ﬁnancial beneﬁts in international organizations to the private sector, it makes sense to focus on companies with an international reach. Somewhat similar to international organizations vis-à-vis national administrations, these call upon a task force with advanced skills (including language skills) that perform well internationally. In addition, the structure of the ﬁnancial beneﬁts that they offer, including expatriation packages, echoes that of international organizations. In this regard, the private sector offers better ﬁnancial beneﬁts. This is why the salaries of the private sector serve as a benchmark for the salaries of ﬁnancial international organizations to ensure the attraction of the best professionals available on the job market. Incidentally, the salaries of the private sector are accompanied by a strong marketability of accomplished professionals from the private sector vis-à-vis international organizations. This is especially the case for ﬁnancial international organizations, where good academic credentials and a ﬁrst-hand experience of economic issues are valued. To a certain extent, this is also the case for the UN. The reputation that the private sector can have in terms of dynamism, efﬁciency, and good management of resources is viewed as an asset, not only by organizations that deal with economic development (see UNDP 2004, for example), but also by the areas of the UN in need of institutional and operational improvement, such as human resources and management. The difﬁculty for professionals to re-enter the private sector after an experience in international organizations gives an indication of the marketability of international organizations vis-à-vis the private sector. The damaged reputation of the UN in terms of management and ability to deliver taints the marketability of its workforce outside the UN. As for the international ﬁnancial institutions, while their competitiveness vis-à-vis the private sector is better

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than the UN’s, arguably, the marketability of the World Bank and the IMF in the private sector is also lower than the one of the private sector vis-à-vis the World Bank and the IMF.

10.2.3 Examining Other Factors of Professional Attractiveness of International Organizations Beyond ﬁnancial incentives, what role does working in an environment that is in principle dedicated to the public good, and its career opportunities, have on the desire of skilled professionals to join and stay with international organizations?

INTERNATIONAL PUBLIC SERVICE AS A STIMULATING PROFESSIONAL ENVIRONMENT The prospect of working for international organizations in an environment that combines concerns for the global public good with an interaction with peers from around the world can certainly appear attractive. The results of the Picture of UN Staff survey conducted in 2005 (on what motivates or demotivates UN staff, and what they think of the organization) indicate that idealistic reasons are primary for joining the UN and for staying with it. Idealistic reasons and interesting work represented 62 per cent of the answers to why they joined the UN in 2005, against 54 per cent in 1995, whereas reasons such as ‘to have a career’ or ‘by chance’ fall far behind. Table 10.2 contains sample indicators from this survey that paints a telling picture.23 Results show that the motivations grounded in a commitment to ideals, and the interesting aspects of the work of the UN, are intertwined. In this context, the global scope of activities, which is one of the main characteristics of the UN, certainly plays an important role. Indeed, not only are UN professionals focusing on issues of global importance associated with international security and ethics, but they also have the possibility of being posted in a variety of places worldwide. While staff tend to 23 This survey was the third to be launched with the help of UNSpecial, a magazine for Geneva-based UN staff. The ﬁrst survey was conducted for the 40th anniversary of the United Nations in 1985 and limited to Geneva. The second, for the 50th anniversary in 1995, generated more than 4,000 responses worldwide. The 2005 survey produced 5,320 responses, half from Geneva and New York, and half from other locations (UNSpecial 2005).

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1995

1995–2005

1. Why did you join the United Nations? (tick max. 2 boxes) For idealistic reasons/belief in the United Nations 32.92 To do interesting work 29.27 To have a career 14.77 By chance 10.14 For the salary 6.55 Lack of employment prospects elsewhere 2.27 To remain in the country of my duty station 2.08 Other (specify) 2.00

25.50 28.82 14.38 12.75 7.49 3.14 3.20 4.71

7.42 0.45 0.39 −2.61 −0.94 −0.87 −1.12 −2.71

2. Why do you still work for the United Nations? (tick max. 2 boxes) Because the work is interesting 34.76 For idealistic reasons 21.86 To have a career 13.07 For the salary 11.30 Retirement beneﬁts 6.12 Because it is difﬁcult to ﬁnd work elsewhere 5.70 Other 2.58 To remain in the country of my duty station 2.56 Out of habit 2.05

30.32 15.25 12.20 13.67 7.20 9.46 3.36 4.76 3.78

4.44 6.61 0.87 −2.37 −1.08 −3.76 −0.78 −2.20 −1.73

(I)

(II) 1. What could or has motivate(d) you to go on mission in the ﬁeld? (tick max. 2 boxes) Contributing to the UN ideals 32.60 30.99 Career development 25.64 23.50 Adventure 16.03 14.92 Financial reward 8.78 8.17 Other 5.21 7.49 Frustration at work 3.51 7.15 Personal reasons 4.49 4.90 2.86 Nothing 3.73 2. If you have been on mission in the ﬁeld, what was the impact on: (a) Your career? Positive 64.20 Negative 5.70 No impact 30.10 (b) Your personal development? Positive 86.50 Negative 2.43 No impact 11.07 (c) Your professional competence? Positive 83.28 Negative 1.64 No impact 15.08 Total Positive Negative No impact

78.01 3.25 18.73

51.60 6.80 41.60

12.60 −1.10 −11.50

90.40 2.00 7.60

−3.90 0.43 3.47

83.20 1.30 15.50

0.08 0.34 −0.42

75.00 3.40 21.60

3.01 −0.15 −2.87

Notes and source: See text and footnote 23. Results are in percentage and percentage change.

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1.61 2.14 1.11 0.61 −2.28 −3.64 −0.41 0.87

An International Profession Table 10.3 UN Staff Work Environment Do you ﬁnd that working in a multicultural environment is:

2005

1995

1995–2005

Enriching Stimulating Difﬁcult Frustrating Other

72.81 19.93 4.01 1.55 1.71

61.90 25.10 7.40 3.30 2.30

10.91 −5.17 −3.39 −1.75 −0.59

Source: See Table 10.2.

primarily value a stable career at headquarters (in New York and Geneva in particular), the possibilities that the UN offers in terms of work in the ﬁeld worldwide is another appreciated professional advantage.24 Working in a multicultural environment is also a beneﬁt to which the staff of international organizations are very sensitive, as Table 10.3 shows.25 Parents in particular, tend to value the international cultural and educational environment to which it exposes their children.

CAREER PROSPECTS AND INTERNATIONAL ORGANIZATIONS: A MIXED PICTURE The question of career opportunities constitutes a mixed blessing for the professional attractiveness of international organizations. On the one hand, in addition to high salaries, the ideals, the meaningful nature of the work and the multicultural environment, there are other factors which make a career in international organizations attractive. For those international organizations that are more successful in maximizing human resources, these factors imply, for instance, better career prospects for women. On the other hand, there are less positive aspects of the professional culture of international organizations. These aspects are by and large related to the minimization of (often already relatively limited) human resources, and the implications that this has on the working conditions of, and in, international organizations. 24 Ibid. There is more to the story of peacekeeping operations. Although peacekeeping ﬁeld postings are appreciated by some, especially by junior staff, for many who are posted in the ﬁeld on a more permanent basis, it can be draining and unstable. In recent years, UN DPKO has tried to improve the bridge between the professional tracks at headquarters with that in the ﬁeld; ﬁeld experience now being more or less of a requirement for obtaining a post at headquarters. 25 Picture of UN Staff (UNSpecial 2005).

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MAXIMIZATION OF HUMAN RESOURCES, OR THE ADVANTAGES OF INTERNATIONAL ORGANIZATIONS Compared to national, regional, or local administrations, the number of people working in international organizations is quite small, especially in light of their global mandates.26 Hence the need to maximize the minimal resources. An important element of maximizing resources is the integration of the female work force. The efforts that international organizations have made in recent years to achieve a more gender balanced workplace has increased their attractiveness. Although there is still much progress to make, especially in senior positions, gender balance is improving among professionals at the entry and mid-career levels. At the entry level, numbers are close to above gender parity.27 At the World Bank, women account for 52 per cent of all staff and 26 per cent of management and senior technical positions (World Bank 2006). As for the IMF, gender balance among professional and managerial staff has also evolved positively (see Table 10.4).28 As a whole, however, it is important to note that women are in general better represented in those organizations (or departments) with a generalist mandate than in those with technical ones that do not deal directly with gender related issues.29 At a time when more and more women hold university degrees and the skilled labour force is increasingly populated by women, gender efforts of international organizations are essential. In this regard, it is likely that international organizations offer better possibilities.30 In some countries, this phenomenon becomes particularly signiﬁcant. In Japan for example, the percentage of women with higher education is among the highest of developed countries (OECD 2004) but yet, women do not have equal career opportunities.31 As such, female students are encouraged to acquire 26 For instance, the US Federal Government employs more than 89,000 civilians overseas alone, and the city of Vienna has over 70,000 public employees. See UN (undated: ch. 6). 27 Historically, support staff in international organizations has largely been female, and this continues to be the case today (see UN 2005a: 28). 28 IMF (2005a: 88). 29 Women account for 99 per cent of UNIFEM’s work force. The situation is more balanced in UNICEF. 30 The difﬁculty of ﬁnding ﬁgures on the topic explains the tentativeness of our statement (refer also to Kofman 2000). 31 In 2003, the gender gap in university student hiring made a conspicuous drop to only 2 per cent, with 61.1 per cent of male university graduates, and 59.1 per cent of female graduates, ﬁnding jobs. However the positive picture is complicated by the fact that more female graduates take part-time jobs and by unequal employment opportunities for men and women (‘Women’s Issues’, Japan Fact Sheet. Available at: http://web-japan.org/ factsheet/woman/work.html).

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An International Profession Table 10.4 Distribution of Staff by Gender at the IMF 1980

1990

2004

No.

%

No.

%

No.

1,444 676 768

100.0 46.8 53.2

1,774 827 947

100.0 46.6 53.4

2,714 1,246 1,468

100.0 45.9 54.1

Total support staff (A1–A8) Women Men

613 492 121

100.0 80.3 19.7

642 540 102

100.0 84.1 15.9

718 613 105

100.0 85.4 14.6

Total professional staff (A9–A15) Women Men

646 173 473

100.0 26.8 73.2

897 274 623

100.0 30.5 69.5

1,633 579 1,054

100.0 35.5 64.5

Total managerial staff (B1–B5) Women Men

185 11 174

100.0 5.9 94.1

235 13 222

100.0 5.5 94.5

363 54 309

100.0 14.9 85.1

All staff Women Men

%

Notes: For more details, see Coicaud (2006: annexe 6). Source: IMF (2005b: 88).

skills that are marketable internationally (Ono 2004), to learn foreign language skills and earn foreign degrees (Ono and Piper 2001). This explains the fact that there are almost as many Japanese women as there are Japanese men in professional positions in international organizations,32 a ratio which certainly does not correspond to the domestic Japanese workforce. Dynamic career management is another factor which can make international organizations attractive to skilled professionals. This requires a successful handling of human resources and reasonably good career prospects. In this perspective not all international organizations are equal. Not all display satisfactory human resources management in terms of hiring (with clear guidelines), career development (with institutionalized progress of career), and long-term stability. Using these elements as benchmarks, the World Bank and the IMF perform better than the UN. In the IMF for example, most initial appointments are offered for a term of two years and if performance shows potential and there is a continued need 32 The substantial ﬁnancial contribution of Japan to international organizations, including the UN, creates signiﬁcant professional opportunities for Japanese nationals. As of 1 January 2005, there were 318 women and 324 men among the 642 Japanese nationals working for international organizations (data provided by the Japanese mission to the UN, New York). The fact that Japanese women go abroad to increase their career prospects while men tend to early on join the domestic job market, is part of an overall complex relationship between Japan, Japanese women, and the West (on this issue, see Kelsky 2001).

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for the position, the staff may be offered a regular indeﬁnite appointment. The average time that professionals spend in each grade respectively is one of the shortest among international organizations and in addition, the staff salary structure is regularly adjusted, i.e., increased. Compared to the UN system, the IMF and the World Bank have a relatively small size work force that deals with more targeted and technical issues calling for specialized and skilled professionals also in demand in the private sector. In addition, the World Bank and the IMF are proportionally better funded and have a central and one site location in Washington DC.33 All this helps to explain why their human resource management performs better than that of the UN. This is not to say, however, that their output and track record, and their ability to make a positive difference on the ground, exceeds that of the UN system.34 But it does make them more attractive to professionals. MINIMIZATION OF HUMAN RESOURCES, OR THE DOWNSIDES OF INTERNATIONAL ORGANIZATIONS Poor human resources management tends to be one of the disadvantages of international organizations. According to various studies and surveys, the UN is in many respects a rather unhappy place with dysfunctional characteristics, if not pathologies, which signiﬁcantly impede its attractiveness to skilled professionals. Among the shortcomings related to the minimal use of already weak human resources, four important factors stand out: (i) ambiguous security and career development tracks; (ii) process rather than result oriented work; (iii) ad hoc and unsystematic implementation of mandates; and (iv) self-centred exercising of leadership.35 There is a general trend to hire staff on short-term contracts,36 and in the UN in particular this has become the rule rather than the exception. 33 See for example the implications that the location of the United Nations Environment Programme (UNEP) headquarters in Nairobi, Kenya, can have on the life of the organization: ‘The most important implication of UNEP’s location is the inability to attract and retain topnotch staff with the policy expertise and experience necessary to make the organization an anchor institution’ (Ivanova 2005). 34 For the IMF, refer for instance to Barnett and Finnemore (2004: 71–2). For Bretton Woods institutions in general, see Stiglitz (2003). 35 For more on these different points, refer to Coicaud (2006). 36 In a 2004 survey on human resources management practices, commissioned by 30 international organizations (including UN organizations, the World Bank, and the IMF), the Association for Human Resources Management in International Organizations (AHRMIO), Ferney-Voltaire, reported a signiﬁcant increase, from 6 per cent in 1999 to 32 per cent in 2003, in the number of international organizations which employ over 10 per cent of their staff on a temporary basis (Human Resources Management Practices in International Organizations: On Behalf of its Organizational Membership, in collaboration with the Cranﬁeld School of Management. www.ahrmio.org).

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In 2005, the number of regular budget posts in the UN system was far lower than the extra-budgetary funds and short-term contracts. Before turning to the negative consequences of this trend, a few advantages are worth mentioning. Short-term contracts provide ﬂexibility and access to additional human resources that is all the more important in light of the reluctance of member states to increase the regular UN budget. In addition, short-term contracts are not necessarily followed by unemployment and they can go on for several years. Yet, the human and institutional costs of this trend contribute to make the UN less attractive, especially from the point of view of developed countries, in which the national civil service offers a long and well delineated career. At a human level, shortterm contracts bring a sense of insecurity, as constant possibility of the termination of the contract renders staff vulnerable vis-à-vis management. Also, short-term contracts encourage what one could call ‘institutional cowardice’, where staff are reluctant to challenge and report wrongdoings that they may witness for fear of jeopardizing their job. This has negative effects on the functioning of the UN. In the worst case scenario, the status of short-term staff without reasonable prospects of amelioration in the years ahead results in them being treated as second-class citizens, which in turn leads them to be motivated primarily by ‘asocial self-interest’. Surviving in the current position or securing the next job is where most of the energy is spent. The quasi lack of institutionalized and predictable career development at the UN, and the ambiguous long-term policy of the short-term contracts, encourages staff to have ‘one foot in and one foot out’ the job. Moreover, the grade structure falls short of a formalized career track with clear guidelines of the requirements and selection process for the advancement in the profession, which well functioning national administrations, or other international organizations, have. With the open-ended time spent in each grade,37 and with staff left under the impression that promotion depends more on connection than on competence,38 the lack of proper career development constitutes a major disincentive. Another unattractive aspect of the professional culture of the UN (although not speciﬁc to the UN) is its tendency to be more process than result oriented. Although certain UN bodies have more practical mandates that make them more action oriented, such as the UN Department of Peacekeeping Operations (DPKO), overall, the environment is prone to 37 Short of progression mechanisms based on performance, time spent in each grade is likely to be lengthy (see Brewster and the ICC 2003). 38 Refer to UNSpecial survey (2005: n 23).

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making process rather than result a deﬁning character of its professional culture. Four main factors shape the work ethics in this direction. First, there is the hierarchical structure of most UN institutions, in which decision making is highly concentrated and, as actors are squeezed in between layers of authority, no real sense of initiative is encouraged. This is especially the case in the UN Secretariat. Second, there is a tendency of the UN to adopt conservative courses of action trying to avoid the responsibility and the risks associated with trying to make a difference. This trait is linked to the political and ﬁnancial dependency of the UN vis-à-vis member states, and its remoteness from direct constituencies. Third, there is the servicing function that a number of UN departments and institutions have vis-à-vis member states in the establishment and follow-up of multilateral commissions, conferences, and negotiations. Combined with the cumbersome and slow rhythms of the politics of UN diplomacy, this can turn activities into a ritualistic production of documents with little short-term result. Fourth, the misuse of resources with unfocused and nonstrategic spending of already limited resources renders progress, and progress assessment, difﬁcult. As a result, an environment is created where activities are often undertaken just for the sake of it. A third downside of the UN professional culture is its ad hoc and unsystematic character. This is rather ironic considering the importance that rules and regulations have in the UN context. Yet, it is as if there is a signiﬁcant disconnection between them and their ability to put tracking systems in place in the various domains of action, internally as well as externally. Indeed, one of the areas in which the UN is signiﬁcantly weak is in recording its activities and drawing, as well as applying, the lessons learnt. It is rare that systematic and well reasoned39 mechanisms record action. This makes the sharing of data and coordination of action among UN entities very problematic. In the UN Secretariat, the creation in the 1990s, along with a Policy and Strategic Planning Unit in the Executive Ofﬁce of the Secretary-General, of a Lesson Learnt Unit (now the Peacekeeping Best Practices Section—PBPS) in the DPKO was designed to improve this shortcoming. But although some progress has been made, UN-wide, much remains to be done. Most of the time there is only piecemeal information and coordination available. A tracking system would allow the UN not only to better grasp where it comes from and where it 39 Systematic and well reasoned records do not stop at registering activities. It also calls for putting them in perspective, historically and comparatively, within the UN context and vis-à-vis other actors relevant at the international level.

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currently stands, but also provide instruments to identify and implement better policies. Instead, the lack of a systematic approach invites the UN to act in a state of semi-blindness, to extinguish ﬁres with inadequate tools, and to only hope for the best; a position in which an organization dedicated to solving global questions and crises, and anticipating on future ones, does not wish to ﬁnd itself. The unsystematic character of the UN way of doing business is one illustration among many of the underinstitutionalization of the UN. As it weakens its capacity to be, and project itself as professional, it also undermines its attractiveness for internationally skilled people. Even more so since the leadership in the UN too often appears to fall short of being up to the task, as the results of the United Nations Organizational Integrity Survey conducted in 2004, underline (Deloitte Consulting LLP 2005). In this study, three main concerns stand out. First, the discrepancies of UN leaders’ lofty rhetoric, not matching words with acts. Second, the tendency of UN leadership to be uninterested in management issues. It is already problematic that frequently those in positions of leadership are not trained to exercise managerial responsibilities. Adding insult to injury, there is a tendency to concentrate on the more ‘noble’ aspects of the job (such as political and diplomatic issues) at the expense of investing in management. Third, while as the custodians of the welfare of the organization, UN leaders should place their own interest if not after, then at least not at odds with that of the organization, it is not uncommon that the contrary happens. The institutional pathologies of the UN can become a reason for its leaders not to try to improve it. Assessing that turning the place around would not only be a difﬁcult exercise, but also very unlikely to succeed, management is inclined to opt for individualistic strategies, using the visibility and contacts associated with their position as a springboard. Weak institutional accountability within the UN allows its leaders to get away with it. In the worst case, it amounts to a posturing of leadership. A posturing of leadership that is far from what a healthy democratic leadership is supposed to be, that is, more aware of its duties than of its rights and entitlements; a posturing of leadership that is far from using personal qualities not to personalize the institutions under its watch, but on the contrary to depersonalize them;40 a posturing of 40 Using personal leadership qualities to depersonalize institutions is meant to make their functioning depend as little as possible upon a single individual, allowing institutionalization of procedures and mechanisms to ensure dynamism, motivation, and commitment of its employees to, and of, the organization as a whole. Incidentally, using leadership to institutionalize the delegation of energy and power is one of the elements distinguishing democracy from authoritarian rule.

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leadership that, far from thinking strategically for the organization and its mission, fails to realize that unless an institution is strong internally, it cannot be strong externally and everybody, including the people that it is supposed to serve, loses. This leadership behaviour is not speciﬁc to the UN. However, the public service and public good ideals and goals of the UN are prone to make it all the more demoralizing for those UN professionals who take the ethical dimension of the UN message seriously.

10.3 International Civil Service and Distribution of Power Despite the shortcomings, working for an international organization continues to be a popular professional choice. This being said, the extent to which international organizations appeal to professionals with skills marketable internationally is not only explained by their intrinsic characteristics. It also has to be understood in connection with relations of power at the national and international level. More speciﬁcally, it has to be understood in connection with the place that international organizations and their potential workers occupy in the international and national distribution of power. In order to clarify this point, two aspects will be touched upon. First, how the appeal of international organizations tends to be relative to the power position of the countries of origin of potential staff and, second, how the attractiveness of international organizations can be relative to the power position that staff occupy in their home countries.41

10.3.1 The Power Status of International Organizations vis-à-vis Countries of Origin For professionals from countries at the top of the hierarchy of international power, joining international organizations is not a primary choice, whereas for professionals who belong to countries in the middle or low ranks of the international distribution of power, a career in international organizations is an attractive proposition. This suggests that the appeal of international organizations is relative to the power position of the countries of origin of the potential staff. 41 The tendencies examined below only correspond to statistical trends. As such, they simply provide an outline of reality without giving a comprehensive explanation of the personal trajectory of each staff.

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FROM INTERNATIONAL POWER TO INTERNATIONAL ORGANIZATIONS AS A SECOND CHOICE The social prestige of an organization is largely based on its power, and on the extent to which it is, or derives from, a source of power. International organizations are not foreign to this status ‘law’. Their attractiveness as a working place is partly measured by their position in the distribution of power vis-à-vis member states. The examples of the US and France illustrate this state of affairs particularly well. Regarding the United States, its centrality in the international distribution of power shapes the professional trajectories, social attachments, and status that seem highly desirable to skilled ambitious American professionals. As such, for American skilled professionals, there is little that is more rewarding than an American career. For instance, if the choice is between being a senior ofﬁcial in one of the US’s Executive Branch entities dealing with international issues, or being a senior ofﬁcial in an international organization, the former is likely to be more attractive than the latter.42 The power of the US reverberates on the Executive Branch, on its posts and its staff, granting them with social prestige as well as with strong personal satisfaction.43 Ultimately, the disparity of power between international and US organizations accounts for patterns of professional mobility. For example, it is easier for a US national with a senior career in the US governmental machinery to be offered a senior position in an international organization, than for a US national with a senior career in international organizations to be proposed a senior position in the US government. The case of France is less straightforward, echoing its increasingly ambiguous status as an international power. The national professional realm tends to be preferred over the international, particularly for high level careers in the public sector. Traditionally there is more social prestige attached to a senior career in the national administration than to a senior career in an international organization, and being a high civil servant 42 On the relationship between the state and civil society in the United States and its impact on the respective social value assigned to private and public sector professions, such as lawyers and civil servants, see Cohen-Tanugi (1985). 43 See Anthony Lake, National Security Adviser to President Clinton 1993–97: ‘As we left, I reﬂected that it was hardly my skill that was moving the allies behind us. This was an exercise of American inﬂuence; the U.S. ofﬁcials traveling with me called it the big dog barking as we ﬂew from stop to stop—and it was a great feeling to be speaking for America. The exercise of American power would move others . . . ’ (Lake 2000: 275).

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often serves as a stepping stone for a political career. In this regard, the Ecole nationale d’administration (ENA), that educates most high civil servants, cabinet members, and key politicians, holds a prime of place in the national landscape.44 This situation is in line with the fact that France continues to see itself as a major power, and that its public sector elite is nationally centred. Under these conditions, the declared commitment of France to international organizations, is not powerful enough to change the career of choice of its administrative and political elite. Joining international organizations, even on a seconded position, does not help the career advancement of French high civil servants. In addition, the fact that career prospects in international organizations are less predictable than those in the national civil service also has a discouraging effect.45 Hence, among French elite students and professionals, few see the attraction of joining international organizations. But at the same time France is growing defensive and insecure of its international standing, and the way in which its national administration and high civil servants function is increasingly seen more as part of the problem than the solution. As a result, the table of professional attractiveness turns, so to speak. This is not to say that international organizations now constitute a more valued career path than the national high civil service but, compared to 15 or 20 years ago, more well trained students and young professionals see beyond the national civil service. A career in international organizations is becoming an option that is not necessarily worse than the ones offered by the national administration. THE PURSUIT OF STATUS THROUGH INTERNATIONAL ORGANIZATIONS The situation is quite different for skilled professionals from countries standing in the middle or at the low end of the international distribution of power. To them, working for international organizations is an attractive option. In addition to granting ﬁnancial beneﬁts that are substantially higher than their national salaries, the workforce of an international organization gives a professional and social status that the national job market of these countries has difﬁculty matching. This has to do with the greater 44

For a sociological analysis of the importance of ENA in France, refer to Bourdieu (1996). Although mobility traditionally has not been a factor of career advancement for French civil servants, this state of affairs is changing. In 2004, the decree number 2004708 made mobility and secondment compulsory for civil servants recruited through the ENA (article 1), (article 2 paragraph C). The decree is available at: www.legifrance.gouv.fr/WAspad/ UnDocument?base=LEX&nod=1DM004708# 45

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range of action and opportunities that can come with international organizations. Consider for instance diplomacy. Generally speaking, it is much more difﬁcult for a diplomat of a developing country to have an impact internationally, than it is for a diplomat of a leading developed country. Short of the backing of a powerful state, a diplomat stands more or less on his or her own, at times being no more than a background actor. However, in a high level position within an international organization, a developing country diplomat has more of a chance to overcome this predicament, especially if he or she joins an international organization with political clout. Moreover, it is certainly more comfortable to be a staff member of an international organization that seeks to get countries out of trouble, than to be on the other side of the fence. Thus it is not uncommon that developing countries diplomats are attracted to senior UN positions while this is relatively rare for countries at the top of the international hierarchy of power, except for the top positions.46

10.3.2 International Organizations and the Power Position of its Potential Staff Within Their Respective Home Countries The correlation between the attractiveness of international organizations to skilled professionals, and the distribution of power, extends to the position of the individual professionals in the distribution of power in their respective home countries. This correlation is rather straightforward. Skilled professionals with an ‘elite’ social and educational background from leading developed countries tend not to see joining an international organization as one of their ﬁrst career choices, whereas skilled professionals from developing countries do. POWER DISTRIBUTION WITHIN LEADING COUNTRIES AND INTERNATIONAL ORGANIZATIONS It is not surprising that the disparity of power between international organizations and powerful countries, which brings about the dependency of the former vis-à-vis the latter, translates into certain patterns of behaviour of skilled professionals in leading countries. These patterns amount to professionals from countries at the top of the international distribution of power being more attracted to careers inside than outside the national framework. This state of affairs is ﬁrst and foremost the case in the US. 46 For example the World Bank has always been headed by an American, and the IMF by a European.

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Data shows that in general, even those highly skilled US nationals who are trained in areas relative to international relations, do not consider these organizations the most appealing professional option. Their educational background, often also a beneﬁt of their privileged social background,47 puts them in a position of being able to set their eyes on US government, universities, think tanks, Wall Street, and other prestigious professional venues.48 However, later in their career, some choose to join international organizations for a period, preferably in a high position, as a ﬁnishing touch.49 Against this background, when it comes to the UN, those US nationals who consider international organizations, and the UN in particular, as a long-term career tend to come from the second tiers of US universities.50 To a certain extent, this also applies to other developed countries. For instance few of the French professionals working for the UN come from elite schools, or have elite social backgrounds. Few graduated from elite schools, and the majority only hold master’s degrees. Moreover, for those working in the UN who are sons and daughters (actually more daughters than sons) of French diplomats tend to have a moyenne bourgeoisie or petite bourgeoisie socioeconomic background. And for those who come from a higher social background, chances are that working for the UN was not their ﬁrst choice but, a career on which they settled faute de mieux. An analysis of nationals of the UK is likely to show similar results. Another interesting example is Japan. Again, few graduates from elite schools such as the University of Tokyo, and its Faculty of Law in particular, consider international organizations for a full-time career. They prefer to be where power is, namely at home. Moreover, with the time limited 47 ‘Three-quarters of students at the country’s top 146 colleges come from the richest socioeconomic quarter, compared with just 3 per cent who come from the poorest quarter (the median family income at Harvard, for example, is USD 150,000). This means that, at an elite university, you are 25 times as likely to run into a rich student as a poor one.’ From ‘Meritocracy in America. Ever Higher Society, Ever Harder to Ascend’, Economist, 29 December 2004. Available at: www.economist.com/world/na/displayStory.cfm?story_id= 3518560 48 For an American graduate, not all these options are equally valuable. Elite graduates, especially those who have a background in law, prefer to make their mark ﬁrst in the private sector (law ﬁrms and others), and then join the public sector in positions of responsibility, via political appointments. 49 In certain US elite circles, especially on the east coast, it may look good and quite ‘progressive’, to have an international organization, including a UN connection of some sort. For example, in a phone interview, Yves Dezalay stated that spending a few years at an international NGO can allow graduates from prestigious universities to acquire a ‘savoirfaire’ and contacts that are useful for a corporate career (for more on this, see for example Dezalay and Garth 2005: 30–1). 50 Incidentally, among US nationals working for the UN, the percentage of women tends to be higher than men (UN 2005a: 50).

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contracts becoming the norm, a career at the UN becomes all the less attractive for Japanese males, who are still the main bread-winners.51 This being said, for Japanese women with an elite socioeconomic and educational background, international organizations remain a quite prestigious career.

POWER DISTRIBUTION WITHIN DEVELOPING COUNTRIES AND INTERNATIONAL ORGANIZATIONS The picture tends to be reversed for developing countries.52 This can be largely explained by the patterns of access to education. In most developing countries access to education faces even more severe inequalities than in developed countries. Although in the past 50 years enrolment in primary education and the demand for access to secondary education has risen,53 this has not removed the socioeconomic inequalities in the access to education, particularly not for the absolute underdogs of society.54 This is especially the case since the growth of education in developing countries has been accompanied by an increase of private proﬁt oriented education, with tuition fees that are much higher than in public establishments, especially for higher education. In effect, this system excludes the underprivileged students from the competition and major imbalances remain in terms of access to education between urban and rural areas, and between rich and poor households.55 Only those who come from a privileged socioeconomic background can afford international education and the limited scholarships offered by governments and foundations from 51 In Japan, although moving away from life employment, job security remains a key consideration when applying for a job. Considering that once out of the Japanese domestic job market, it is very difﬁcult to get back in, the professional insecurity that now characterizes the UN system makes it a risky proposition for men to join it. 52 A more detailed analysis of this situation would have to introduce some nuance in this statement, taking into account for instance the various layers of elites in developing countries and their access to power (economic, social, and political power). 53 By 1995, 70 per cent of adults living in developing countries were literate, compared to less than half of the adult population in 1965. The number of adults in developing countries with higher education went from 28 million in 1980, to 47 million in 1995 (World Bank 2000: 26–7). 54 On this question, see the example of India (Sen 2005: 211, 216–18). 55 ‘We know of no country in which high-income groups are not heavily represented in tertiary enrolments. For example, in Latin America, even though the technical and professional strata account for no more than 15 per cent of the general population, their children account for nearly half the total enrolment in higher education, and still more in some of the best public universities such as the University of São Paulo and the University of Campinas in Brazil, the Simón Bolivar University in Venezuela, and the National University of Bogotá in Colombia’ (World Bank 2000: 27–8).

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developed countries tend to beneﬁt the students of higher socioeconomic strata. The impact that this has on the marketability of professionals from developing countries at the international level is quite straightforward. Those socioeconomic elites who received the best education at home or abroad, are most likely to land a job internationally. In this regard, education in the US, although more costly than in Europe, proves to be a good investment. The reputation of US universities over European universities serves as something of a guarantee for greater marketability, as well as social, mobility at home and abroad. Against this background—to professional elites of developing countries with skills that overlap those in demand in international organizations— international organizations are quite attractive. Once someone from a developing country has been educated abroad, the pull for staying abroad is powerful. Even more so when language is not an obstacle and when a diaspora from the home country already exists in the host country.56 International organizations beneﬁt from this pull power. A student from a developing country, compared to a US graduate, who studied at Harvard University, is likely to see international organizations as an attractive career option. There are most likely not only more, but also more stable, opportunities in the US.57 Furthermore, although the US job market is one of the most open, beyond those technical ﬁelds (engineering and science) in which foreign skilled professionals are in demand, it is still rather difﬁcult for non-US nationals to enter. In contrast, and without even mentioning the challenge of obtaining a work permit, international organizations need good quality graduates from developing countries. Moreover, international organizations do not necessarily demand the level of English ﬂuency that American companies do.58 This helps explain why in international organizations, professionals from leading developed countries tend not to have a ‘ﬁrst class’ educational and socioeconomic background whereas most professionals from 56 This is the case for the Indian subcontinent vis-à-vis the UK and North America, or for west and north Africa vis-à-vis France. 57 Of course, this all depends upon the level and potential of development of the developing country, the extent to which it values graduates from good foreign universities, and how family connections back home can be used for professional success. 58 The fact that French is widely spoken in western and northern Africa is an advantage for Africans from the regions who want to joint the UN system. Yet, with the decrease of the global importance of France, English increasingly becomes a must. Moreover, when a former colonial link translates into English proﬁciency, it becomes an asset for working in international organizations. The large number of staff from India and to some degree Pakistan and of the Philippines working in international organizations has to be seen in this context.

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developing countries tend to be from very good social and educational backgrounds.59 A rather ironic picture unfolds as international organizations come to, in a way, endorse the social and economic (and ultimately political) disparities of developing countries that they are supposed to address. On the whole, the way in which attractiveness of international organizations reﬂects the inequalities of the social proﬁle of skilled professionals in developed and developing countries, underlines an aspect of the geographical distribution principle. To a certain extent, one could argue that this principle, intended to be a democratic device bringing national diversity to international organizations, also, by unveiling the inequalities of home countries, constitutes an expression of their democratic limits as well as that of international organizations. This is not surprising, although quite troubling, considering international organizations’ commitment in principle, to social, economic, and political justice. The impact on home countries of how attractive international organizations are to professionals from developed and developing countries is ambiguous. On the one hand, professionals in international organizations accumulate a knowledge that can be useful for their countries of origin. On the other hand, it is in reality rare that these professionals return to apply their expertise at home, at least not until after a life time career abroad. Sure, in the ﬁeld of ﬁnance, there are those professionals from developing countries who use a few years stay at the IMF as a way to gain professional credential, to then leverage this experience for the purpose of a high level position back home.60 This may also happen for professionals in senior positions or with speciﬁc expertise. However, for the average professional, who has spent his or her career in an international organization, there is no direct ‘return on investment’, for the country of origin. Furthermore, if professionals do return home, it is often for retirement, but this also happens less than one would think. This is particularly the case when people have acquired a private life with a family in a new country. By then, working for an international organization has become part of an exit strategy.61 59

See for instance the biographies of senior United Nations ofﬁcials in Weiss et al. (2005). For example, heads of central banks of developing countries often have an IMF experience, especially in Latin America. 61 On exit strategy, see to Hirschman (2006). Regarding the exit issue, it is also interesting to note that the opening up of former communist countries to the West has changed the patterns of migration of professionals from these countries. While professionals from Eastern Europe, Soviet Union, China, and central Asia who join international organizations used to do it with 60

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Ultimately, for the mobility of talent to be beneﬁcial to home countries (both developed and developing), it would be necessary to have mechanisms and processes bridging the skills of people working in international organizations and their countries’ needs. Yet, so far these bridges hardly or do not exist at all. Even in developed countries, which have more resources than developing countries, most of the time they are lacking. As a result the contribution that professionals working in international organizations could make to their home countries is usually absent. Of course, one could argue that the mere fact of having some of their nationals occupying positions in international organizations is useful for countries.62 This is not very convincing, especially for professionals coming from developing countries. The track record shows that they rarely inﬂuence the decision making process of international organizations in ways which would beneﬁt developing countries from a policy point of view. To begin with, due to their privileged social background, due also to the fact that they generally studied in the West, rather than taking a stand in favour of the interest of developing countries, they tend to align themselves with Western views of the world, including their ideological biases. The rules of the game in international organizations and the pressure for people working in them to conform, at least if they want to survive let alone progress in their career, only encourage this state of affairs.

10.4 Lessons Learnt and Pending Questions, as a Way of Concluding In conclusion, let us brieﬂy review some of the main lessons learnt and pending questions.

the support of their government, this is less and less the case. The fact that young people from former communist countries can travel, study abroad, and market themselves on their own has modiﬁed signiﬁcantly their professional mobility and the hiring process of international organizations. 62 From a general point of view, reversed skilled migration, with talents returning to home countries, tends to happen when professional opportunities are equal or better in the home country than on the international job market (on this, refer to Docquier et al. 2005; Beine et al. 2003; see also Economist 2006: 59).

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10.4.1 Lessons Learnt from the Current State of Professional Attractiveness of International Organizations Among the lessons that can be learnt from this chapter, three stand out. They concern: (i) the interaction between international organizations and home countries; (ii) the evolving patterns of attractiveness based on the evolution of home countries; and (iii) the place of women in the mobility patterns of skilled professionals.

INTERACTION BETWEEN INTERNATIONAL ORGANIZATIONS AND HOME COUNTRIES This chapter has shown that the professional attractiveness of international organizations is related to the working conditions, the international standing of one’s country, and one’s place in the internal distribution of national power. As such, the analysis of the professional work force of international organizations is a signiﬁcant entry point to understanding national and transnational elites, to understanding their rationale and choice.

PATTERNS OF ATTRACTIVENESS OF INTERNATIONAL ORGANIZATIONS AND EVOLUTION OF HOME COUNTRIES The more a country is economically advanced and powerful internationally, the less attractive a full ﬂedged career in an international organization appears to its professional elite. Compared to developed countries and their professional beneﬁts, international organizations do not stand at the centre of power, and seem to offer increasingly unstable career prospects: a considerable disadvantage, especially for the UN. Although exceptions exist, this cannot persist as it only furthers the difﬁculty of attracting and keeping the ‘best and the brightest’. It also risks becoming true for developing countries. As the powerful countries of the developing world are increasingly successful, chances are that their national professionals could become less likely to overlook these shortcomings of international organizations. Since the UN system is particularly weak in this regard, the organization’s ability to rely on a high quality work force in the future is questioned.

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INTERNATIONAL ORGANIZATIONS AND WOMEN IN PATTERNS OF SKILLED PROFESSIONAL MOBILITY Another lesson that emerges from this chapter is the important role of women in the patterns of professional mobility towards international organizations. This is not only because international organizations are increasingly committed to gender parity. It is also in line with four other trends of our time. First, there is an increasing number of women with higher education, both in the developed and the developing world. Second, female disentanglement from traditional sexual and family structures gives women a certain autonomy that allows them to project themselves as individuals.63 Third, there is a continued lack of equal access to professional careers in many countries, both developed and developing. Fourth, there is a female embrace of the international realm to overcome the barriers at home. In addition and more generally, there is perhaps a greater willingness of women to take risks and explore beyond the familiar (national).64 More speciﬁcally, there is also the fact that the current unravelling of the international civil service renders it less attractive to men (who to a large extent still are the bread winners, in both developing and developed countries). For women, a career even in an international civil service that is under attack can be a supplemental income to the husband’s salary. Against this background, it is indeed striking to see that among candidates for jobs in international organizations, there are more and more women—women who act as free agents—more existentially and psychologically detached from their home governments than men.

10.4.2 Pending Questions, and What to Do About Them The pending questions fall into three main categories: (i) methodological, (ii) institutional, and (iii) normative/political. METHODOLOGICAL ISSUES AND SOCIOLOGY OF NATIONAL/TRANSNATIONAL ELITES There is an urgent need for more research on the topics touched upon in this chapter, especially as globalization and global governance is becoming more and more cogent. Having more comprehensive data on the 63

On this issue and its social consequences, refer to Heritier (2002: 143–7). In connection with this, note that social anthropology tells us that it is a traditional pattern for women to leave their family and the world in which they grew up (see Heritier 2002: 133–5), for example; and Heritier 1996. 64

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socioeconomic and educational background of international professionals, as well as qualitative data on how they perceive their professional and life options, would improve the picture of the attractiveness of international organizations, and of the evolution of international bureaucracies.65 Beyond this, more systematic information on national elites and their patterns of transnational mobility (transversal and social mobility) would open the possibility for ‘a sociology of elites’ at the international level.66 This line of sociology would systematically examine the correlation between the place of the professional elite in the internal national distribution of power, and the place of these countries within the international distribution of power. It would also analyse the networks in which international organizations function, professional ﬁeld by professional ﬁeld, with a particular attention on gender issues.67 This could give a better understanding of the process of socialization, of the international realm on the one hand, and of internationalization of national societies on the other.68

INSTITUTIONAL QUESTIONS FOR INTERNATIONAL ORGANIZATIONS As we have seen, weak management of human resources has a strong impact on the professional attractiveness of international organizations. On this account, the UN system has to achieve much progress. How can it happen and will it happen? If the past is an indication of the future, there are reasons for pessimism. It is necessary to ﬁnd a middle course between too much security as understood in traditional bureaucracies, and too much insecurity as a result of the lack of funding combined with an ideological understanding of liberal management of human resources. This entails relating to professionals as an asset and not a liability. 65 A book doing for international bureaucracies what Bernard S. Silberman has done for administrative history and organization theory in a national context would be extremely illuminating (see Silberman 1993). 66 On these issues, see the work of Dezalay (2004), for example. 67 On the need to go beyond traditional models of migration and to integrate the women factor, see for example Kofman (1999). 68 Wacquant, in the foreword to Bourdieu (1996: xiii) indicates that ‘Properly construed, The State Nobility offers a systematic research program on any national ﬁeld of power, provided that the American (British, Japanese, Brazilian, etc.) reader carries out the work of transposition necessary to generate, by way of homological reasoning, an organized set of hypotheses for comparative inquiry in her own country.’ The same could be said for the study of elites at the international level. For an interesting view on the essue, although somewhat different from the one held in this chapter, see Huntington (2004).

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NORMATIVE/POLITICAL: ON A QUEST FOR A PROGRESSIVE AGENDA International organizations cannot be expected to be more democratic than their member states, either at the policy or at the functioning level, as the shortcomings of member states are mirrored in international organizations. But international organizations are still to be held accountable for their limitations because to a large extent, international organizations allow these shortcomings to persist. The well functioning of international organizations is essential to the implementation of their progressive message of political, economic, and social inclusion. Being dysfunctional as well as subservient towards the powerful and contemptuous vis-à-vis the powerless, is not an option for international organizations, at least not if their message is going to be taken seriously. Making sure that international organizations are centres of professional and ethical excellence is the best way to nourish their legitimacy and bring the intended global corrective socioeconomic and security effects. Under this condition international organizations are more likely to become instruments of progress rather than caisses de résonance of inequalities and tools of regression. Under this condition, their professionals are more likely to ﬁnd a place away from home and be part of ‘an aristocracy of responsibility, moved by a moral responsibility to think a world better, still receptive to the idea of idealism’ (Allott 2003: 338).

References Allott, P. (2003). ‘The Emerging International Aristocracy’, New York University Journal of International Law and Politics, 35(2). Available at: www.law.nyu.edu/ journals/jilp/issues/35/35_2_Allott.pdf Barnett, M. and M. Finnemore (2004). Rule for the World: International Organizations in Global Politics. Ithaca, NY: Cornell University Press. Beigbeder, Y. (1988). Threats to the International Civil Service. London: Pinter. Beigbeder, Y. (1996). The Internal Management of United Nations Organizations: The Long Quest for Reform. New York: St Martin’s Press. Beine, M., F. Docquier, and H. Rapoport (2003). ‘Brain Drain and LDC’s Growth: Winners and Losers’, IZA Discussion Paper, 819. Bonn: Institute for the Study of Labour. Bourdieu, P.E. (1996). The State Nobility: Elite Schools in the Field of Power, trans. L.C. Clough. Stanford, CA: Polity Press.

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An International Profession Brewster, C. and ICC (2003). Framework for Human Resources Management: Mobility, note by Chris Brewster and comments by the secretariat of the International Civil Service Commission ICS/57/R.4. 29 May. New York: International Civil Commission. Cohen-Tanugi, L. (1985). La Société sans l’Etat: Sur la démocratie en France et en Amérique. Paris: Presses Universitaires de France. Coicaud, J.-M. (2006). ‘International Organizations as a Profession: Professional Mobility and Power Distribution’, WIDER Research Paper, 2006/109. Helsinki: UNU-WIDER. Cooker, C. de (ed.) (1990). International Administration: Law and Management Practices in International Organisations. Norwell, MA: Martinus Nijhoff. Deloitte Consulting LLP (2005). United Nations Organizational Integrity Survey 2004, report prepared by Deloitte Consulting LLP, and contracted by the UN Ofﬁce of Internal Oversight Services. New York: United Nations. Dezalay, Y. (2004). ‘Les Courtiers de l’international. Héritiers cosmopolites, mercenaires de l’impérialisme et missionnaires de l’universel’, Actes de la Recherche en Sciences Sociales, 151–2. Dezalay, Y. and B. Garth (2005). ‘Les ONG au service de la mondialisation? Connivence des élites internationalisées’, Le Monde Diplomatique, June: 30–1. Dijkzeul, D. (1997). The Management of Multilateral Organizations. The Hague: Kluwer Law. Docquier, F., O. Lohest, and A. Marfouk (2005). ‘Brain Drain in Developing Regions (1990–2000)’, IZA Discussion Paper, 1668. Bonn: Institute for the Study of Labour. Economist (2006). ‘The Battle for Brainpower. A Survey of Talent’, Special Report, 7–13 October, p. 59. Heritier, F. (1996). Masculin/Féminin I: La Pensée de la différence. Paris: Jacob. Heritier, F. (2002). Masculin/Feminin II: Dissoudre la hierarchie. Paris: Jacob. Hirschman, A. (2006). Exit, Voice and Loyalty: Responses to decline in Firms, Organizations, and States. Cambridge, MA: Harvard University Press. Huntington, S.P. (2004). ‘Dead Souls: The Denationalization of the American Elite’, The National Interest, 75. IMF (2005a) Annual Report of the Executive Board for the Financial Year Ended April 30, 2005. Washington, DC: IMF. IMF (2005b) Diversity Annual Report 2004. Washington, DC: IMF. Ivanova, M. (2005). ‘Assessing UNEP as Anchor Institution for the Global Environment: Lessons for the UNEO Debate’, Yale Center for Environmental Law and Policy Working Paper, 05/01. New Haven, CT: Yale. Jordan, R.S. (ed.) (1972). International Administration: Its Evolution and Contemporary Applications. Oxford: Oxford University Press. Kelsky, K. (2001). Women on the Verge: Japanese Women, Western Dreams. Durham, NC: Duke University Press.

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Additional Topics Kofman, E. (1999). ‘Female “Birds of Passage” a Decade Later: Gender and Immigration in the European Union’, International Migration Review, 33(2): 269–99. Kofman, E. (2000). ‘Skilled Female Migrants: Invisible International Migrants in European Migratory Spaces and States Policies’, International Journal of Population Geography, 6(1): 1–15. Krosney, H. (1967). Careers and Opportunities in International Service. New York: Dutton. Lake, A. (2000). 6 Nightmares: Real Threats in A Dangerous World and How America Can Meet Them. New York: Little, Brown & Co. McLaren, R.I. (1980). Civil Servants and Public Policy: A Comparative Study of International Secretariats. Waterloo, Ontario: Wilfrid Laurier University Press. Mouritzen, H. (1990). The International Civil Service: A Study of Bureaucracy in International Organizations. Aldershot: Ashgate. OECD (2004). Education at a Glance 2004. Paris: OECD. Ono, H. (2004). ‘Organizational Structure and Labor Market Stratiﬁcation: Evidence from Foreign-Owned Firms in Japan’, mimeo. Stockholm: European Institute of Japanese Studies. Ono, H. and N. Piper (2001). ‘Japanese Women Studying Abroad: The Case of the United States’, EIJS Working Paper, 125. Stockholm: European Institute of Japanese Studies. PLS Ramboll Management (2000). Comparative Study of the Remuneration of Ofﬁcials of the European Institutions (99/12/IX.D1): Summary. Arhuus: PLS Ramboll Management. Sen, A. (2005). The Argumentative Indian: Writings on Indian History, Culture and Identity. New York: Farrar, Straus & Giroux. Silberman, B.S. (1993). Cages of Reason: The Rise of the Rational State in France, Japan, the United States and Great Britain. Chicago, IL: University of Chicago Press. Stiglitz, J.E. (2003). Globalization and its Discontents. New York: W.W. Norton. Udom, U.E. (2003). ‘International Civil Service: Historical development and Potential for the 21st Century’, Public Personnel Management, 32(1): 49–50. UN (undated). ‘Who Works at the United Nations?’ Questions and Answers, Images and Reality, ch. 6. Available at: www.un.org/geninfo/ir/ch6/ch6.htm UN (2005a). Composition of the Secretariat: Report of the Secretary-General, document A/60/310, 29 August, United Nations, New York. UN (2005b). Report of the International Civil Service Commission for the year 2005, document A/60/30, 1 January, UN General Assembly, Sixtieth Session, New York. UNDP (2004). Human Resources Strategy: Optimizing Performance for People Through People and the Professionalization of Human Resources Practice. New York: UNDP. UNSpecial (2005). Available at: www.unspecial.org/StaffPictures/report_p2b.html Vaubel, R., A. Dreher, and U. Soylu (2006). ‘Staff Growth in International Organizations: A Principal–Agent Problem? An Empirical Analysis’, in J. Chen and D. Sapsford (eds), Principles of International Institutions: Theoretical Foundations and Empirical Evidence. Cheltenham: Edward Elgar.

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An International Profession Weiss, T.G. (1975). International Bureaucracy: An Analysis of the Operation of Functional and Global International Secretariats. Lexington, MA: Lexington Books. Weiss, T.G., T. Carayannis, L. Emmerij, and R. Jolly (eds) (2005). UN Voices: The Struggle for Development and Social Justice. Bloomington, IN: United Nations Intellectual History Project, Indiana University Press. World Bank (2000). Higher Education in Developing Countries: Peril and Promise. Washington, DC: Task Force on Higher Education and Society, World Bank. World Bank (2006). World Bank Annual Report 2005. Washington, DC: World Bank.

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11 Talent Mobility in the Global Economy: Europe as a Destination Mario Cervantes and Andrea Goldstein

11.1 Introduction This chapter differs from others in this volume by the emphasis it puts on location as destination, and not source, of cross-border talent ﬂows. We focus on Europe, where talent is abundant. One indicator of this talent is the number of university graduates in science and technology. The EU produces more science and technology graduates and PhDs than either the US or Japan, and is also the world’s largest producer of scientiﬁc publications. Individuals from both developed and developing countries make a great contribution—for instance the UN has more staff in Europe than in any other continent; Fortune named an Indian steel tycoon based in London as the European businessman of 2004; and the 2004 Pritzker Architectural Price also went to an Iraq-born British architect. These diasporas play an important social, political, and economic role—for instance Argentina’s 1983 Nobel Prize winner in medicine was then a Cambridge professor; one of Brazil’s most distinguished social scientists taught in Paris before serving as his country’s president during 1994–2002; and six Brazilian volley ball players who won the Athens 2004 Olympic title work in Europe. In professional football (soccer)—a world of talent where Latin America and, to a lesser although growing degree, Africa, globally excel— players that usually train and play in Europe transfer back the latest knowhow when performing for the national team. Against this background, it may come as a surprise that the paucity of internationally mobile talent is an important policy concern in Europe.

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There are both economic and noneconomic reasons for this. On the one hand, Europe employs few foreigners in export oriented, research intensive industries (Zimmermann 1995), something that is at odds with the fact that the demand for highly skilled workers, in particular human resources in science and technology (HRST), 1 cannot be fully satisﬁed. At the same time, an increasing number of European scientists in all disciplines are leaving to teach and work in North America and Australia (e.g., Becker et al. 2004 for the case of Italy). As China develops its R&D potential, it also is seeking to lure European and North American researchers in addition to Chinese expatriates. Physicians and less glamorous skilled professions such as nurses, pharmacists, and laboratory technicians are also in a state of critical undersupply in Western Europe. EU business is indeed pushing for the adoption of measures similar to the US H1B visa programme. Various governments are studying how to ‘cream skim’ immigrants so as to attract the brightest to Europe. On the other hand, insofar as Europe does not manage to attract the brightest students from Africa, Asia, and Latin America, who are attracted by the brightest career lures of the US, the continent may be losing the battle for the hearts and minds of the next generation of policymakers and opinion leaders—one in which Europe used to make up in soft power for her relative dearth of weapons and troops. Besides contributing to new knowledge formulation, scholars in the humanities and the social sciences, in particular, are an important conduit in the circulation of ideas and Europe is arguably losing out to the US. 2 This chapter has three main objectives. First, it provides quantitative evidence on the scale and characteristics of ﬂows and stocks of different types of foreign talent in Western Europe. 3 There are several possible means to gauge the stock and migration ﬂows of highly skilled workers, including censuses, registration data, labour force surveys, administrative data, speciﬁc surveys, and case studies. Although none of these provides an entirely satisfactory means of measurement (Auriol and Sexton 2001), for HRST a ﬁrst approximation is possible following the ‘Canberra 1

That is scientists, engineers, and technicians, including higher education teachers. There is also a relationship between the allure of Europe for southern talents and the continent’s struggle to sustain its venture capital industry and technology intensive spinoffs and start-ups. If the former is limited, the latter is made harder; and if the latter proves unsuccessful, southern talents—the staple of the ‘new economy’—will not be attracted to Europe. 3 As for transition economies, they are still largely exporters of talent to Western Europe and North America, although in passim references will be made to speciﬁc examples of developing world ﬂows of talent into former socialist countries. 2

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Manual on Measurement of Human Resources in Science and Technology’ (a joint initiative of the European Commission, Eurostat, and the OECD). For other categories of talent, a variety of national sources are used. 4 Second, it analyses the mobility of talent and its impact through four case studies—entrepreneurship, the impact of outﬂows in South Africa, the contribution of foreign talent to European economics, and the circulation of African talent in European football (as a global cultural industry). Although the selection of the four cases responds exclusively to the idiosyncratic preferences of the authors, we think that they provide some interesting hints of more general value. Third, the chapter examines appropriate migration policies for facilitating the mobility of talent in ways that are beneﬁcial both to receiving and sending countries. The chapter is organized as follows. In the following section the state of talent in Europe is presented, to highlight how much of it is available and what are the major gaps that justify, or at least explain, worries in the continent’s academic, business and political cycles. Section 11.3 focuses on stock and ﬂow data for the migration of technical talent. The next section examines four speciﬁc cases. In section 11.5 the emphasis shifts to the policy environment in both host and source countries that would be conducive to seamless talent mobility. In the conclusions we synthesize the main ﬁndings and point to major knowledge gaps.

11.2 The State of Technical and Scientiﬁc Talent in Europe 11.2.1 Does Europe Suffer From a Talent Gap? One proxy for technical and scientiﬁc talent is the population having attained tertiary education. 5 Figure 11.1 shows that the overall stock of talent in the population (aged 25–34 years) of the majority of EU countries, as measured in terms of the population with tertiary level education (both vocational and university—but excluding PhD level) is smaller than in the US, with the notable exception of Norway, Ireland, Belgium, and Sweden.

4 The information on foreigners who enter an EU country provided by interior ministries does not include returned descendants of European emigrants or those who hold EU documents. This may underestimate the actual number, in particular for Latin Americans in southern Europe. 5 Entrepreneurship is different, and is analysed separately below.

300

%

Denmark Netherlands

Finland Australia

France

Spain

United States

Ireland

Norway

Belgium

Sweden

Korea

Israel

Japan1

Canada

Russian Federation1

Czech Republic

Turkey

Slovak Republic

Chile

Italy

Hungary

Portugal Mexico

Germany

Austria

Poland Greece

New Zealand

Luxembourg Switzerland

United Kingdom Iceland

Notes: 1 Year of reference 2003. Countries are ranked in descending order of the percentage of 25 to 34-year-olds who have attained tertiary education. 25 to 34-year-olds; 45 to 54-year-olds. Source: OECD (2004).

Figure 11.1 Educational Attainment in OECD Countries, 2004

0

10

20

30

40

50

60

70

Brazil

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Nevertheless, when one considers only the current production of advanced university graduates which is important for the competitiveness of new growth sectors, the EU25 is producing more university graduates, in numerical terms, than the US or Japan (Table 11.1). Furthermore, EU25 countries produce more science and engineering (S&E) graduates in absolute terms and relative to all graduates than the US. The EU also produces more PhDs compared to the US. In terms of the production of PhDs in S&E, again more than half of PhDs in Europe go to S&E students compared to only 25 per cent in the US. If Europe does not appear to have an absolute shortage of the kinds of talent that are needed for knowledge-based industries, compared to the US a greater share of its youth population lacks tertiary education at the lower levels, especially in some countries. The Third European Report on Science and Technology Indicators noted that the EU is the world’s biggest ‘brain factory’, but that it has lost or underemployed this human capital during the last decade (EC 2003). A major reason is the lower level of investment in research—the EU15 currently spends 1.94 per cent of GDP, compared with 2.8 per cent in the US and 2.98 per cent in Japan. Despite producing more human resources in S&T (graduates and PhDs) each year than the US and Japan, the EU displays a lower density of researchers: 5.8 researchers per 1,000 labour force compared to 8.6 in the US (see Table 11.1). In some EU countries such as Italy, the weak demand for industrial R&D and limited opportunities in public research are seen as the ‘push’ factors for the (temporary or permanent) emigration of European PhDs and postdoctorates to the US (Fondazione Cassa di Risparmio di Venezia-CENSIS 2002; Gagliarducci et al. 2005). In many ﬁelds of research and development, Europe’s advantages are not being converted into commercial success. Strong performance in fundamental research, as exempliﬁed by the EU’s growing share of scientiﬁc publications in the world, 6 has been accompanied by relative weaknesses in patenting and conversion into products and services with industrial and economic beneﬁts. Data from the OECD’s patent database show that the US accounts for the largest share of ‘triadic patent families’ (i.e., a set of patents ﬁled for an invention in each of the three main jurisdictions; US, EU, and Japan) at 36.4 per cent of the 53,000 triadic patent families that were ﬁled in 2003 (see Figure 11.2). For the EU, which ranks second, the share has 6 Between 1991 and 2001, the gap between the EU’s and the US’s share of scientiﬁc publications has been shrinking. The EU15 expanded its share by 30 per cent during that period to reach 556 publications per million inhabitants while the US saw its share fall by 8 per cent to reach 705 publications per million inhabitants.

302

Table 11.1 Graduates at Tertiary-A and PhDs Levels in S&T Fields (2002 or Latest Year Available) All ﬁelds

S&E ﬁelds

Tertiary-A and advanced research programmes (ISCED 5A+6)

Of which PhDs only

US Japan EU15 EU25 Of which Germany France UK

1,898,876 637,168 1,726,863 2,303,891

44,160 13,642 72,016 79,460

199,863 382,661 435,868

Total OECD

5,909,120

Tertiary-A and advanced research programmes (ISCED 5A+6)

Of which PhDs only

As a % of total OECD S&E PhDs graduates

298,761 165,012 458,681 532,074

15,393 5,340 31,380 34,106

24.7 8.6 50.4 54.7

−3.4 8.4 1.3 2.6

8.6a 9.9 5.8 5.8

23,838 10,404 14,232

61,839 109,861 122,624

8,651 5,945 7,224

13.9 9.5 11.6

−2.3 −2.8 5.3

6.9 7.5 5.5b

151,513

1,281,842

62,311

−0.5

6.5

Notes: a 1999; b 1998. This table excludes all vocational education (ISCED 5B). Source: OECD Education Database, May 2005.

100

Average annual growth of S&E PhDs graduates, 1998–2002 (%)

Density of researcher population

Additional Topics 20,000

United States European Union

15,000 Japan 10,000

5,000 0 1987

89

91

93

95

97

99

2001

2003

Figure 11.2 Trends in Filings of Triadic Patent Families Note: Triadic patent families are deﬁned by the OECD as a set of patents taken at the European Patent Ofﬁce (EPO), the Japanese Patent Ofﬁce (JPO), and the US Patent and Trademarks Ofﬁce (USPTO) that share one or more priorities. Only patents applied for in the same set of countries are included in the patent ‘family’. This indicator is preferred to indicators of patent applications in individual patent jurisdictions due to the national bias and geographic location in patenting. Source: Data from the OECD Patent Database (2006).

tended to fall in recent years, reaching 30.3 per cent in 2003. While there are structural reasons for the higher level of patenting activity in the US, these alone do not fully explain the relatively weaker patenting activity in Europe. An examination of patenting applications ﬁled via the Patent Co-operation Treaty (PCT)—which makes it possible to seek protection in several countries with a single application—shows that while the EU share of patents in key areas like ICT is relatively strong (see Figure 11.3), the shares are concentrated in four countries (Germany, UK, France, and the Netherlands). China, whose share has risen sharply in recent years, outranks countries like Sweden and even Finland. The EU’s share of PCT patents in biotechnology is also behind that of the US even if it is ahead of Japan. But here too, emerging economies like India and China exhibit faster growth rates. Meanwhile, more than one in seven doctorates received by foreigners in the US are awarded to Europeans. Of these Europeans, about 75 per cent stay behind, including for further research training (EC 2003). For Germany alone, between 1990–98, the number of post-PhDs, assistant professors, and research fellows in the US increased from 5.2 per cent to 7.2 per cent of foreign-born scholars. In response, European governments have sought to improve research and working conditions in public research as well as to facilitate the return migration of young researchers. 304

Europe as a Destination 36.6

United States European Union

30.1 17.9

Japan 10.4

Germany United Kingdom

4.8

France

4.0

Netherlands

3.9

Korea

3.5 1.9

Canada China

1.8

Sweden

1.7

Finland

1.7

Israel

1.4

Australia

1.3 1.0

Italy Switzerland

1.0

Denmark

0.6

Austria

0.6

Singapore

0.5

Spain

0.4

Russian Federation

0.4

India

0.3

Norway

0.3

Belgium

0.3

Ireland

0.3

South Africa

0.2

New Zealand

0.2

Brazil

0.1

Hungary

0.1

Chinese Taipei

0.1

Poland

0.1

0

10

20

30

40

%

(a) Share of countries/economies in ICT-related patents filed under PCT, 2003

Figure 11.3 High-Technology Patents in OECD and Selected Non-Member Economies Notes: Patent counts are based on the priority date, the inventor’s country of residence and fractional counts. Country shares in total PCT ﬁllings. Source: OECD Patent Database 2006.

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Additional Topics 43.3

United States

27.8

European Union

14.1

Japan

9.6

Germany United Kingdom

5.3

France

3.6 2.7

Canada

2.1

Australia

1.8

Denmark Netherlands

1.7

Korea

1.7 1.7

China Israel

1.6

Switzerland

1.4

Sweden

1.2

Belgium

1.1 1.0

Italy India

0.8

Spain

0.8

Finland

0.5

Austria

0.5

New Zealand 0.4 Singapore 0.4 Norway 0.3 Russian Federation 0.2

0

10

20

30

40

50 %

(b) Share of countries in biotechnology patents filed under PCT, 2003

Figure 11.3 (Continued)

On the other hand, mobility is part and parcel of a scientiﬁc career. Therefore, policies in European countries are increasingly trying to foster outward mobility needed for further training, while encouraging return migration of European scientists, as well as the migration of students and skilled workers from outside the EU. 306

Europe as a Destination

11.2.2 Europe’s Position in Global Student Flows 7 Europe is the largest receiving region for foreign tertiary students, taking in 856,733 such individuals in 2001 (53 per cent of the 1.6 million foreign students enrolled in the OECD area). North America took in 547,867 foreign students in 2000–01. OECD countries in the Asia-Paciﬁc region (Australia, Japan, Korea, and New Zealand) hosted 189,345 foreign students. Seven countries host more than 81 per cent of all foreign students studying in the OECD area: the US (30 per cent); the UK (14 per cent); Germany (13 per cent); France (9 per cent); Australia (7 per cent) Japan (4 per cent); and Canada (3 per cent). Most of these countries, with the exception of Canada, France, and the US, experienced large increases in the number of foreign tertiary students. France fell from second to fourth position as a receiving country between 1980 and 2001. The shares of Canada, the US, the UK, and Australia increased less, even if the numbers rose signiﬁcantly in the latter two. These countries together accounted for 56 per cent of all foreign students in 2001, highlighting the dominance of English as the modern lingua franca of commerce and scientiﬁc exchange. English speaking countries host three-quarters of the students from Asia. In absolute terms, Asia is the largest sending region; accounting for 43 per cent of foreign students in the OECD countries followed by Europe (35 per cent); Africa (12 per cent); North America (7 per cent); South America (3 per cent); and Oceania (1 per cent). Most Asian students go to North America and elsewhere in the Asia-Paciﬁc region. For North America as a whole, Asian students accounted for 60 per cent of all foreign students. Students from the Americas account for 17 per cent of all foreign students in North America. While Europe collectively receives most of the foreign students in the OECD, 52 per cent of foreign students in Europe originate from elsewhere in Europe compared to 23 per cent from Asia, 17 per cent from Africa, 5 per cent from North America, and 3 per cent from South America (see Figure 11.2). In Europe, the countries with the largest numbers of students studying abroad in OECD countries are Greece, Germany, France, and Italy. Thus, Europe collectively receives more foreign talent than the US, but most of it comes from within Europe followed by Asia. Only one in ﬁve foreign students in Europe come from developing countries in Africa and South America (see Figure 11.4). In 1995–2001, the number of 7

The following section is largely based on OECD (2005).

307

Additional Topics South America, 3% North America, 5%

Oceania, 0% Africa, 17%

Asia, 23% Europe, 52%

Figure 11.4 Distribution of Foreign Students in Europe by Continent of Origin, 2001 Source: OECD (2005) and data from OECD Education Database.

European students abroad rose faster than the number of students from other regions. Inﬂows from South America have remained ﬂat since the mid-1990s (see Figure 11.5). Foreign students also differ from domestic students in terms of ﬁelds of study. In English speaking countries, a greater share of overseas students enrols in engineering, social sciences, business, and law. In the US, 20 per cent of all foreign students study business and management and 15 per cent study engineering. Given the cost of studying abroad, these ﬁelds may appear to students as having a higher return on investment. However, countries such as the UK, the US, and the Netherlands are increasingly dependent on foreign recruitment for attracting sufﬁcient talent in S&E ﬁelds for which interest among national students has declined. They often seek to attract graduate students or young researchers in order to maintain their research capacity. In general, slightly smaller shares of overseas students are enrolled in health and welfare (except in Poland, Hungary, the Czech Republic, and Italy), and slightly larger shares in humanities and arts.

308

Europe as a Destination 500000

1998

1995

2001

400000 300000 200000 100000 Not specified

Oceania

Europe

Asia

S America

N America

Africa

0

Figure 11.5 Increase of Foreign Tertiary Students in Europe by Continent of Origin, 1995–2001 (thousands) Note: Because of a change in the ISCED classiﬁcation of educational levels in 1997, the 1995 series are not fully comparable with the other series but nevertheless provide a good approximation. Tertiary education corresponds to ISCED levels 5A, 5B, 6 in the new classiﬁcation, which might not cover exactly the same programmes as ISCED 5, 6, and 7 in the former classiﬁcation; see www.uis.unesco.org/en/act/act_p/isced.html for details. Source: OECD (2005). Data from OECD Education Database.

11.2.3 Drivers and Modes of International Student Flows Patterns of international student ﬂows vary greatly due to historical, geographic, linguistic, cultural, economic, and social drivers, including foreign policy considerations and development goals (US cultural and educational exchange programmes in central and Eastern Europe during the Cold War; bilateral agreements between France and its former colonies). Most English speaking students studying abroad do so in other English speaking countries. Five Commonwealth countries (Australia, India, Malaysia, New Zealand, and the UK) received altogether 35 per cent of all the Commonwealth students studying abroad (in countries reporting data). In France, some 51 per cent of foreign students originate from Africa. Geographic proximity matters too. Between 1998 and 2001, intraregional concentration increased in Europe and the Asia-Paciﬁc region and decreased in North America (see Table 11.2). In 2001, 81 per cent of European foreign students in OECD countries were studying in a European OECD member country. In Asia, such a pattern of intra-regional mobility is much less common. In fact, only 23 per cent of the foreign students from Asia and Oceania who were studying in an OECD country

309

Additional Topics Table 11.2 Distribution of Foreign Students Enrolled in OECD Countries by Region, 1998 and 2001 (%) Origin of students

1998 in OECD countries from:

2001 in OECD countries from:

Europe EU N. America Asia Oceania Europe EU N. America Asia Oceania Europe S. America N. America Asia Oceania OECD countries

79 40 39 28 19 52

71 38 37 27 19 49

17 57 56 49 30 34

1 2 2 11 4 6

2 1 3 12 47 8

81 42 38 29 19 54

72 40 36 28 18 50

15 54 55 47 29 33

1 1 2 11 3 5

2 2 6 12 49 8

Note: The table shows that 79 per cent of European foreign students in OECD countries in 1998 were studying in OECD member countries located in Europe, and 57 per cent of foreign students from South America who were studying in OECD countries were studying in OECD member countries located in North America. Source: OECD (2005). Data from OECD Education Database.

were from the same region (i.e., Australia, Japan, Korea, or New Zealand). 8 Although the number of Asian students in Australia and New Zealand has been growing, most foreign students from this region continue to go to North America, followed by Europe. As regards North America, 55 per cent enrolled in a foreign university remained in a North American OECD country (OECD 2005). Finally, bilateral agreements in higher education, large scale international programmes, and international migration policies also affect the direction, channels, and magnitude of student ﬂows. Within the EU, most migration is in the context of organized exchanges. Only 2 per cent of tertiary level students in Europe who are enrolled abroad do so to acquire a full degree overseas. In Asia-Paciﬁc, most cross-border education is characterized by the acquisition of a full length degree and most often involves the self-ﬁnancing of tuition and other costs. Asian students going to the US mostly follow this pattern. In Europe and North America, most students study abroad on short-term, bilateral exchanges for less than an academic year (e.g., semester abroad programmes). International mobility of students has also been institutionalized in Europe through large scale 8 Note that these data include countries of origin, but not countries of study outside the OECD area. Data on the number of foreign students studying in China, in particular, are not included. The government hopes to have 120,000 foreign students in China by 2008, compared to 8,000 in the mid-1980s (‘China expects inﬂux of foreign students’, China Daily, 29 September 2004). Thus our data may underestimate the concentration of Asians studying in all Asian countries: about 70 per cent of foreign students in Malaysia and India, for example, are of Asian origin. The number of foreign students enrolled in South African higher education institutions has also risen from 12,600 in 1994 to 35,000 in 2001. The majority of these students (73 per cent in 2000) are from other African countries.

310

Europe as a Destination

programmes such as ERASMUS and fully funded student mobility schemes such as the EU’s Marie Curie post-doctoral fellowships. Analogous programmes exist in North America (and the Asia-Paciﬁc region, e.g., University Mobility in Asia and the Paciﬁc) but these tend to be of less importance in terms of contributing to student mobility ﬂows (OECD 2005).

11.2.4 The Relative Attractiveness of US Advanced Research Programmes Although the large majority of foreign tertiary level university students enrol at the undergraduate level, a higher proportion is enrolled at postgraduate level by comparison with domestic students. 9 In 2001, international students enrolled in advanced research programmes represented on average 10.2 per cent of all students at the tertiary level, but only 3.8 per cent of all (domestic and foreign) students in the countries for which data are available. Overall the number of foreign PhD students enrolled in national advanced programmes has increased in the past ﬁve years in most countries (Figure 11.6). The proportion of foreigners exceeds 20 per cent of total PhD students in the UK and Australia. The US hosted in 2002 the largest foreign PhD population with about 79,000 students coming from abroad. Foreign students supported by US grants are the majority in many S&T related ﬁelds (NSB 2002). Asian students represent the bulk of PhDs awarded to foreigners in the US (OECD 2005). As discussed earlier, the predominance of the English language explains to some extent the choice of destination, notably for English speaking countries and to some extent in Spain with regard to students from Central and South America, but other factors are at work, including support for foreign student study, the quality and accessibility of a foreign education and ﬁnally, prospects for further study and careers as well as the relative higher economic returns from an OECD education. 9 ‘In the United Kingdom, for example, whereas only 9% of British higher education students are enrolled at postgraduate level, 26% of students from EU countries, and 41% of students from other overseas countries are enrolled in postgraduate courses. Overall, 48% of international students (from Europe and elsewhere) studying in the United Kingdom were enrolled at postgraduate level in 2001. In the United States, about 45% of international students are enrolled at postgraduate level, compared with 17% of higher education students overall. While international students represent about 4% of all tertiary level enrolments in the United States, they represent about 14% of students at the postgraduate level. In Australia, 36% of all foreign students were enrolled at the postgraduate level in 2002, against 23% of domestic students’ (OECD 2005).

311

Additional Topics 78 884 22 824

United States (2001) United Kingdom Spain Australia Switzerland Canada (2000) Sweden Austria Belgium Czech Republic Finland Denmark Norway Portugal (2000) Korea Hungary Turkey (1999) New Zealand Italy Slovak Republic Mexico Iceland 0

2,000

4,000

6,000

8,000

10,000

Figure 11.6 Foreign PhD Students, 2002 or Nearest Years Available Note: Number by host country. Source: OECD Education Database, March 2005.

11.3 Europe’s Position in the Global Stocks of Highly Skilled Migrants from Developing Countries Like foreign students, highly skilled migrants mostly move in response to economic opportunities abroad that are better than those available at home as well as in response to the migration policies in destination countries. Governments also contribute to stimulating migration in the context of international agreements. In the case of researchers and academics, the conditions in the host country regarding support for research and demand for R&D staff and professors can also be an important determinant in the migration decision and destination. Among the entrepreneurially minded, the climate for innovation generally and for business start-ups and self-employment in particular may play an important role in the decision to move abroad. Another factor of mobility relates to the globalization of ﬁrms that changes the geographical pattern of demand for specialist talent and feeds the transfer of skilled workers 312

Europe as a Destination

to other countries.10 There is an important role of institutions outside the labour market, such as venture capital, which help the expansion of high-tech industries and in turn, demand for technical talent. The new OECD database on immigrants and expatriates in OECD countries is the ﬁrst internationally comparable dataset—which concerns stocks and not ﬂows—on the foreign-born population as well as the foreign-born, non-citizen/national population11 for almost all member countries of the OECD.12 In 2000 there were 3.4 million highly skilled foreigners (foreign-born and noncitizen) from developing countries in the OECD countries and Europe as a region (EU25, Norway, and Switzerland) hosted only 13 per cent of them. The US hosted nearly three-quarters of highly skilled foreigners from developing countries who had not acquired citizenship from an OECD country and were residing in an OECD country in 2000. Using a broader deﬁnition of foreigners—foreign-born whether or not they have acquired the nationality of the host country—the population of highly skilled foreigners from developing countries in the OECD area reached 10.2 million individuals in 2000. Whether one uses the narrow deﬁnition of foreign highly skilled in an OECD country, or the broader deﬁnition of foreign-born irrespective of nationality, the US attracts most of the talent from developing countries (Figure 11.7). Just over half of the highly skilled foreign-born in OECD countries resided in the US. However, of the 3.4 million highly skilled foreigners from developing countries in the OECD (without the nationality of the host country), some three-quarters resided in the US; Europe hosted only 2.7 million. The differences in the ratio in the two measures likely relates to differences in the acquisition of nationality and access to higher education as well as differences in temporary and permanent migration and incentives 10 Evidence from a recent British survey of non-EU migrants working in the UK on work permits showed that the dominant reason for migrating was the career ambition of workers and opportunities to work in global centres of excellence. 11 An earlier draft of this chapter had deﬁned the foreign high skilled population as ‘both foreign-born and noncitizen/non-national of the country in which the migrant was resident’. The broader deﬁnition, all foreign-born, whether the migrant acquired the nationality of the host country or not, is henceforth used in this chapter. However, countries differ extensively in the nationality acquisition laws and in some countries migrants from certain countries tend to obtain host country nationality more frequently which would tend to overestimate the share of highly skilled foreigners. Despite these limitations, the broader deﬁnition has become the preferred deﬁnition by the OECD as well as the World Bank. 12 In Europe there is no equivalent to the SESTAT database maintained by the National Science Foundation in the US. The Community Labour Force Survey (CLFS) covers the whole of the working population, those with university level education and those in senior scientiﬁc or technical posts. Its data make it possible to look at the number of non-nationals working in a European host country.

313

Japan 144,675

Others 44,560

United States 2,504,285

Canada 1,222,785

Japan 137,441 Others 194,903

Note: Total is 10.22 million.

Europe 2,659,733

Australia 611,840

(b)

United States 5,396,954

(a) Highly skilled foreign-born and foreign citizen/national from developing countries residing in OECD regions, 2000 (b) Highly skilled foreign-born from developing countries residing in OECD, whether foreign resident or naturalized citizen, 2000

Figure 11.7 Comparison of Highly Skilled Foreign Immigrants from Developing Countries in OECD Countries, by Foreigner Status and Host Regions, 2000

Note: Total is 3.68 million.

Europe 475,219

Australia 158,708

Canada 360,900

(a)

Europe as a Destination

for foreign students to stay in the country after obtaining a diploma. It is well documented that many highly skilled foreigners have obtained at least part of their education in a host country, especially among individuals who arrived as youngsters to the country (OECD 2001). The relative higher share of highly skilled foreigners from developing countries (deﬁned simply as foreign-born) residing in European OECD countries (25 per cent), compared to the lower share of highly skilled foreigners in Europe from developing countries who are both foreign-born and foreign citizens (13 per cent), could be due to a combination of the above factors. For instance, it may be argued that successive campaigns to ‘regularize’ migrants in an irregular situation in EU countries during the 1980s and 1990s, may have facilitated the acquisition of the nationality of the host country. In the US, only around half of the highly skilled foreign-born from developing countries do not have foreign citizen status and may be US citizens/nationals. Some 71 per cent of foreign highly skilled expatriates in the US come from developing countries, compared to 50 per cent in France. The variance is high in Europe: while Finland has a higher share of the highly skilled coming from developing countries (77 per cent), it is only 28 per cent in Belgium—despite being a very internationalized country and a destination for foreign student ﬂows (30 per cent of Belgian PhDs are foreigners). Some European countries therefore appear not only to attract fewer higher skilled immigrants for settlement than the US, but those that come tend to come from OECD countries as opposed to from developing countries. For Europe as a whole, the inﬂows of highly skilled migrants from developing countries are highly diversiﬁed and highly atomized or fragmented (Figure 11.8). In other words, 59 per cent of the stock of highly skilled migrants from developing countries is made up by countries which individually account for less than 50,000 of the highly skilled migrants in Europe. For Europe as a whole, Algeria, Morocco, followed by India make up the largest sending countries of highly skilled migrants but they each account for less than 10 per cent of the 2.7 million highly skilled foreigners (i.e., deﬁned as foreign-born only) from developing countries in Europe. Only 1.9 per cent (or 47,000) of the highly skilled migrants from developing countries in Europe originate in China, although, using the narrow deﬁnition of foreign-born and foreign citizen, the share rises to 3 per cent but represents only 14,000 individuals.

315

Additional Topics (a) Europe (1) Russian Serbia and Federation Nigeria Montenegro 2% 2% 2% Tunisia 2% Pakistan 2% South Africa 3% Other below 50,000 emigrants 59%

Ukraine 3% Malaysia 1%

Iran 3% India 6% Morocco 7%

Algeria 8%

(b) Australia Hong Kong 4% Sri Lanka Vietnam 4% 5%

South Africa 6% Malaysia 7%

Other below 20,000 emigrants 50%

Philippines 7%

India 8% China 9%

Figure 11.8 Destination of the Highly Skilled Foreigners (i.e., All Foreign-Born) from Developing Countries Residing in the Main OECD Regions, by Country of Origin, 2000 Note: (1) Europe deﬁned as EU25 plus Switzerland and Norway. Source: OECD (2005).

316

Europe as a Destination (c) Canada Vietnam 3% Iran 3% Jamaica 3% Hong Kong 8%

Pakistan 3%

Chinese Taipei 3% Romania 2% Russia Federation 2%

Philippines 10%

Other below 25,000 emigrants 43%

India 10% China 10%

(d) Japan

Brazil 18%

Philippines 16%

China 45% Peru 5% India 2%

Other below 2,000 emigrants 10%

Thailand 2%

Indonesia 2%

Figure 11.8 (Continued)

317

Additional Topics (e) United States Russian Federation 3%

Iran 3%

Cuba 4%

Jamaica 3% Colombia 2%

Chinese Taipei 4% Vietnam 5% China 8%

Other below 120,000 emigrants 42% Philippines 13%

India 13%

Figure 11.8 (Continued)

In contrast, in the US, four Asian (developing) countries account for 36 per cent of the highly skilled immigrants from developing countries. India and the Philippines each account for 12 per cent, followed by China (8 per cent), and Vietnam (4 per cent). The only Latin American countries that are a signiﬁcant source of highly skilled migrants are Cuba (4 per cent) and Colombia (2 per cent). Canada presents a similar proﬁle as the US with China, India, and the Philippines as the main sending developing countries. Similarly, highly skilled migrants from Asia also account for most of the highly skilled in Australia that originate from developing countries. Japan, which receives only 1.3 per cent of the highly skilled immigrants from developing countries who reside in the OECD area, has an even greater concentration of source countries: China alone accounts for 45 per cent of foreign highly skilled migrants, followed by Brazil (18 per cent) and the Philippines (16 per cent). Based on the OECD database on immigrants and expatriates, the picture that emerges is that of stability—the scale of highly skilled migration

318

Europe as a Destination

from developing countries to Europe is much lower than to the US; proximity—the origin of the highly skilled migrants from developing countries is highly biased in favour of south-eastern and Eastern Europe; and diversiﬁcation in terms of the wide number of sending countries. Notwithstanding the relatively small shares of African highly skilled in Europe, the disaggregate data show that the shares are much higher in individual countries with long historical ﬂows of migrants from Africa (e.g., France and the UK).

11.4 Southern Talent in Europe: Four Case Studies While the sections above have focused on the relative position of Europe in the international geography of talent, the four case studies below offer a glimpse at the experience of developing countries’ talent in Europe.

11.4.1 Entrepreneurship That immigrants as a group exhibit signiﬁcant entrepreneurial behaviour is almost a given (e.g., Acs et al. 2005). In the US, in every decennial census from 1880 to 1990, immigrants were signiﬁcantly more likely to be self-employed than natives (IMPP-CEIP-UI 1997) and the increase in business ownership among ethnic groups has been especially noteworthy since the 1970s. Migrant entrepreneurs may contribute to the host economy through community development and by creating and growing small businesses (Toussaint-Ceomeau 2005). Some ethnic minority groups, ‘such as Koreans and Cubans, are even characterized as “entrepreneurial” because their rates of business ownership participation far exceed that of other groups’ (Valdéz 2002). In Silicon Valley’s knowledgebased industries, in particular, foreign-born engineers and scientists play a crucial role. International comparisons are rather hazardous as uniform statistical data are lacking (Kloosterman and Rath 2003).13 National incorporation regimes differ, entrepreneurship and self-employment are differently deﬁned, and 13 The Global Entrepreneurship Monitor (GEM) research programme has no speciﬁc questions on migration/ethnicity in the adult population survey, and the relatively small size of the sample in most countries would make this a rather unreliable measure in the course of the normal annual data collection exercise.

319

Additional Topics in some countries, the whole ofﬁcial statistical concept as such is nonexistent (e.g., France), whereas in others like the US, the ofﬁcial census data allow for a combination of country of birth and/or nationality with socio-economic status. (ibid.)14

Nonetheless, at least prima facie, the same macro trend that has been identiﬁed in the US can also be found in Europe. In the United Kingdom the number of ethnic minority owned businesses has grown rapidly over the last two decades and this group has much higher proportional representation among business start-ups than in the population at large (Basu and Altinay 2002). Their presence is particularly visible in Greater London. Although the quantitative prominence of South Asians in self-employment has assumed an almost takenfor-granted status within the ﬁeld of ethnic minority entrepreneurship, the numerical gap between them and the rest of the small business population is gradually being whittled away (Jones and Ram 2003). Other groups such as the Chinese, the East-African Asians, and those from the Caribbean occupy an increasingly relevant place. In France, the upsurge in foreign entrepreneurship and selfemployment began in the 1970s and 1980s—when immigrants from southern shores of the Mediterranean overtook those from northern ones in terms of new business starts (Simon 1990)—and has gathered pace more recently. In Italy, in mid-2004 there were 71,843 companies registered by foreign citizens (of which 95 per cent were non-European), a 27.3 per cent year-on-year increase (CNA 2004). To put this ﬁgure in perspective, the same statistics for Italians was equal to a meagre 0.5 per cent. Interestingly, to the extent that native ﬁrms successfully embraced ﬂexible specialization in the 1980s, the opportunity for immigrant entrepreneurs to set up sweatshops and beneﬁt from outsourcing trends have been limited (Magatti and Quassoli 2003).15 The economic literature on ethnic minority entrepreneurs in Germany is particularly rich and shows that the likelihood of self-employment decreases over time, but, when immigrants have accumulated more years of residence in Germany, it increases again. This suggests that once immigrants have overcome the initial adjustment shock, self-employment 14 Numerous US federal programmes (including the Public Use Microdata Samples, the Survey of Income and Program Participation, the Characteristics of Business Owners, the Survey of Minority Owned Businesses, and the National Panel Survey of Entrepreneurial Dynamics) exist. 15 On the other hand, in France, which has not developed an Italian style industrial base, a thriving sweatshop cluster run and manned by Chinese immigrants can be found in the Sentier neighbourhood in central Paris (‘La Vague chinoise’, L’Express, 6 December 2004).

320

Europe as a Destination

is a means to take advantage of existing opportunities and achieve a higher socioeconomic standing (Constant and Shachmurove 2003). Among immigrants, guest workers are twice as likely to choose selfemployment as ethnic Germans. Immigrants are able to traverse the socioeconomic gap through self-employment, irrespective of the part of the distribution they are at. Self-employed immigrants earn 22 per cent more than the salaried immigrants. Turks are twice as likely to choose selfemployment as any other immigrant group (Constant et al. 2004). The age–earnings proﬁles of self-employed German and immigrant men are concave and surprisingly similarly shaped. The earnings of self-employed men increase with exposure to Germany, hours worked and occupational prestige; they decrease with high regional unemployment to vacancies ratios. Everything else equal, the earnings of self-employed Germans are not much different from the earnings of the self-employed immigrants, including those who have become German citizens. However, immigrants suffer a strong earnings penalty if they feel discriminated against, while they receive a premium if they are German educated. Even more than for other categories of talent ﬂows, in the case of entrepreneurs individual and collective choices are highly interconnected. Starting a business demands ﬁnancial resources, access to clients and suppliers, good location, and other pre-conditions that can best be acquired by relying on existing networks and sources of social capital. In a speculative way, when a community takes the decision of selecting some individuals for emigration, their entrepreneurial abilities enter into the equation. Therefore, the immigration regime in the host country—alongside labour and product market policies, as well as administrative barriers to doing business—plays an important role in determining the likelihood that immigrants make a positive contribution to business development. It is only in countries with a liberal regime that immigrants can make a longterm commitment and build the social capital (ideally without severing ties with the local community). The overall restrictive posture of European immigration policy may hence explain why immigrant entrepreneurs are heavily concentrated in lower end retailing, wholesaling, restaurants, and eateries. A ﬁne analysis of the Swiss 2000 census, in particular, reveals that immigrants have a lower propensity to self-employment than nationals (Piguet and Besson 2005). In addition, the underdevelopment of venture capital results in a low number of high-tech start-ups founded by immigrants in Europe, especially on the continent.16 16

See The Financial Times, April 2005, on biotechnology.

321

Additional Topics

11.4.2 South African Talent Over the past three decades, migration of high skilled workers from South Africa to the US, the UK, and other Commonwealth countries, has been considerable. Ofﬁcial migration statistics show that 16,725 highly skilled South Africans emigrated between 1994 and 2001.17 The loss seems to be felt most acutely in engineering, medicine, accounting, and ﬁnancial services. Cultural reasons, no less than the fact that under the Commonwealth’s Working Holidaymakers and Family Reunion schemes South Africans do not need a visa to work there, have made the UK the main destination country in Europe, and indeed worldwide. In 2003, according to the UK General Medical Council, there were 7,400 South African registered doctors working in the UK (Dovlo 2004). Pull-and-push factors are at work. On the one hand, more British general practitioners (GPs) give up out of hours work and the profession struggles to attract junior doctors to general practice. In recent years the National Health Service (NHS) has been recruiting GPs from Germany and dentists from Poland. On the other hand, the beneﬁts on offer in Britain are enough to convince South Africans to abandon private practice in their homeland for locum work on the NHS. While family doctors in South Africa earn similar salaries to those in Britain—around £75,000 a year—the hourly locum rate is much higher and comes without the overheads of running a surgery.18 Personal safety and deteriorating work conditions are additional factors, especially for female nurses (McNeil-Walsh 2004). The practical impact of such ‘brain drain’ is very hard to quantify. According to the more optimistic view, many skilled South Africans, only recently really welcome to travel and work in other countries, took the opportunity and may return in due course. For others, the departure of trained, mostly British and white, South Africans is both a reﬂection and 17 About 70 per cent of skilled South Africans consider emigrating, although a composite statistical index used to construct each person’s ‘emigration potential’ showed that only 2 per cent of the sample falls into the ‘very high’ category (McDonald and Crush 2003). Although the number is probably much higher, even the upper-bound estimate is still less than 4 per cent of South Africa’s highly skilled human resources in 2001 (see Brown et al. 1999). Moreover, data from the 2001–2 R&D survey shows that only 11 per cent of R&D personnel departing from the science councils were reported as going overseas. 18 ‘Dr Vlok said that he was paid £200 for seeing 16 patients in a two-hour session and he normally worked about 12 sessions each week, earning £2,400. “It is similar to South Africa”, said Dr Vlok. “But here I keep what I make and walk out. I can make more money as a temporary GP here than operating a private practice back home” [. . . ] On GPNet, a website directory of family doctors in South Africa, advertisements offer doctors £7,300 to work for a month or £16,000 for ten weeks’ work. Other attractions offered include free ﬂights, a “meet and greet” on arrival in Britain and the chance to travel around Europe.’ See ‘GP commutes from South Africa to help cure shortage of doctors’ (The Times, 7 February 2005).

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Europe as a Destination

a cause of the hard transition from apartheid. A particularly thorny issue is South Africa’s HIV/AIDS policies.19 Unfortunately there are, to our knowledge, no speciﬁc studies on South African nurses in the UK. According to a wider study, ethnic minority internationally recruited personnel nurses report experiencing racial harassment from work colleagues and patients (Shields and Wheatley Price 2002). Such racial harassment is found to lead to a signiﬁcant reduction in job satisfaction, which, in turn, increases nurses’ intentions to quit their job.

11.4.3 European Economics For a further facet of the talent circulation phenomenon, we focus on research and teaching of economics in Europe. The choice of the dismal science responds to a few reasons. First, economic thinking has a great inﬂuence on policy choices. Therefore, what economists learn and how they then turn such lessons into practice has important consequences for the well-being of societies around the globe. To the extent that national differences remain, where economists learn and work is an important instrument to inﬂuence the policy debate. Second, if all of the above is true, paraphrasing John Maynard Keynes we can say that the deeds of today’s ﬁnancial ministers and central bank governors in developing countries are usually based on the theorems they learnt on campuses in the US. Just to provide a simple statistics, of the 55 laureates of the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, no less than 41 were teaching in US universities. Over the past 20 years, one can only count ﬁve ‘purely’ European Nobel Prize winners—in the sense of both born and working there.20 Equally telling is the fact that 72 of the world’s 100 most productive economists are US-based Americans (our calculation is based on Coupé 2004). Third, and possibly most relevant for our purpose, economics is a discipline where the international circulation of talent is constant. Of the 41 individuals mentioned above, four were foreign citizens and an additional six were naturalized US 19 The government has long opposed the use of anti-retroviral drugs for AIDS patients in public hospitals and clinics, citing concerns about the costs and effectiveness. If many doctors have seen this ‘with disgust’, the ruling party has considered their departure as treason towards fellow citizens. ‘Condition critical as African doctors head overseas’, Christian Science Monitor, 1 October 2002. 20 James Mirlees (1996); Reinhard Selten (1994); Trygve Haavelmo (1989); Maurice Allais (1988); and Richard Stone (1984). Six other Europeans were awarded the Prize before 1977— Bertil Ohlin and James Meade (1977); Leonid Kantorovich (1975); Gunnar Myrdal (1974); John Hicks (1972); and Ragnar Frisch and Jan Tinbergen (1969, the ﬁrst year the Prize was awarded).

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citizens.21 Among the remaining 14 not teaching in the US, three were foreign-born economists teaching in the UK.22 Therefore, it is not surprising to ﬁnd a strong presence of foreigners in the world’s best economics departments. According to our reclassiﬁcation of the data in Gagliarducci et al. (2005), Coupé (2004) and the top 100 list includes 16 US-based non-Americans (including seven EU nationals), two EU-based non-Europeans, and two more scholars working outside of their country of origin.23 Additionally, economics has the third highest share of foreign-born highly cited scientists among the 21 diverse scientiﬁc ﬁelds analysed by Ioannidis (2004). European scholars and institutions have long been concerned with this situation and different strategies have been implemented to increase the number of the continent’s departments among the world’s top 100. The results are encouraging—Europe’s share has doubled from 11 per cent in 1984 to 22 per cent in 2000 (Coupé 2004)—and the number of non-Europeans teaching in the 14 new European departments is higher than the average. In order to investigate the career path and the knowledge networks of economists from the developing world working in European universities, we identiﬁed such individuals on the staff web pages of Europe’s 75 top economics departments according to Lubrano et al. (2003), of Israel’s top ones, and of selected professional associations (AERC, CEAUK, ERF, LACEA).24 A total of 136 subjects were identiﬁed and contacted through email in April 2005. The research design used a questionnaire,25 and a total of 29 completed questionnaires were received back by the closing date of 15 May 2005 (a response rate of 21.3 per cent)26 (see Table 11.3). The responses gathered were too few to properly identify processes in expatriate knowledge transfer, network formation, and social relations. 21 Respectively Finn Kydland (2004, Norwegian); Clive Granger (2003, British); Robert Mundell (1999, Canadian); and Ronald Coase (1991, British); Daniel Kahneman (2002, born in Israel); Franco Modigliani (1985, born in Italy); Gerard Debreu (1983, born in France); Tjalling Koopmans (1975, born in the Netherlands); Wassily Leontief (1973, born in Russia); and Simon Kuznets (1971, born in Russia). 22 Amartya Sen (1998, born in India); Sir Arthur Lewis (1979, born in St Lucia); and Friedrich von Hayek (1974, born in Austria). 23 Of the eight scholars that can be classiﬁed as Europeans teaching in Europe, six spent most of the time used for determining the ranking (1990–2000) in the US (Tirole and Laffont at MIT; Bertola and Besley in Princeton; Gali at NYU; Canova in Chicago). 24 For their precious help, we thank Marco Celentani, Daniele Paserman, and Maurizio Zanardi. 25 For a similar exercise covering foreign doctors in the UK, see Commander et al. (2004). 26 We encouraged the addressees to circulate the questionnaire to other individuals that ﬁlled the selection criteria. To the extent that we do not know how many such requests were fulﬁlled in practice, this means that the response rate is unknown (although it is unlikely to differ signiﬁcantly).

324

Europe as a Destination Table 11.3 Statistics of the Main Demographic Variables

Woman Age Married Spouse from same country Dependants Years from PhD Tenure Years from tenure Country of current appointment = country of PhD In home country as visiting professor In home country as consultant to donors In home country as consultant to government In home country as government ofﬁcial In home country as consultant to business Student from home country as PhD student Student from home country as teaching assistant Student from home country as research assistant Student from home country as co-author In home country to do research In home country to attend conferences In home country to participate in PhD commission In home country to participate in concourses

No. observations

Mean

Standard deviation

29 29 29 24 28 26 29 15 28

0.2758 41.83 0.7931 0.6667 0.6786 10.81 0.5517 11.2 0.0357

0.4548 10.78 0.4122 0.4815 0.4756 8.74 0.5061 10.05 0.1889

29 29 29

0.6207 0.3793 0.2759

0.4938 0.4938 0.4549

29 29 29

0.1035 0.2759 0.2759

0.3099 0.4549 0.4549

29

0.1724

0.3844

29

0.3104

0.4708

29 28 29 29

0.4828 0.5 0.3448 0.0689

0.5086 0.5092 0.4837 0.2579

29

0.2069

0.4123

Source: Authors.

EU-based economists from the developing world maintain professional contacts with their home countries, in particular by doing research there and/or with same nationality students. If this suggests a form of brain circulation, it is more difﬁcult to argue in the sense of a true brain gain— in particular, those that participate in concourses and PhD commissions in the home countries are a small minority. Further research could explain differences in the intention to return in terms of nationality, current residence, and the source of education ﬁnancing.

11.4.4 Football Players Talent is also used to meet the demand for cultural activities, entertainment, and aesthetical enjoyment (Solimano, Chapter 2 of this volume). Data on the ﬂows of cultural workers, however, are hard to gather, not 325

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least because labour relationships in cultural activities are often characterized by a high degree of informality and therefore escape census coverage. In professional sports such as football, however, some such data are available. The number of individuals is obviously small, but a short analysis is of interest for two reasons. First, this is a truly global activity at which the European industry excels, thus making its leagues the destination of choice for talented football players from any other region of the world. Second, in the 1990s major changes—including the Bosman judgement, the renegotiations of broadcasting and sponsoring rights, the rise of sport–media complexes, and the stock market listing of some clubs—have introduced a discontinuity in the business and economic environment within which the industry operates. Teams that used to be staffed by local youth, often playing for the same team for the whole of their professional career, now resemble real multinationals and foreign player quotas have all but disappeared (Table 11.4). In Europe’s six top leagues, the number of migrant players (i.e., excluding foreign-born individuals who started their career in the host country) increased by 17.3 per cent between 1995 and 2000, although it has levelled off afterwards (Poli and Ravenel 2004). The number of African players has grown rapidly—in 2000 more than 50 per cent of the players who represented their countries in the African Nations Cup plied their trade in Europe (Darby 2000)—and that of Latin Americans has also remained high, with Brazil and Argentina ranked ﬁrst and second among non-European sending countries. Nowadays, it is not unusual to watch Iranian, Korean, or Japanese players in the starting line-up. The number of teams employing non-European players has also been on the rise following the opening of eastern and southern European football markets. Recruitment patterns, however, have not become truly global. On the one hand, cultural and geographical proximity still counts—for instance, Congolese players can be found in disproportionate measures in Belgium. On the other hand, once a non-European player migrates, the chances of transferring to another team in the same league are much higher than those of moving to another country (Poli and Ravenel 2004). Can the drain/gain dichotomy be applied to the game? The ‘rosy’ view is that exposure to the competitive environment of major leagues has allowed non-European players to improve their skills and enhance the competitiveness of national teams—an effect similar to exposure to trade for export oriented and import competing ﬁrms. According to the typology proposed by Magee and Sugden (2002) to analyse the relationship

326

Europe as a Destination Table 11.4 Distribution of Foreign Footballers in Main EU Leagues by Region, 2004/05 Season League

Spain Italy France Belgium Germany Netherlands Total

Players’ origins Africa

Latin America

Eastern Europe

EU15 & EFTA

Total

9 14 92 67 23 24

77 68 34 21 42 15

14 25 22 44 69 35

39 44 29 49 71 58

139 151 177 181 205 132

229

257

209

290

985

Source: Poli and Ravenel (2004: table 2).

between professional football and international labour migration, these players fall in the ambitionist category. One step further, a successful player such as the Liberian, George Weah, has had an impact on his country that is not dissimilar from that of extremely talented individuals in other ﬁelds.27 There is, however, evidence to suggest the presence of labour market segmentation, with African players in particular being numerous in second tier football leagues, where they are employed on short contracts, receive relatively low salaries which do not accurately reﬂect their productivity and market value, and are subject to additional discrimination with regards to payment regularity (Darby 2000 and Poli 2006). In this sense football players are migrants à qualiﬁer, rather than skilled migrants (Poli 2004).

11.5 Policy Issues The relationship between migration, growth, and development is undoubtedly complex. The fact that, as shown above, relatively little is known, even about the magnitude of ﬂows, makes it necessary to multiply caution when discussing policy implications and alternatives. In this section we describe some of the options being pursued to attract foreign talent to Europe and to minimize the possible costs for developing countries, as well as for migrants themselves. 27

‘Le Nouveau match de Mister George’, Le Monde, 30 December 2004.

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11.5.1 Attracting Foreign Talent to Europe An increasing number of EU countries are implementing measures to attract foreign students and to facilitate their access to the labour market. The traditional immigration countries have, within the general framework of their migration legislation, developed speciﬁc policies to promote the temporary residence (European countries) or permanent residence (Australia and Canada)28 of foreign HRST, both students and workers. France has established a ‘scientiﬁc visa’ not subject to labour market testing, a policy also being considered at the EU level. Business, in particular, has argued that Europe is faced with a strong resource constraint surrounding highly skilled individuals. In some countries, measures have recently been adopted that speciﬁcally target employment in the information and communications sector in order to ease labour market tensions.29 In January 2002, the UK government launched a similar skillsbased migration programme which was expanded one year later in January 2003. The new programme targets ‘individuals with special skills and experience to immigrate, initially for a year but with the opportunity to renew. [ . . . ] This is the ﬁrst time in nearly three decades that foreign workers, other than EU member state nationals, have been able to enter the UK without guaranteed employment’ (Iredale 2005).30 More generally, it is felt that the attractiveness of a career in European research must be improved in order to maintain current levels of research staff, attract young scientists, and attenuate the effects of an ageing scientiﬁc workforce. This includes better salary levels, higher quality of the infrastructure, the availability of PhD places and funding for doctorates, and changes in the academic employment structure to allow more 28 Canada’s investor/entrepreneur programme aims at attracting entrepreneurs from, for example, Hong Kong, South Korea, and Taiwan. Canada had hoped that the new immigrants would provide capital, innovation, and jobs through high-tech ﬁrms and businesses. Yet studies show that rather than coinciding with provincial preference for manufacturing and technology businesses, recent entrepreneurs have followed ethnic business strategies resulting in co-ethnic and service providing businesses. Fear of ﬁnancial risk, bank loan refusals, and the familiarity factor all have contributed to entrepreneurial immigrants’ business patterns (Jones 2004). 29 However, even in free circulation areas, there remains considerable scope for facilitating the mobility of HRST through such policy initiatives as the mutual recognition of diplomas and the transfer of social security and pension rights. 30 Successful admission is based on scoring in four key areas: educational qualiﬁcations, work experience, past earnings, and prior professional achievement. The programme gives extra points to general medical practitioners. Applicants also need to demonstrate that they can support themselves and their family during their stay. Individuals who receive at least 75 points are free to look for a job and may be able to extend their residency after the ﬁrst year for another three years, by which time they become eligible for permanent settlement.

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ﬂexibility and the entry of young talent. In the UK, the government and research councils have increased funding for PhD studentships and have committed to providing further resources for higher education to recruit and retain academic staff in science and engineering. The Dutch government has launched a special programme, the so-called ‘Renewal Impulse’, which aims at retaining more young researchers in the public science system; in the period 2000–10, 1,000 researchers will be selected for this programme. Furthermore, foreign students will be targeted for science related careers in the Netherlands. In Germany, reforms aimed at shortening the doctoral programmes have been launched. Additional measures include a strengthening of the positions of junior staff in German universities and increased funding for research in high demand areas. In Sweden, during the ‘Promotion Reform’ launched in 1999, 1,100 lecturers in higher education were promoted to the rank of professor. Italy has recently taken the ‘centre of excellence’ route with the establishment of an ‘Italian MIT’ in Genoa, although the choice has not been uncontroversial. The Spanish region of Catalunya, where research in health science has a long tradition, is developing BioCat as a centre of excellence in biotechnology by recruiting top scientists among the Spanish diaspora and elsewhere.31 Attracting foreign students who are willing to pay higher tuition fees may also be of direct ﬁnancial beneﬁt to the universities concerned and provide a potentially highly qualiﬁed reserve of labour that is familiar with prevailing rules and conditions in the host country. Scotland hopes to attract 8,000 new migrants each year with new regulations that grant foreign students visas to remain and search a job for two years after they graduate.32 On a much smaller scale, Germany’s Helmholtz Association of National Research Centres launched three fellowship programmes in 2004 that aim to lure top young overseas scientists to work in Germany.33 The problem of some such initiatives is that they may act at crosspurpose. For example, after the UK Home Ofﬁce proposed to charge foreign students up to GB£495 for a visa, Exeter and Newcastle Universities 31

See ‘La Capital de la biomedicina’, El País Semanal, 17 April 2005. Under current regulations, non-EU students can only remain in the UK until October of the year they graduate. 33 The Young Investigators Program targets scientists no older than 36 years of age who earned doctorates in the previous two to six years; the Helmholtz Research Award, jointly conferred with the Alexander von Humboldt Foundation, seeks to attract highly experienced and proven scholars and scientists from abroad; and the joint Helmholtz-German Academic Exchange Service (DAAD) programme offers 39 doctoral and post-doctoral fellowships for periods of one to three years; English is the ofﬁcial language of all centres. 32

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decided to ditch science courses citing the deterrence effect of such changes.34

11.5.2 Ensuring Coherence in Development Cooperation Policy The general view is that talent mobility beneﬁts rich host countries— through the stimulation of innovation capacity, an increase in the stock of available human capital and the international dissemination of knowledge—more than poor source host countries. The reality, however, is not made of stark contrasts. In sending countries, the mobility of talent can promote investment in training; increase inﬂows of currency through remittances; lead to the development of networks facilitating the circulation of skilled workers between host countries and their country of origin; reduce the labour surplus; and have a positive effect on the competitive position and, therefore, income of those who remain. Somewhere in between these two extremes, the cases of Chinese Taipei, Korea, Ireland, and Israel suggest that when skilled migrants return to their country of origin after a long stay abroad, they make a considerable contribution to the expansion of their high-tech industry (see Saxenian, Chapter 5 of this volume). The ﬂamingo metaphor has been used to model the dynamics of talent, as these aviaries migrate only to return when the brackish waters are replenished (Kahn et al. 2004). Balancing the conﬂicting priorities of Europe—that tries to ﬁll its talent gap by increasing opportunities for labour mobility—and of developing countries—that fear a stultifying brain drain—is a test case for policy coherence, in other words, the pursuit of win–win opportunities for both host and sending countries through the systematic promotion of mutually reinforcing policy actions (Xenogiani 2005).35 One risk has attracted considerable attention: rich countries that fail to invest enough in the replenishment of their own pool of skilled personnel, especially in health services, may ﬁnd a quick ﬁx in international recruitment ‘of ready made doctors, who would otherwise take 10 years or more to train if the “grow your own” option was selected’ (Buchan 2005). In order to ﬁght this risk, some countries have drafted ethical recruitment guidelines, stipulating that healthcare providers from certain countries will not be recruited. 34 Currently, an initial student visa costs GB£36. Visa extensions to ﬁnish a course are charged at GB£155, or GB£250 for a faster service. 35 As an anonymous reviewer pointed out, there is no theoretical justiﬁcation for the assumption that it is always desirable to institute policies that beneﬁt both sending and receiving regions. At the policy level, however, the latter assumption is made tenable by the desire to give greater weight to the needs of less developed countries.

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Examples include the guidance on ethical international recruitment practices issued by the Department of Health in the UK in 1999 requiring NHS employers to avoid direct recruitment from designated countries such as South Africa and the West Indies, as well as the Commonwealth Agreement on Ethical Recruitment. Such agreements, however, are often voluntary, they are difﬁcult to enforce, and may simply displace recruitment activity to other developing countries. A more proactive attempt to manage migration of healthcare workers is the bilateral arrangement between South Africa and the UK (Mafubelu 2004). South African healthcare personnel can spend limited education and practice periods in organizations providing NHS services, while UK clinical staff are encouraged to work alongside healthcare personnel in South Africa.36 In order to protect African football, the international federation (FIFA) introduced team rules that prevent the transfer of under-18 players and safeguard the work of ‘nurseries’ (academies and training schools established by European teams in Africa) through the payment of fees on future transfers (Poli 2006). The possible policy inconsistency is with the efforts that some EU countries are making in support of sending countries’ strategies to enhance the capacity of tertiary education institutions. Investment in human capital formation depends on expected returns, and if these are lowered by restrictions to talent mobility so will be the investment itself. Barriers to mobility may also be considered an infringement to human rights, which can hardly be justiﬁed unless the existence of a clear market failure is demonstrated. On the other hand, the beneﬁts that sending countries may derive from ‘brain recirculation’ take a long time to materialize and in the meantime poorer countries need the immediate (and possibly low hanging) fruits of foreign assistance to human capital formation. The ‘local labour market channel’ is somehow more mundane in nature and relates to the fact that donors pay their local staff and consultants salaries and remunerations that are much higher than the norm, therefore making it almost impossible for local institutions to beneﬁt from local talent. In December 2002 the European Commission (EC) proposed to enhance cooperation and partnerships with third countries throughout a strengthened dialogue on migration (EC 2002). In this context the EC 36 The provincial government of Alberta, Canada, as one example, has done active recruitment of more than 40 physicians from South Africa to ﬁll the numerous vacancies in the rural communities (Bundred and Levitt 2000), and over half of the physicians in northern Saskatchewan, another Canadian province, are South African. The South African government in 2001 formally complained to the Canadian government about the number of its physicians being allowed to take up practice in Canada, yet in 2002 the number of South African trained physicians in Canada increased by another 174, to total 1,738 (McClelland 2002).

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has considered offering jobs currently taken by expatriate staff—notably in the development cooperation sector—to local people under ﬁnancial conditions that are sufﬁciently attractive to provide an alternative for emigration. To facilitate this mechanism, modalities of technical assistance to developing countries shall be reformed, in coordination with UNDP. Development cooperation may also assist in tackling some of the reasons why migrants may choose not to return. These include the risk of severing new social and cultural bonds, of disrupting the education of children, or of jeopardizing pension entitlements and their possibilities of returning to the EU to visit family and friends. In November 2000, the European Commission communication on Community Immigration Policy (EC 2002: 757) explicitly proposed abandoning the zero immigration policies of the past 30 years. Instead, new immigration policies will be devised with which to better regulate migration through orderly and regular channels that are responsive to labour market needs, as well as to undercut migrant smuggling and human trafﬁcking. Migrants may also not return home because they are unaware of job opportunities back home. Almost all southern scientiﬁc diaspora have created groups that use information technology and networking as knowledge sharing mechanisms, with the ultimate objective of creating ties with their respective home countries (see Kuznetsov and Sabel, Chapter 4 of this volume). Policymakers in developed countries must recognize mobility needs and manage the participation of the research diaspora. In this regard, development assistance may assist in various ways. The 6th Community RTD Framework programme offers training to scientists from third countries, including LDCs, with the aim of increasing the overall scientiﬁc and technological capacity of developing countries. It includes elements that promote the actual return of trainees, including re-entry grants. Another interesting phenomenon, although on an exceedingly smaller scale, concerns European talent that consider the developing world to be an exciting place to conduct their activity. In this case, again, the focus is on scientists, although this is a form of talent mobility where entrepreneurial transfer is arguably the commonest channel.37 Esteves

37 An important subcategory of European entrepreneurial talent that migrates to the developing country is constituted by (usually younger) individuals who open and run businesses in tourism locations. While some may argue that they fail to build important linkages to the rest of the economy, such entrepreneurs have played a critical role in putting places like Bali, Goa, Malindi, Pattaya, Puerto Escondido, Tangier, Zanzibar, and many others on the global map of tourism.

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(2003) provides some examples in Latin America.38 Development assistance can support this phenomenon.

11.6 Conclusions Although Europe remains a place of choice for world class talent in a broad range of areas—from manufacturing to the production of all kinds of services (ﬁnancial, cultural, and sport related)—and makes an important contribution to their competitiveness, there is concern that the birthplace of Western civilization is producing and employing less of the types of talents that are needed for economic and social development of a ‘knowledge-based’ economy. Based on evidence of ﬂows of university students as well as on the stocks of highly skilled people in OECD countries, this chapter argues that Europe is more attractive, in quantitative terms, to talent from other developed countries than to talent from developing countries. Student migration is biased towards intra-European migration ﬂows partly due to geographic proximity and historical reasons. For Europe, the problem is not just one of losing real talent and intellectual property, but also its poor record in attracting skilled foreigners. Since the early 1990s, some 900,000 HRST professionals from India, China, Russia, and a few OECD countries (including Canada, the UK, and Germany) have migrated to the US under the H1B temporary visa programme. Highly skilled potential migrants from developing countries shun Europe because they lack information about competitive employment opportunities there, or conversely, because such opportunities are little. Until the mid-1980s, EU countries did not take any speciﬁc action to recruit foreign students in developing countries outside or beyond their traditional spheres of inﬂuence. During the 1990s, as private higher education providers have increased and universities were given more autonomy and greater ﬁnancial responsibility (including the right to levy tuition in some countries), European countries have strengthened their efforts to recruit foreign students, especially from Asia.39 Similarly, 38 British geneticist Andrew Simpson, for instance, started at the Ludwig Institute for Cancer Research in São Paulo in 1995, coordinating the genome sequencing of two bacteria (Xylella fastidiosa and Chromobacterium violaceum). Soon after publishing the genome of Xylella fastidiosa, the Brazilian researchers were commissioned by the US to sequence a related strain that attacks grapes in California. In 2003, Simpson was invited to move to New York to head the Ludwig Institute’s international research programme. 39 Universities in EU countries, such as the UK and France, are not only taking a more proactive stance towards foreign student inﬂows but they are also emulating USA higher

333

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Europe’s immigration policies only moved to favour the highly skilled in the late 1990s after having focused on family reuniﬁcation (mainly for the relatives of low skilled labour migrants from African and Caribbean countries) and asylum migrants (in the Scandinavian countries and Germany). While the focus of policy concerns has been on HRST, gaps are also emerging for other categories of talent (e.g., medical and health talents). One of the pillars behind the EU’s Lisbon agenda to become the world’s most competitive economy by 2010 is the notion that human capital is an important driver of economic growth. This is best illustrated by the EU’s target to raise R&D spending from the current 1.9 per cent in 2002 to 3 per cent of GDP by 2010 and for which an estimated 500,000 to 700,000 additional researchers will be required. Europe’s lower attractiveness to talent from other parts of the world, especially from developing countries, relative to the US, however, is due to structural factors. Less ﬂexible labour markets in several EU countries could act as a barrier to labour market entry for highly skilled immigrants, except for certain specialty occupations (e.g., health personnel in the UK). In addition, restrictive product market regulations and barriers to entrepreneurship, notably the underdevelopment of the venture capital industry, may also make new business creation less attractive to highly skilled and/or entrepreneurial migrants. In the future, while the active recruitment of foreign students from developing countries may help meet growing demand for such education in the south, it could aggravate the ‘brain drain’ and create disincentives for capacity building in higher education in developing countries. At the same time, the existence of such regulatory impediments may reduce the contribution of southern talent to European competitiveness, obviously without mitigating the risk of the negative development impact of skilled migration—the case of South African nurses in the UK is illustrative of this contradiction. A middle ground could perhaps be found where Europe could make itself more open and attractive to students from developing countries while at the same time promoting capacity building in sending countries through the provision of cross-border education (e.g., overseas campuses and exports of educational services). Finally, in the speciﬁc case of HRST, the desirability and viability of creating centres of high quality research and higher education (‘centres of excellence’) in sending countries to attract diaspora researchers and students must be examined. education institutions by establishing overseas campuses or cross-border university partnerships with developing countries.

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The case of Chile is an interesting example in this respect as public and private investment in key research areas has attracted researchers from the south and the north (OECD 2006). Policies to improve the attractiveness of Europe to the foreign skilled must therefore take a systemic and coherent approach, linking selective migration policies to economic reforms as well as to higher education and research policies, while not losing sight of their development impact.

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Additional Topics Dovlo, D. (2004). ‘The Brain Drain in Africa: An Emerging Challenge to Health Professionals Education’, Journal of Higher Education in Africa, 2(3). Esteves, B. (2003). ‘Reverse Brain Drain: The Lure of Latin America’, SciDev.Net, 14 August. EC (European Commission) (2002). ‘Integrating Migration Issues in the European Union’s Relations With Third Countries’, Communication to the Council and the European Parliament, COM(2002) 703 ﬁnal, 3 December. Brussels: European Commission. EC (European Commission) (2003). Third European Report on Science & Technology Indicators. Brussels: European Commission. Florida, R. (2005). The Flight of the Creative Class. New York, NY: HarperBusiness. Fondazione Cassa di Risparmio di Venezia-CENSIS (2002). Un capitale intellettuale da valorizzare: Indagine conoscitiva sul fenomeno della fuga dei cervelli all’estero. Venice: Fondazione Cassa di Risparmio di Venezia-CENSIS. Gagliarducci, S., A. Ichino, G. Peri, and R. Perotti (2005). ‘Lo Splendido isolamento dell’università italiana’, in T. Boeri, R. Faini, A. Ichino, G. Pisauro, C. Scarpa (eds), Oltre il Declino. Bologna: Il Mulino. IMPP-CEIP-UI (1997). ‘Immigrant Entrepreneur’, Research Perspectives on Migration. Washington, DC: International Migration Policy Program of the Carnegie Endowment for International Peace and the Urban Institute. Ioannidis, J.P.A. (2004). ‘Global Estimates of High-Level Brain Drain and Deﬁcit’, The FASEB Journal, 18: 936–9. Iredale, R. (2005). ‘Gender, Immigration Policies and Accreditation: Valuing the Skills of Professional Women Migrants’, Geoforum, 36(2): 155–66. Jones, T. and M. Ram (2003). ‘South Asian Businesses in Retreat? The Case of the UK’, Journal of Ethnic and Migration Studies, 29(3): 485–500. Kahn, M., W. Blankley, R. Maharajh, T. Pogue, V. Reddy, and G. Cele (2004). Flight of the Flamingos: A Study on the Mobility of R&D Workers. Cape Town: Human Sciences Research Council Press. Kloosterman, R. and J. Rath (eds) (2003). Immigrant Entrepreneurs: Venturing Abroad in the Age of Globalization. Oxford: Berg Publishers. Lubrano, M., L. Bauwens, A. Kirman, and C. Protopopescu (2003). ‘Ranking Economics Departments in Europe: A Statistical Approach’, Journal of the European Economic Association, 1(6): 1367–401. Mafubelu, D. (2004). ‘Using Bilateral Arrangements to Manage Migration of Health Care Workers: The Case of South Africa and the United Kingdom’, paper prepared for the IOM Seminar on Health and Migration, 9–11 June, Geneva. Magatti, M. and F. Quassoli (2003). ‘Italy: Between Legal Barriers and Informal Arrangements?’ in Kloosterman and Rath (eds), Immigrant Entrepreneurs: Venturing Abroad in the Age of Globalization. Oxford: Berg Publishers. Magee, J. and J. Sugden (2002). ‘ “The World at Their Feet”: Professional Football and International Labor Migration’, Journal of Sport and Social Issues, 26: 421– 37.

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Europe as a Destination McClelland, C. (2002). ‘South African Brain Drain Costing $5 Billion—and Counting’, Canadian Medical Association Journal, 167(7): 793. McDonald, D. and J. Crush (2003). ‘Thinking about the Brain Drain in Southern Africa’, Southern African Migration Project, Migration Policy Brief, 8. McNeil-Walsh, C. (2004). ‘Widening the Discourse: A Case for the Use of PostColonial Theory in the Analysis of South African Nurse Migration to Britain’, Feminist Review, 77(1): 120–4. NSB (National Science Board) (2002). Science and Engineering Indicators 2002. Washington, DC: National Science Board. OECD (2001). International Mobility of the Highly Skilled. Paris: OECD. OECD (2004). Education at a Glance 2004. Paris: OECD. OECD (2005). Internationalization and Trade in Higher Education: Opportunities and Challenges. Paris: OECD. OECD (2006). Innovation Review of Chile. Paris: OECD. Piguet, E. and R. Besson (2005). ‘L’emploi indépendant des personnes issues de la migration en Suisse en 2000’, in Recensement fédéral de la population 2000. Poli, R. (2004). ‘Des migrants à qualiﬁer: Les footballeurs africains dans quatre pays européens’, in M. Nedelcu (ed.), La Mobilité internationale des compétences. Paris: L’Harmattan. Poli, R. (2006). ‘Africans’ Status in the European Football Players’ Labour Market’, Soccer and Society, 7(2–3): 278–91. Poli, R. and L. Ravenel (2004). ‘Les Frontières de la “libre” circulation dans le football européen: vers une mondialisation des ﬂux des jouers?’, Espace, Populations, Sociétés. Shields, M., and S. Wheatley Price (2002). ‘Racial Harassment, Job Satisfaction and Intentions to Quit: Evidence from the British Nursing Profession’, Economica, 69(2): 274–95. Simon, G. (1990). ‘Immigrant Entrepreneurs in France: A European Overview’, in California Immigrants in World Perspective: The Conference Papers, Vol. V. Los Angeles, CA: University of California Institute for Social Science Research. Toussaint-Ceomeau, M. (2004). ‘Self-Employed Immigrants: An Analysis of Recent Data’, Chicago Fed Letter, 213. Valdéz, Z. (2002). ‘Beyond Ethnic Entrepreneurship: Ethnicity and the Economy in Enterprise’, Center for Comparative Immigration Studies Working Paper, 63. San Diego: University of California. Xenogiani, T. (2005). ‘Policy Coherence for Development: A Background Paper on Migration Policy and its Interactions with Policies on Aid, Trade, and FDI’, mimeo. Paris: OECD Development Centre. Zimmermann, K. (1995). ‘Tackling the European Migration Problem’, Journal of Economic Perspectives, 9(2): 45–62.

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Index

aboriginal artists 248 abstract expressionism 237, 245, 250 academic talent 4, 6 academicism 245 accountability 281 Acemoglu, D. 31, 89 n. Acer 125, 127, 128 Acer Technology Ventures 119, 131 Acs, Z. J. 319 ADHA (Ghana Additional Duty Hours Allowance) 218 Aditi 136 advanced degrees 29 ‘advantages of backwardness’ 160 adverse selection problems 155 afﬁrmative action programmes 49 Afghanistan 92, 248 Africa 141, 152 n., 179 brain drain effects 209 emigration of technical professionals and healthcare workers 25, 67 football players from 3, 298 highly-skilled in Europe 319 indigenous singers from 21 long historical ﬂows of migrants from 319 main source of medical personnel for developing countries 15 political turmoil 249 rate of return on cultural goods 243 smaller countries likely to suffer due to narrow economic base 74 spread of multiparty democracy 250 see also North Africa; Southern Africa; Sub-Saharan Africa; West Africa; also under individual country names African Nations Cup 326 African-Americans 67, 249, 255 Agarwal, V. B. 170 ageing societies/populations 51, 74, 218 agents 30 agglomeration effects 8

338

AHRMIO (Association for Human Resources Management in International Organizations) 278 n. AIDS, see HIV/AIDS Aiken, L. 208, 214 Akire, S. 203 Alarcón, R. 61, 62 n., 63 Albania 52, 70 n. Alberta 331 n. Alberta University 194 Alexander von Humboldt Foundation 329 n. Algeria 52, 249, 315 Allende, Isabel 3 n. allocation of talent: assessing patterns of 31 education and 33–4 excessive 33 key determinant of 30 Allott, P. 294 Alper, N. 246 ambitionist category 327 AMD 90 n. amortization 194, 195 Amsterdam 241 Anandaram, Sanjay 137, 138 Andhra Pradesh 49 Angel-Urdinola, D. 174, 177, 182 Angkor 254 Angola 222, 266 n. anti-retroviral drugs 323 n. ‘Apache Indian’ 254 apartheid 250, 251, 323 Apple 252 Arab countries 267–8 architects 237 Argentina 7, 13 n., 102, 179, 268 dictatorship 35 failure to take advantage of talent 95 footballers 326 inequality 37

Index main recipient of migrants with entrepreneurial skills 27 Nobel Prize winner in medicine (1983) 298 nurses from 213 outﬂows 62 n. return of talent 59 Argentina Crisis (1990s) 178 Armedia 136 Armenia 84, 91, 92, 102 arranged marriage 138 Artiman Ventures 139 arts/artists 8, 30, 236–60 Asia 8, 52, 59, 117, 179, 196 considerable migration within 51 fast growing market for wireless communication 124 government support for large scale, capital intensive investments 141 IT related H-1B visas 62 see also Central Asia; East Asia; Southeast Asia Asia-Paciﬁc region 309 cross-border education 310 foreign students in OECD countries 307 student mobility schemes 311 Asian Crisis (1990s) 178 assembly work 89 asset speciﬁc machines 87 assets 185 Association of Latin American Professionals 90 ASTA (Arab Scientists and Technologists Abroad) 162 Athens Olympics (2004) 298 Atlantic economy 37 auctions 241, 242, 243 Australia 13 n., 51, 179, 213, 228, 248, 268, 299 beneﬁt from foreign students who pay for education 66 Chinese students returned from 72 English-speaking south Asians prefer 52 highly-skilled migrants 318 import of medical doctors and nurses 24 important destination 51 inequality 37 migrant physicians 206 permanent settlers in 52 shortages of IT labour 65 special programmes for recruitment and permanent residence 60 visa programmes 10 Austria 60, 266

authoritarianism 34–6 Authosis 133 avant-garde artists 249, 250 awareness 9 Bach, S. 25, 31, 225 Baines , D. 87 n. Bala, M. 216 Bali 332 n. Ball, R. 215 Bangalore 72, 76 n., 136, 137, 138, 139 labour mobility 134, 135 large scale consulting and software services 140 salary gap narrowed between Silicon Valley and 66–7 Bangladesh 68 n. Bank of Sweden Prize in Economic Sciences 323 banks 130, 135 Banque Populaire Marocaine, La 94 Barcelona 241 Barnett, M. 263, 278 n. Barranquilla 194 Barrere, R. 56, 59, 62 barriers to mobility 331 Barro, R. J. 32 Basquiat, Jean-Michel 245 batik 255 Baumol, W. 25 n. Béart, Emmanuelle 248 Becker, G. S. 170 Becker, S. 299 Beigbeder, Y. 263 n. Beijing 129, 140 Beine, M. 172–4, 290 n. Belgium 300, 315, 326 belle époque 7 Benabou. R. 34 benchmarking 103, 104, 107, 277 Benin 249 Berlin 252 best practice 157 n. Bhagwati, J. N. 92 Bhagwati. .J. N. 170, 171 bhanga 254 Biafra war (1969) 249 bilateral agreements 228–9, 310, 331 biennials 251 BioCat 329 biotechnology 3, 304, 329 ‘birds of passage’ 87, 88 n. Birla 134 Birmingham (England) 254

339

Index Bitnet 195 Blouin, C. 46 n. Bogotá 194 Bolivia 52 Bologna Process (EU) 39 Bolton P. 32 Bombay 134 boom–bust cycles 253 Borjas, G. 24, 171, 183 Bosman judgement (ECJ 1995) 326 Bosnia 95 Bosnia-Herzegovina 54 Botero, Fernando 3 n. Botswana 224, 225 Bourdieu, P. E. 284 n., 293 n. Bowen, H. Kent 103 n. brain bank diaspora 23 brain circulation 1, 2, 24, 84, 117, 120, 199, 203 as a resource 146–7 networks 92, 93 policy responses that effectively stimulate 163 temporary 205 transforming brain drain into 119 brain drain 1, 2, 4, 13, 15, 67, 71, 118, 145, 147, 168, 169 analysing 170 compensating for the detrimental effect of 170 concerns on 39, 84 countries reported to be hurt by 174 developing countries increasingly depart from 161 different approach to 172 effects of 209 fears of 206, 330 one of the ﬁrst anthologies on 92 option to transform into brain gain 197 pattern that combines elements of brain circulation and 24 permanent 205 practical impact very hard to quantify 322 reversing 119 serious 35 tax on 146 term ﬁrst used (1960s) 149 testing the impact of student migration on 182–5 brain exchange 84, 203 brain gain 10 n., 13, 146, 169, 174–82 conditions for 172–3 option to transform brain drain into 197

340

policies should go beyond pecuniary rewards 152 policy responses that effectively stimulate 163 setting up preconditions for future 66 brain recirculation 331 Brandi, M. C. 59 Brastberg, B. 171, 183 Brazil 52, 149, 157, 179, 251, 268, 287 n. dictatorship 35 distinguished social scientists 298 footballers 326 H-1B visa share 61 highly-skilled migrants 318 individuals earning a PhD in US 59, 159, 180 inequality 37 Japanese migration to 54 outﬂows 62 n. students coming to US from 12 students in US 63 talent imported from 8 volley ball players 298 Brazilian restaurants 26 Breton, André 237, 249, 250 Bretton Woods 278 n. Brewster 279 n. Brinkerhoff, J. 92 Britain, see UK British civil service 269 n. British Council 194, 254 Brown, M. 92, 162 Brown, P. 44 Brunei 266 n., 268 n. Brush, B. 211 Buchan, J. 205, 218, 224 Buenos Aires 141 Bureau of Labor (US) 210 bureaucracy 13, 33 business creation 28 barriers to 13 contribution of Jewish community to 26 n. business law 132 n. business models: and the movement of technical talent 63–4 new 119 CALDAS (Colombian Network of Scientist and Engineers Abroad) 162–3, 186, 195–8 Cali 194

Index California 97, 240 see also San Jose; Santa Clara; Silicon Valley Cambodia 254, 268 n. Cameroon 216 Canada 13 n., 179, 190, 213, 228, 268 Colombian diaspora in 196 English-speaking south Asians prefer 52 Canada highly-skilled migrants 318 import of medical doctors and nurses 24 important destination 51 inequality 37 international recruitment 218 investor/entrepreneur programme 328 n. IT worker shortages 64–5 network of inﬂuential Chileans in 96 nurses 24, 211, 220 physicians 24, 25, 31, 206, 331 n. special programmes for recruitment and permanent residence 60 visa programmes 10 ‘Canberra Manual on Measurement of Human Resources in Science and Technology’ 299–300 capability problem 108 Caparo Industries 60 capital 10 access to 2–3 accumulation of 32 allowed to migrate 169 demand for 7 information 34 mobilization of 12 potential of expatriate professionals as sources of 93 return on 32 risk 132 capital cities 240, 241 capital markets: development of 126, 127 efﬁcient and well developed 124 integration OF 36–7 private enterprises have virtually no access to 134 weakest link in China’s economy 130 career prospects 23, 275 increasingly unstable 291 reasonably good 277 careers: advancement of 216, 284 n. economist stream 268 enhanced possibilities of development 25 long-term 286 prestigious 283–4, 287

reputable and better-paid 33 specialized stream 268 stable 29 women do not have equal opportunities 276 Caribbean countries 132, 210, 222, 225 entrepreneurs 320 high percentage of health professionals reside abroad 12 important source of nurses 8 Carnegie, Andrew 26 carpet business 26–7 Carrington, W. J. 174 Cassarino, J.-P. 147 castes and tribes 49 Castrillon, C. 205, 213 Catalunya 329 causality: double 14 mutual 12, 27 Caves, R. E. 32, 33 Celestry Design Technologies 133 Celik, Neco 255 Central America 63, 311 Central and Eastern Europe 67, 68 n., 141, 196, 210, 319 professionals who join international organizations 289–90 nn. US cultural and educational exchange programmes in 309 Central Asia 290 n. central planning 157 centres of excellence 16, 329 global 313 n. CEOs (chief executive ofﬁcers) 28, 125, 133, 134 Cerbara, L. 59 certiﬁcation requirements 205 CGFNS (US Commission on Graduates of Foreign Nursing Schools) 209 chaebols 95, 141, 142 Chalamwong, Y. 55, 71, 72 champions 101–2 Chang, Carmen 130 Chao, David 132 n. Characteristics of Business Owners (US) 320 n. ‘Charter 77’ movement 251 Checkpoint 119 Chen, L. 203 Chennai 76 n. Chiao Tung University 127 Chile 16, 157, 266 diaspora networks 95, 96–8, 99, 101–2 dictatorship 35

341

Index Chile (cont.) health sector movement from poorer countries to 210 outﬂows 62 n. return of talent 59 return to R&D 160 scientiﬁc funding mechanisms 157 n. students coming to US from 12 ChileGlobal 73, 96–8 China 7, 52, 55, 65,70, 75, 251, 268 n., 290 n. ageing population 74 beneﬁt from allowing migration 174 diaspora 102 doctoral recipients working in US 24 n. economic transformation 123 education and research centres 71 engineering students with degrees 48 entrepreneurial ecosystem still in formative stages 123 entrepreneurial immigrants from 13 FDI 94, 132 foreign students in 310 n. hardware manufacturing 140 high-tech industries 28 highly-skilled migrants 318 income difference 149 Indian IT companies seek low cost sites in 76 intense competition from 253 IT experts from 21 linking high technology clusters to high-tech regions in US 161 new ﬁrms cannot grow fast in 134 patents 304 R&D potential 299 rate of return migrants 72 regional upgrading 117–44 remittances 69 n. research system 157 returnees 159 reverse migration 159 stock market organized (1980s) 131 students in US 24, 63 talent imported from 8 tendency to send medical doctors to developing countries 25 venture capital 120, 129–34 visas 61, 68, 136 CHISA; overseas Chinese China Daily 310 n. China New Technology Venture Investment Corporation 129

342

China Securities and Regulatory Commission 131 Chinese groups 320 Chinese Institute of Engineers (US) 72 Chinese restaurants 26 Chinese Securities and Regulatory Commission 130 Chinese Taipei, see Taiwan CHISA (Chinese Scholars Abroad) 162 Christian Science Monitor 323 n. CINVESTAB-IPN 190 circulatory migration 75 Cisco 140 civic/civil rights 35, 171 civil liberties 35 n. civil service: international 269 n., 282–90 national 268, 270, 271, 279 Civil Service Systems in Comparative Perspective (1997) 270 n. civil unrest 213, 217 class bias 48 classical music 245 CLFS (European Community Labour Force Survey) 313 n. Cliché, D. 238 Clinton, Bill 283 n. Clinton Foundation 216 clothing and textiles 253 clusters 105, 106, 161, 240 creative 243 CNY (Chinese yuan) 134 Cochin 209 codes of practice 226, 228 ethical 227 voluntary 228 coercion 249 Cohen-Tanugi, L. 283 n. Coicaud, J.-M. 270 n., 278 n. COLCIENCIAS 195, 196 Cold War 250, 309 Colext 195 COLFUTURO programme 73, 153–4, 186, 192–5 collective action 35 n. collectors 241, 242, 243, 244 college degrees 46 colleges 31 share of graduates in engineering 32 Colombia 155, 179, 287 n. highly-skilled migrants 318 network of scientists and research professionals 162 outﬂows 62 n.

Index return of talent 59 students in US 63 see also Bitnet; CALDAS; COLCIENCIAS; Colext; COLFUTURO; PECX colonies 13, 213, 243, 309 Commander, S. 67 n., 324 n. commercial banks 126 commercial immigration policies 60 commercialization 126, 133 commodity prices 253 Commonwealth Agreement on Ethical Recruitment 331 Commonwealth countries 227–8, 309 Health Ministers meeting (2003) 226 Secretariat 224 Working Holidaymakers and Family Reunion schemes 322 communism/communist countries: end of 36 right restricted under 36 state policy during 35 n. young people from 290 n. Comoros 266 n. compact discs 244 company law 130 comparative advantages 11 compensation 15, 50, 227, 228 ﬁnancial 153 competition 156 intense 253 technology 123 competitive advantage 252 competitive edge 251 competitive funding 156–7 competitiveness 153, 195, 273 new growth sectors 302 signiﬁcant gains in 163 Competitiveness and Work Force Improvement Act (US 1998) 60–1 Computer Associates 138 computer science: graduates 71 specialization in 48 CONACYT (Consejo Nacional de Ciencia y Tecnologia) 90 n., 98, 186, 187–92, 198 concentration effects 8 Congolese football players 326 connectivity 134 consumerism 71 consumption 70 Continental Engineering Group 127 continuous improvement 103 n. contract theory 32 control variables 174

convergence 37 convertible currencies 267 Cook, P. J. 33 Cooker, C. de 263 n. Cooper, R. 211 Corcega, T. 208 core–periphery model 121 Cornelius, W. A. 44–5, 58 n., 60 corporate culture 28 corruption 31, 124 strong incentives for 130 cost–beneﬁt analysis 214 Costa Rica 52, 174 Coupé, T. 323, 324 Cranﬁeld School of Management 278 n. ‘cream skimming’ 299 creative industries 237–9, 240, 252, 254, 256 downstream 251 international centre on 251 valuing talent difﬁcult in 32–3 creativity 6, 238, 239, 251–2 decisive source of competitive advantage 252 credibility 100 crime 217 Cuba 15, 54, 209, 319 highly-skilled migrants 318 tendency to send medical doctors to developing countries 25 cubism 243 cultural barriers 60 n., 122, 209 cultural capital 252 cultural differences 9 cultural exchanges 250–1 cultural production: more efﬁcient pattern of 254 spatial distribution of 239–43 cultural skills 122 cultural workers/talent 4, 8, 16, 29–30 data on ﬂows of 325–6 international mobility of 236–60 currency 36 appreciation 56, 70 curriculum reform 225 Czech Republic 210, 308 Czechoslovakia 251 DAAD (Helmholtz-German Academic Exchange Service) 329 n. Dai, Wayne Wei-Ming 133 ‘Dak’Art 251 Dakar 243 Dali, Salvador 237

343

Index Darussalam 266 n. D’Costa, A. P. 23, 44, 49, 60, 63, 68, 70 n., 71, 76 decentralization 122, 141 decision-making 218 degrees: advanced 60 bachelor’s 48, 61, 65 doctoral 191 engineering 71 foreign 56, 277 master’s 48, 196, 286 nontechnical 50 postgraduate 65, 311 premium associated with 49 science and engineering, largest number of holders 62 technical 50 tertiary 46, 89, 149 see also PhDs degrees of freedom 183 De Kooning, Willem 25 Delft 241 Delhi 76 n. Dellafar, W. 170 demand 7, 8, 68, 214 exceeds supply 49 externally generated 50 geographical pattern for specialist talent 312 global 47 imbalances in supply and 73 managerial 71 resources may be insufﬁcient to meet 13 skilled workers 44 structural 55–60 technical 171, 313 unprecedented, workers in healthcare 51 democracy 34–6 democratization 250, 251, 254 demographics: changing proﬁle 218 serious problems 73 shifts 45 Department of Health (UK) 209, 225, 228, 331 Department of Homeland Security (US) 63 deregulation 49 Desai, M.A. 61, 65, 136 design 107, 252 ﬁxity of 105 higher level 132–3 software and hardware 136

344

development assistance 102 development banks 29 development cooperation policy 330–3 development gaps 5, 6 Dewatripont, M. 32 Dezalay, Yves 286 n., 293 n. Diallo, K. 204, 205 diaspora networks: active 162 common characteristics of 162–3 creating with nationals abroad 161–2 links to government institutions 162 diasporas 7, 73, 161, 288 brain bank 23 demonstration effects of 124 entrepreneurship and 26 n. high skill 89 recruiting top scientists among 329 southern scientiﬁc 332 Dickens, Charles 245 dictatorships 35, 51, 249 Dijkzeul, D. 263 n. diploma holders 48 diplomacy 285 directly productive talent 4, 7 discrimination 136, 249, 327 discussions 99–100 disentrenchment problem 108 displaced people 255 disruption 103 n. dissidents 35 n. distortions 31 division of labour 105 Djura, Djur 249 D-Link 128 Docquier, F. 44, 52, 148–9, 290 n. doctorates: funding for 328 increase in the supply of 24 S&E 23, 62, 72, 149 Documenta 251 Doeringer, P. 87 n. domain expertise 48, 74 Domingues Dos Santos, M. 75 Dominican Republic 54 Dovlo, D. 209, 224, 225 downstream activities 238, 239, 247, 251 DPKO (UN Department of Peacekeeping Operations) 275 n., 279, 280 Draper, William H. 134, 135, 138 Draper International 134, 135, 137, 138 droit de suite 242, 246 Drucker, P. 23 Duchamp, Marcel 237

Index dummy variables 183 Dumont, J. 209, 217, 223, 225 Dutch disease syndrome 70 Dutch-speaking countries 213 Eakins, Thomas 249 earnings 30, 135, 216, 247 adjusted by cost of living and cost of moving 30 depressed 24 higher 29 international differences in 5 ‘invisible’ 253 no legal way to get out of country 134 East-African Asians 320 East Asia 152 n., 268 Eastern Europe, see Central and Eastern Europe EC (European Commission) 331–2 Ecole des Beaux-Arts 241 economic boom 178 economic characteristics 49–51 economic development 1, 21–43, 69, 121–213, 272 commitment to 16 enduring impact on patterns of 119 harnessing technical expertise of expatriates for 73 higher levels of 59 highly capable local organization 96 impact of talent mobility on 10–14 important consequences for 120 economic growth: higher income growth likely to contribute to 68 importance of ‘intangibles’ for 1 key source of 207 large scale emigration of high-skilled workers could lower 68 low 56 positive effect of migration on 28 n. potential contribution of cultural talent to 254 rapid 13, 28 n. source countries 13–14 economic instability 51 economic performance: divergent between countries 210 poor 35 n. unremarkable 59 economics 323–5 economics of scarcity 49 Economist, The 286 n., 290 n. Ecuador 174, 210

education 149, 170, 240 acquisition costly 174 advanced 159 beneﬁt from foreign students who pay for 66 college-based 208 creating centres of 26 n. cross-border 310 demand exceeds supply 49 enhanced expected income and 68 funding of 221 graduate 159 international 288 inviting more investment in 13 lack of opportunities for 218, 247 low quality 147 musical 246 net ﬂows by level of 47 pursuing a higher level of 174–6, 177 rapidly increasing returns to 89 secondary enrolment and completion rate 183, 184 socioeconomic inequalities in access to 287 sophisticated systems 124 street 245 strong technical tertiary infrastructure 47 talent allocation and 33–4 see also higher education; technical education; tertiary education ‘education signalling’ approach 34 educational background 286, 293 elite 285, 287 good 289 Edwards, Sebastian 242 efﬁciency global gains 11 egalitarian trends 37 Egypt 52, 228 remittances 69 n. , 70, 221 El Salvador 54 Electronics Research and Service Organization (Taiwan) 127 elites 93, 124, 286 educational 285, 287 international 9, 22 national/transnational 291, 292–3 professional 288, 291 socioeconomic 285, 287, 288 email 137 emerging economies 45 emeritus beneﬁciaries 192 employment contracts 34 employment opportunities 185, 216 ENA (Ecole nationale d’administration) 284

345

Index engineering, 133, 139 see also S&E engineers: foreign-born 118, 319 low cost, highly skilled 126 main source of 23 on-site 64 overseas Chinese 118, 120, 125, 126 returning 14, 119 training in software engineering and quality processes 69 US-educated 117, 120, 128 England 225, 248 English language 52, 90 dominance as lingua franca of commerce and scientiﬁc exchange 307 level of ﬂuency 288–9 ofﬁcial 329 n. proﬁciency in 208 English literature 255 English-speaking countries 307, 308, 309, 311 entrepreneurial circulation 26 entrepreneurial drain 26 entrepreneurs/entrepreneurship 25–8, 46, 319–21 difﬁculties in rewarding talent 31 efforts to jump-start 123 engineering background 46 ethnic minority 320 highly successful 60 international mobility of 117–44 outﬂow of 13 psychology of 27 returning 14, 120, 123, 124, 130, 141, 142 social esteem 31 source of wealth creation via 22 specialized niches 129 successful 2, 3, 123 transfer of 28 n. transnational 125, 142, 161 under-the-table deals with 130 entry visas 204 epistemic communities 72 ERASMUS programme 311 Ernst, Max 249, 250 error detection and correction 104, 107 Espenshade, T. J. 58, 60, 61 ethical recruitment 15, 207–8 Ethiopia 266 ethnicity 27, 319, 320 common 52 connections between entrepreneurship, migration and 27 externalities 10–11

346

EU (European Union) 209, 242 n., 265, 332 business pushing for adoption of measures similar to US H-1B 299 enlargement of 210 information on foreigners who enter 300 n. Marie Curie post-doctoral fellowships 311 measures to attract foreign students 328 mobility of cultural talent 253 most migration in the context of organized exchanges 310 music sector 239 new members 95 patents 302–4 Permanent Representations 271 n. PhDs 298 science and technology graduates 298 university graduates 302 European Economic Area 211 European Music Ofﬁce 239 n. European transition countries 268 E-Ventures 138 exchange rates 183, 184, 188 n. purchasing power 36 exclusion 27, 249, 255 Executive Yuan (Taiwan) 125, 127, 128 Development Fund 127 Exeter University 329–30 exhibitions 244 exit: justiﬁcations for restricting 35 n. lack of viable options 134 strategy 289 expectations 32 explanatory variables 32, 182–3 exports 70 external oversight 130 externalities technological 71 F1 visas 171, 179, 182, 184 factors of production 7 family businesses 26 FAO (UN Food and Agriculture Organization) 265 n. Far East Textile 127 fashion industry 251–2 FDI (foreign direct investment) 46, 62, 69, 70, 132 expatriates’ critical role in accelerating 94 policy reform for attracting 75 signiﬁcant 95 Federal Republic of Yugoslavia 54 feedback effects 215, 221, 230 ‘feelgood’ donations 100

Index female workers 69 Ferguson, N. 26 n. Ferney-Voltaire 278 n. FIFA (Fédération Internationale de Football Association) 331 ﬁnancial assistance 125 ﬁnancial beneﬁts differentials 265, 268–73 ﬁnancial centres 26 ﬁnancial institutions: international 273 large, US collaborations with 126–7 Financial Times 321 n. Findlay, A. 46, 68, 72, 75, 76 Finland 304, 315 Finnemore, M. 263, 278 n. ﬁscal revenues 10 ﬂamingo metaphor 330 Florida, Richard 252 ﬂows of talent 46–7, 49, 239, 327 cultural workers 325–6 establishment of accurate data on health professionals 204 global student, Europe’s position in 307–9 growth a major contributor to 71 international student 309–11 long historical 319 physician and nurse labour force 206 Fongue, J. N. 243 football 3, 298, 325–7, 331 forced migration 35 n. Forcier, M. 206 foreign exchange 253 accumulation 70 scarce 69 foreign investment 121 see also FDI foreign investors 134 foreign markets 28 foreign students 47, 58, 307 attracting 329 paying for their education 66 PhDs enrolled in national advanced programmes 311 ratio to total tertiary school enrolment 177 underpaid postdoctoral work 67 Fortune 298 foundations 26 n., 216, 253 Fox, V. 90 n. France 190, 249, 266 ambiguous status as international power 83–4 bilateral agreements between former colonies and 309

decrease of global importance 288 n. ﬂows of physicians between North Africa and 209 French-speaking north Africans prefer to emigrate to 52 highly-skilled foreign-born from developing countries 315 holders of student visas who graduate in IT ﬁelds 60 illegal immigrants 247 largest sources of immigrants to 52 long historical ﬂows of migrants from Africa 319 patents 304 Russian scientiﬁc workforce in 68 ‘scientiﬁc visa’ policy 328 special programmes for recruitment and permanent residence 60 upsurge in foreign entrepreneurship and self-employment 320 Francophone culture 248 Frank, R. H. 33 Frank, Robert 244 Frankl, Viktor 91 free movement of labour 203, 209 free trade agreements 56 freedoms 34 academic 35–6 health professionals 227 Freeman, R. 24, 36–7 French language 288 n. French restaurants 26 Fulbright programme 186 fund managers 129, 138, 139 Fundacion Chile 96–8, 99 furniture business 26–7 Gagliarducci, S. 324 Galenson, D. W. 247 galleries 248 Garcia Lorca, Federico 237 Garth, B. 286 n. GATS (General Agreement in Trade in Services) 45, 75 GATT (General Agreement on Tariffs and Trade) 266 GDP (gross domestic product) 302, 68–9 per capita 149, 183 GDR (German Democratic Republic) 35 n. GEM (Global Entrepreneurship Monitor) 319 n. gender 49, 206, 249, 276 General Medical Council (UK) 322 Geneva 273 n., 275 genius 244, 245, 247

347

Index geographical distance/proximity 171, 309, 319, 326 Germany 190 Chinese workers in auto and electrical engineering industries 56 n. emigration to Latin America 26 n. ethnic minority entrepreneurs 320 Green Card Programme (2001) 60 guest worker programme 54 important destination 51 migrant physicians 206 patents 304 permanent settlers in Australia 52 reforms aimed at shortening doctoral programmes 329 Russian talent 36, 51, 59, 68 second generation largest migrant group 254 self-employment 321 special programmes for recruitment and permanent residence 60 unsuccessful in attracting Indian IT professionals 60 n. visas 10, 62 Geronimi, E. 206 Gerova, S. 210 Gershenkron, A. 160 Ghana 52, 215, 224 beneﬁt from allowing migration 174 educational level of applicants to nursing schools 221 impact of structural adjustment programmes on health sector 216 medical vacancy rate in public sector 209 nurse recruiting agents 220 salaries of doctors and nurses 216 see also ADHA Giese, K. 56 n., 60 Glasgow 97 global migration 51–5, 84–114 global migration as an opportunity 84–6 selectively includes less-skilled workers 47 globalization 1, 255, 292, 312 ﬁrst era of 13, 27, 37 hyper-competition associated with 66 migration as a deﬁning feature of 215 recognized feature of 36 role of international organizations grows with acceleration of 263 GlobalScot 96–8 Go, S. 207 Goa 332 n. Go.com 137 Gokhberg, L. 68

348

Goldfarb, R. 208, 221 Goldsmiths College 241 Goldstone, J. A. 250 governance: global 263, 292 hybrids and implication of them on 106–8 poor 218, 222 GPNet 322 n. GPs (general practitioners) 322 graduates 132 advanced university 302 bond posting 224 female 276 n. good quality required from developing countries 288 highly sought after 48 international medical 218 mathematics and computer science 71 nurse 208 overseas, visas commonly used for 218 science and technology 298 Granovetter, M. 88 n. grants 191, 192, 311 large multipurpose 157 Greenberg, Clement 249–50 Grossman, M. 34 Grubel, H. G. 168, 169, 170 guest workers 54, 87 likely to choose self-employment 321 guided serendipity 99 Gulf of Mexico 97 Gurgaon 76 n. Gwangui 251 H-1B visas 23 n., 61–2, 63, 136, 137, 218, 299 payroll taxes from holders 65 Haiti 52, 210, 245 Hansen, T. 35 n. happiness 254 H&Q (Hambrecht & Quist) Asia Paciﬁc 109, 127, 128, 131 Harris, J. R. 246 Harvard Business Review 103 n. Harvard University 286 n., 288 Hausman tests 183 health crises 7 health professionals 8, 24–5, 31, 46 n., 67 attempt to manage migration of 331 destination region for 12 economic and professional interest of 15 foreign, often subject to licensing requirements 25

Index mobility of 3, 4, 12, 202–35 unprecedented demand for 51 healthcare: better 70 increased demand for 218 insufﬁcient 147 hedge fund managers 244 Heleniak, T. 74 Helmholtz Association of National Research Centres 329 Helper, S. 89 n., 104 n. Helsinki 236 Heritier, F. 292 n. hierarchy 84, 101, 105 minimal 124 hierarchy of needs (Maslow) 91 high-skilled workers 46, 51, 118 demand for 178 foreign-born 117 global stocks from developing countries 312–19 highest concentration of expatriates 55 large scale emigration of 68 low concentration of 54 mechanisms to attract 219 mobility of 221 range of expatriate intensities 54 temporary visits must be of long enough duration to make it attractive for 76 high-tech industries 122 availability of foreign critical to sustain 73–4 considerable contribution to expansion of 330 creation of 13 expansion of 313 important human resource in the creation of 28 IT-related, countries that rely heavily on 74 mutually beneﬁcial economic ties between 125 output growth in sector 28 success in building 38 higher education 9, 10, 287 n. acquired abroad 185 bilateral agreements in 310 early socialization toward 48 incentives to obtain 221 lecturers promoted to rank of professor 329 political economy analysis of 48 promoting 48

skipping 34 world class institutions 159 Hira, R. 61 Hirschman, Albert 35 n., 92, 248–9, 289 n. Hispanics 67 history 32 Hitler, Adolf 248, 249 HIV/AIDS 3, 12, 25, 202 devastating toll reaped by 217 impact of 213 major obstacle to scaling up treatment 203 negative impact on provisioning of services 68 n. South Africa’s policies 323 Hochschild, A. 206 Holm-Nielsen, L. B. 46 n., 59, 64 hometown associations 89–90 Hong Kong 55, 133, 142 programme aimed at attracting entrepreneurs from 328 n. Howkins, J. 239, 241, 243 HRST (OECD human resources in science and technology 38, 46, 299–300, 328 HSIP (Hsinchu Science-based Industrial Park) 14, 72, 126, 128, 139 Hsu Li-Te 125 Hsu Ta-Lin 126, 127 Hu Ding-Hua 127 Hua Hong Microelectronics 132 Huang, W.-C. 170 Huawei/3Com 130 Hughes, Robert 250 Hugo, G. 52, 69, 70 Human Resources Agency (US) 265 human rights 331 human trafﬁcking 332 Hungary 196, 308 Hunger, U. 73 Huntington, S. P. 250, 293 n. Hvide, H. K. 34 hybrids 106–8 IAEA (International Atomic Energy Agency) 265 n. IBM 97, 126 IBM Research 137 IC (integrated circuit) manufacturing 119, 133 ICC (International Civil Commission) 279 n. ICFTU (International Confederation of Free Trade Unions) 216, 221 ICICI Venture 138

349

Index ICJ (International Court of Justice) 265 n. ICSC (International Civil Service Commission) 269 n., 270 n. ICT (information and communications technology) 8, 11, 44, 50 fragmentation of production in 121 increasing sophistication of 122 IDA (International Development Association) countries 267 IDB (International Data Base) census pyramids 183 IDG 131 IETM (Informal European Theatre Meeting) 253 IIE (Institute of International Education) 177, 178–9 illegal migrants 89, 90, 247 ILO (International Labour Organization) 75, 214, 265 n. IMF (International Monetary Fund) 216, 265, 266, 267, 268, 277 always headed by a European 285 n. gender balance 276 heads of central banks of developing countries have experience of 289 n. marketability in the private sector 273 relatively small size work force 278 salaries of professionals 270 IMGs (international medical graduates) 211 Immigration Act (US 1990) 61 immigration policies 9–10, 44 favourable 21 incentives 71, 156, 178, 313–15 compromising 129 conﬂicting 155 ﬁnancial 126, 273 higher education 221 lower 180 tax 125, 127 income 246–7 current, willingness to risk for future returns 49 double taxation of 253 expected, enhanced 68 global distribution, effects of overall migration on 37 global sales 243 higher per capita 59 household 215 supplemental 292 world 2, 11 income differentials 5–6, 171 expected, adjusted by costs of migration 30 n.

350

international 30 see also wage differentials income taxation exemption 69 n. incubators 98 independent judiciary 124 independent variables 171 indices: civil rights 171 income inequality 171 law and order 183 political freedom 183 India 3, 7, 52, 55, 75, 205, 213, 268, 287 n., 288 n. business families operating overseas 59–60 challenge for 75 diaspora 91, 102 doctoral recipients working in US 24 n. economic transformation of 123 education and research centres 71 engineers 48, 66, 118, 136, 137 entrepreneurship 13, 26 n., 123, 134–9 FDI 69, 94 foreign students in 310 n. highly-skilled migrants 315 high-tech industry 28, 38 income difference 149 IT industry 21, 60 n., 71, 74, 76 macroeconomic impact of emigration from 68 new ﬁrms cannot grow fast in 134 numbers of expatriates with tertiary education 52 nurses 25, 209, 212 operating system software 140 outsourcing of software services to 63 recruitment agreements signed with 228 regional upgrading 117–44 remittances 69 n., 221 reservations system 49 return migrants 72 scientists 118 students in US 24, 63 talent imported from 8 technical education growth 49 technical talent export 23 top software ﬁrms launched by NRIs from US 73 training not available 216 venture capital 120, 134–9 visas 61, 62, 68, 136, 137 wages for technical talent rising 58 n. Indian carpet and furniture business 26–7 Indian restaurants 26

Index Indian Venture Capital Industry Association 136 Indiana University, Bloomington 270 n. individual-based approaches 153–5 induction 228, 229 industrial parks 158 industrialization: exhaustion of 56 post-Second World War efforts 56 science and technology policy 47 inequality 66 convergence induces 74 n. economic 49 global/international 37, 118 social 49, 71 talent migration, wage convergence and 36–7 inﬂation 71 information: concealing or falsifying 130 imperfect 155 market 121 information exchange 103–4, 122 formalization and long distance of large amounts of 117 open 123 unprecedented rate of 137 exchange variety of possible forms of 123 information ﬂows 2 horizontal 124 information gap 38 Infoseek 137 infrastructure: basic 134 community 90, 91 educational 47, 71 higher quality 328 physical 124 professional, advanced 216 supply chain manufacturing 133 INIFAP (Instituto Nacional de Investigaciones Forestales, Agrícolas y Pecuarias) 190 innovation 6, 13, 129 real, centre for 134 reciprocal 141 stimulation of capacity 330 strengthening national systems 156 super-normal proﬁts associated with 32 n. weak patent system for 31 INS (US Immigration and Naturalization Services) 171 instant messaging 119 ‘institutional cowardice’ 279

institutions 133 cutting-edge 152 government 162 higher educational, world class 159 outside the labour market, important role of 313 Integrated Device Technology 132 integration 27 Intel 136 Intel Capital 138 Intel VC 131 intellectual capital 23 intellectual property 134 see also IPRs intellectuals 35 interaction 29 interest rates 36 international banks 28 international competitiveness 10 reduced 70 international development 29 international law 263 international mobility 239 international organizations 263–97 inducing migration of talent to 33 mobility in 29 international recruitment 215, 218, 219, 222, 224, 226 ethical 227, 228 international students 12 drivers and modes of ﬂows 309–11 large number of 24 promoting the return of 185–98 international transfer of talent 28 internationalists 1–2 Internet 8, 119, 137, 214, 219 licensing 97 ‘me too’ ventures 140 momentum to diaspora initiatives 162 personalization software 137 INTERPOL (International Criminal Police Organization) 266 interpretive engagement 94 intra-company transfers 62, 72 intrinsic motivation 91 investment growth 28 n. IOM (International Organization for Migration) 206, 221, 229 Iowa 244 IPOs (initial public offerings) 131 high proﬁle 132 IPRs (intellectual property rights) 237, 243 enforcement of 158 protection of 256

351

Index Iran 54 Iraq 92 Ireland 7, 10, 300, 330 special programmes for recruitment and permanent residence 60 Iskander, N. 93–4 isolated economies 122 Israel 7, 23, 92, 120 application speciﬁc integrated circuits from 140 FDI 94 recipient of older immigrants 49 n. returning migrants from 119, 123 Russian emigrants 36, 51, 59 sophisticated internet and security technologies 139 technological entrepreneurs 26 n. US-educated engineers and entrepreneurs 123 venture capital funds 136 IT (information technology) 203, 244, 332 countries that rely heavily on 74 demand for 63 destination region for experts 12 ﬁrms create their own venture funds 128 impact of mobility on the sector 64–73 increasing 45 Indian professionals face barriers to work abroad 60 n. international outsourcing of 47 key human resources for 46 outﬂow of specialists 36 salary structure of the industry 50 service delivery 23 shortage of workers 56 n. technical training through diploma programmes 48 visas related to 61 worldwide expansion of related industries 49 Italian restaurants 26 Italy 13 n., 236, 299 companies registered by foreign citizens 320 emigration to Latin America 26 n. establishment of ‘MIT’ in Genoa 329 foreign scientists in 59 permanent settlers in Australia 52 recruitment agencies 213 research institutes 152 students enrolled in health and welfare 308 workers and people with entrepreneurial capabilities 7

352

ITESM (Instituto Tecnológico y de Estudios Superiores de Monterrey) 190 ITI Scotland 98 J-1 visas 218, 219 jack-knife estimation 183 Jamaica 210 Japan 268 n., 277 n., 302 backward and forward linkages 108 Brazilian emigration directed toward 54 careers 287 Chinese and Koreans in 52 Chinese students returned from 72 declining fertility rates 74 H-1B visa share 61 highly-skilled migrants 318 high-risk technology investment in China 131 important destination 51 India’s reputation in IT services recognized in 69 Indian IT professionals 64 n. intra-company transfers 56 modernization during Meiji restoration 119 negative population growth 56 number of US visas for intra-company transfers 62 patents 302, 304 production methods 103 resistance to large scale immigration 74 students in US 63 US settlers to 52 see also keiretsu jazz 237, 254 Jewish emigration 26 n., 51, 84 jingoist posturing 64 job hierarchy 50 job ladders 87, 89 job losses 64 job opportunities 152 lack of 147 young researchers 158 job satisfaction 217 job search 91 job security 287 n. Johannesburg 251 Johnson, H. G. 169 Johnson, Harry 2, 92 joint production 33 joint ventures 127, 130, 132 NRIs and Indian partners 73 Jonkers, K. 145

Index Jordan, R. S. 263 n. July Systems 140 JumpStartUp Venture Fund 138, 139 Junglee 136 just-in-time systems 89, 103 n. Kanbur, R. 240 Kapur, D. 69 n., 70, 92 Karnataka 49, 71 Kassel 251 Kazakhstan 51 Keeling, D. 210 keiretsu 142 Kenen, P. B. 168 Kenya 266, 278 n. nurses 216, 217 Kerala 49, 68 n., 209 Keynes, John Maynard 323 Khadria, B. 62 Kidjo, Angélique 249 Kingma, M. 205, 216, 217 kinship networks 215 Kiribati 266 n. Kloosterman, R. 27 n. Knight, Frank 32 know-how 119 accumulated 123 institutional 126 technical 185 knowledge: codiﬁed 160 commercial 72 cutting-edge 146 domain 135 generation and dissemination 29 information systems that facilitate formalization of 123 international dissemination of 330 lack of opportunities to use 217 local 142 market 74 potential of expatriate professionals as sources of 93 production of 10 sharing 332 specialist/specialized 10, 87 technical 72 see also tacit knowledge knowledge-based economy/industries 302, 319 knowledge transfer 10 contributions of personnel recruitment to 119 source countries beneﬁt from 203

technical and institutional, successful co-ordination of 123 knowledge workers 8, 12, 23 Kofman, E. 276 n., 293 n. Kolkata 76 n. Korea, see South Korea Koreans 319 Krasner, Lee 253 Krosney, H. 263 n. Kuhn, P. J. 23 Kureishi, Hanif 255 Kusin & Company 241 n. Kuti, Fela 248 Kuznetsov, Y. 64, 73, 90 n., 94, 332 L1 visa programme 62, 63 Labour government (UK) 224 labour intensity 27 labour market segmentation 327 labour market theory 86 labour markets 10, 88 effect of foreign graduates on 24 effective barrier to entry to 25 European, speciﬁc rigidities of 18 facilitating entry/access to 209, 328 family members assigned speciﬁc roles 215 global 36, 117, 215 healthcare, global integration of 215 important role of institutions outside 313 integrated 36, 37 inter-ﬁrm and formally skilled 89 international 28 liberalization of 209 ‘local channel’ 331 physicians 218 potential performance in 34 pressure on 68 n. skilled workers 44 labour productivity 50 labour shortages 56, 58 n., 74, 77, 136 labour supply 125 sending country, emigration reduced 37 Lake, Anthony 283 n. Langlois, R. N. 103 n language 185, 213 afﬁnity with 59 entrepreneurs who understand 133 knowledge of more than one 9 not an obstacle 288 shared 123 see also English language; French language language skills 272, 277

353

Index Lao PDR (People’s Democratic Republic) 268 n. Latin America 141, 152 n. art 242 challenge of moving to higher knowledge intensive development 95 dictatorships 35 economic crisis (1990s) 56 football players 298 foreign students in OECD countries 58 health professionals 25, 210 higher education 287 n. highly qualiﬁed professionals 59 immigration 26 n. international investment from Europe into 28 n. intra-company transfers 62 main source of medical personnel for developing countries 15 professionals and writers from 21 military dictatorships 51 nursing workforce 205 one of the largest and most diverse production centres in 159 public sector restructuring 210 restoration of democracy 35 return of talent 59, 73 reversion to democracy 250 student migration to US 168–201 technical talent from 8 top class scientists attracted and retained 16 see also under individual country names law ﬁrms 130 lawyers 31–2 LCU (Local Currency Unit) 270 n. LDCs (less-developed countries) 332 Le Corbusier 237 League of Nations 269 n. learning 34 creating centres of 26 n. learning opportunities 217 Lebanon 266 Lederman, D. 160 Legend Group 133 lemming effect 132 n. Lenovo 133 Lesniak, W. 216 less-skilled workers 9 global migration selectively includes 47 L’Express 320 n. Li, Julie Yu 129 Li Kuo-Ting 125, 126, 127

354

liberalization 10, 74 cross-border movements 44 market 122, 123 political 250 Libya 208 licensing 25, 95 internet 97 Liechtenstein 266 n. Liese, B. 209, 216 life sciences 48 lifestyles 2 linguistic barriers 122, 209 linguistic compatibility 8–9 linguistic skills 122 liquidity 131, 135 Liu, Danny 133 Liu, Peter 127 living costs 269 n. living standards 1, 3, 6 remittances have signiﬁcant impact on 70 ‘location speciﬁc’ factors 252 locational advantages 105 locum work 322 logic 48 London 26, 241, 242, 243, 248, 298 ethnic minority owned businesses 320 low cost labour 124–5 low-income households 49 Lowell, B. L. 61, 62, 65, 68, 72, 75, 76 Lowell, L. 210 Lowell, L. B. 162 low-skilled workers 219 Lubrano, M. 324 Lucas, R.E.B. 31, 70 n. Lucie-Smith. E. 245, 255 McAusland, C. 23 McHale, J. 92 machines 87, 88 McKinsey Global Institute 23 McLaren, R. I. 263 n. macroeconomics: stability 216 volatility 10 Macronix International 128 Madrid 196, 236 Mahroum, S. 151, 152, 156 Malaha, I. 68 n. malaria 3, 12, 25 Malawi 225 Malaysia 65, 205, 268 n. foreign students in 310 n. time limited tax exemptions 154 Maloney, W. F. 160

Index Malvarez, S. 205, 213 managed migration 226–8 management 28–9, 217–18 inefﬁcient 132 staff vulnerable vis-à-vis 279 women in 276 Marfouk, A. 148–9 marginal product 11, 168 marginal productivity 169 human capital in world economy 11 market failure 331 national and international 31 market liberalization 123 market niches 123 marketability 264, 272, 273, 277, 282, 288 marketing 137 global 243 marketization 215 markets: cultural 246 established 138 European football 326 foreign, access to 152 global/international 122, 123, 124, 142 information on 34 overseas 63 poorly regulated 131 transition to 36 winner-takes-all 30, 33, 243–8 Marshall Islands 266 n. Martin, P. 67 Martineau, T. 218 Martinez, J. 35 n. Marxist-Leninist leadership 249 Maslow, Abraham 91 mass manufacturing capabilities 121 mass media access to 30 mass migration 37 mass production 126 Massey, D.S. 55 n. mathematics: generic training in 48 graduates 71 specialization in 48 Mathur, Rakesh 136–7 Matta, Roberto 236–7, 249 MBA (Master of Business Administration) 46, 194 MCA (Master of Computer Applications) 48 Medellín 194 medical doctors 21, 33 community service 222 considerable movement within industrialized countries 25

earnings 216 exit to private sector 222 fellowship programme for 228 junior 322 low salaries 216 movement of 31 provisional, full, and limited registration 211 recruitment of 219 shortage of 203 training for 225 see also physicians medical personnel shortages 7 Mediterranean countries 320 Medium Term Philippines Development Plan (2001–04) Meir, Golda 7, 92 Mejia, A. 206, 208 Mellon, A. W. 26 Mensah, K. 215, 216, 218, 220, 221, 223, 224 mental health nurses 209 mentoring 89, 91 merit 16, 124 metals-based industry 60 Mexican Enterprise Accelerator 98–9 Mexico 54, 157, 179, 196, 245 art and culture 255 diaspora networks, 91, 96, 99 H-1B visa share 61 illegal immigrants from 89, 90 Ministry of Science and Technology 98 number of individuals earning PhD in US 180 nursing aides in US 210 Presidential Fund for Retention 73, 154 remittances 69 n., 70, 221 return of talent 59 return to R&D 160 students in US 63 talent imported from 8 see also CONACYT; INIFAP; ITESM; UAM; UNAM Meyer, J. 209, 217, 223, 225 Meyer, J.-B. 156, 162–3 Microdata 11 n. Microsoft 136 Microtek 128 middle class: bias in tertiary education 48 generalized incentive for students 49 Indian IT professionals 70 size of 10 top engineering students from 124

355

Index Middle East 152 n., 267–8 midwives 227 migrants à qualiﬁer 327 migration chains 84–114 migration policies 9–10 military dictatorships 51 Millennium Development Goals 203 Millennium Science Initiative 157 minorities 49, 319, 320 less privileged 67 Mirablis 119 MIT (Massachusetts Institute of Technology) 133 Mitac 127 Mittal brothers 59–60 Mitterrand, François 248 MNCs (multinational corporations) 72 crowding out by 68 IT companies 66 recruitment of talent by 45 transfer of key management abroad 28 US, key technologies from 95 mobile phone companies 3 Mode 4 (GATS) 45, 75 modernism 248 modularity 105, 107 Moldova 70 n. Mombasa 332n. Monaco 266 n. monopsonists 244 Moreira, Gilberto Gil 251 Moroccan carpet and furniture business 26–7 Morocco 52, 315 ‘Operation Moroccan Workers Abroad’ (1969) 94 Mosel 128 motion-ﬁlm industry 237 Mountford, A. 221 Mouritzen, H. 263 n. movements within countries 239 moyenne bourgeoisie background 286 Mozambique 52, 213, 216 Mukherjee, Amit 270 n. multilateral institutions 135 multinational corporations, see MNCs multiple job holding 239, 246, 247 Murphy, K. 31 music 239 banned 248 musicians 243, 246, 248, 251, 254 African-American 249 exodus of 249 Myanmar 268 n.

356

Nadkarni, Kiran 138, 139 NAFTA (North American Free Trade Agreement) 56 trade-related work visas 62 Nairobi 278 n. NASDAQ 128, 130, 131 nation-building 7 national identity 148 national income: per capita convergence of 37 remittances contribute to 69, 221 national incorporation regimes 319 National Panel Survey of Entrepreneurial Dynamics (US) 320 n. National Research Foundation (SA) 162 National University of Bogotá 287 n. ‘nationalists’ 1, 2 nationality 320 acquisition laws 313 n. NATO (North Atlantic Treaty Organization) 265 natural capital 240 Nauru 266 n. Nayyar, D. 68 Nazism 11, 26 n., 248 Ndoen, M. 27 n. N’Dour, Youssou 243 Nekipelova, E. 68 neoclassical approach 147, 148, 152, 163 neoclassical economic analysis 214, 215 neoclassical trade models 168 Neruda, Pablo 237 Neta Inc. 137, 138 Netherlands 213 foreign students targeted for science related careers 329 patents 304 Renewal Impulse programme 329 special programmes for recruitment and permanent residence 60 network theory 152 networks 8–9, 60, 133, 146, 160 ability to form 152 academic 195 alumni 9 brain circulation 92, 93 business 15 contact 119 cross-regional 124, 142 cultural 15 decentralized 142 development of 330 e-based 162 epistemic 71

Index ethnic-based 59 family/kinship 215 formal, institutionally organized 161 household 215 knowledge 75 out-migrant 214 personal 137 professional 9, 122, 137 relying on 321 scientiﬁc 15, 100 social 219 socioprofessional 161 stimulating the formation of 161 support 219 see also diaspora networks; search networks New Delhi 216, 219 new industrial policy 108–10 new technologies 8 advantage of abundant young engineers trained in 66 creation of 137 leading source of 139 migrants may bring home 12 transfer of 2 New Wave Silicon 132 New York 90 n., 195, 269, 273 n., 275 arts 241, 242, 244, 245, 248, 249, 250 New York Times, The 132 n. New Zealand 268, 310 permanent settlers in Australia 52 Newcastle University 329–30 NHS (UK National Health Service) 205, 212, 219, 224, 226–7, 228 recruiting GPs from Germany and dentists from Poland 322 Nicaragua 160 Nigeria 248 NMC (Nursing and Midwifery Council) 205, 213, 219, 228 Nobel, Alfred 323 Nobel Prize winners 249, 298, 323–4 Noblemaire Principle 269 n. NOIDA (New Okhla Industrial Development Authority) 76 n. nondemocratic regimes 35 non-pecuniary motivations 6 Non-Resident Indians Online 138 norms 31 n., 194 North Africa 209 north–north migration 29 north–south migration 1, 29 Norway 300

NRIs (nonresident Indians) 71 software ﬁrms launched by 73 NSF (US National Science Foundation) 24, 58, 72, 118 n. SESTAT database maintained by 313 n. NSST (Colombian National System of Science and Technology) 195 Nurse Reinvestment Act (US 2003) 224 nurses 24, 46 n., 206, 213, 215 agency charges 220 auxiliary 205 confronted with increased stress 222 considerable movement within industrialized countries 25 deliberate overproduction of 208 difﬁculties in recruiting and retaining 218 doctors retraining as 208 earnings of 30, 216 emigration of 68 n. favoured destination for 210 important source country for 209 lack of opportunities for promotion 217 low salaries 216 mental health 209 overseas associations 219 overseas trained 211–12 personal safety and deteriorating work 322 priorities among 217 racial harassment from work colleagues and patients 323 salaries for 216, 224, 227 shortage of 203 specialist 211 training for 225 working conditions 227 see also registered nurses nursing aides 210 nursing schools 208 obsolete equipment 132 occupational closure 225 occupational mobility 239 Oceania 196, 307 OECD (Organization for Economic Cooperation and Development) 11–12, 22, 23, 52, 56, 60, 148, 196, 204, 211, 225 Asian students dominate technical education in 62 data on R&D expenditure as a percentage of GDP 151 database on immigrants and expatriates 313

357

Index OECD (cont.) demand for talent 45, 68 European foreign students in 309 few Latin American students found in 59 foreign students enrolled in area 307 Indians and Chinese immigrants with tertiary education 55 inﬂows of foreign population 51 large wage differential between developing countries and 50–1 magnitude of loss associated with emigration from 170 mobility inﬂuenced by labour shortages in 56 net inﬂows of technical talent positive for most economies 47 non-OECD expatriate communities in 52 patent database 302 PhD students show high stay rates in US 149 relaxation of quotas 219 relying on foreign talent could depress compensation of IT workers 66 researchers 146 return to R&D 160 Russians absorbed 67 science and technology, declining enrolments 58 serious demographic problems in many economies 73 statistical and analytical base of human resources devoted to S&T 38, 46 temporary migration and permanent migration 75 Ofﬁce of the Census Bureau (US 1990) 118, 177, 183 offshore development 63, 64, 69 Oﬁli, Chris 254 Okri, Ben 245 Olson, M. 35 n. on-site services 63, 64 Open Society Institutes 26 n. opera 30, 244 opportunity costs 48 oppressive political systems 147 Oracle India 137 O’Rourke, K. 37 n. Orozco, José Clemente 245 outﬂows of talent 13, 34–6, 50, 51, 67, 71 important role of national innovation systems in shaping 156 nurses 208 preventing 186

358

relative to stock of sending country 68 way to stem 75 output 172 capital intensive product 16 labour intensive product 169 reproducible 246 outsourcing 7, 237, 320 international/global 47, 67 software services to India 63 overseas Chinese 109, 125, 126, 127, 132 n. contribution to China’s FDI 70 growing numbers attracted to returnees 73, 128 management experience of 133 Page, P. E. 56 n. painters 30, 236, 240–1, 242, 245, 248 African-American 249 Pakistan 55, 288 n. beneﬁt from allowing migration 174 carpet and furniture business 26–7 Palau 266 n. Paltiel, A. 49 n. PAO (período de amortizacionordinaria) 194 paradoxes 96 Paraguay 52 Paris 196, 236, 241, 249, 250, 298 Sentier neighbourhood sweatshop cluster 320 n. Partington, M. 92 patents 141 triadic 302–4 weak system for innovations 31 Patinkin, Don 1, 92 patronage 241 Pattaya 332 n. Paul, Swaraj 60 Pavarotti, Luciano 244 payroll taxes 65 PBPS (UN Peackeeping Best Practices Section) 280 PCs (personal computers): cheap clones 139–40 leading edge manufacturing 119 PCT (Patent Cooperation Treaty, WIPO 2002) 304 PE (periodo de estudios) 193–4 peacekeeping operations 275 n. see also DPKO; PBPS PECX (Association of Colombian Students and Professionals Abroad) 195 peer groups 59 peer interaction 6 peer recognition 23

Index Peking University 13 Pellegrino, A. 35 n. Pennsylvania Academy of Fine Arts 249 People’s Bank of China 129 Peralta, A. 90 n. performance measures 130 permanent migration 11 differences in 313 personal relationships 161 Peru 210, 213, 268 return of talent 59 petite bourgeoisie background 286 pharmacists 209 PhDs 48, 149, 154, 157 n., 188 availability of places 328 commissions in home countries 325 courses/programmes 179, 180, 193, 196 EU 298, 302 foreign students enrolled in national advanced programmes 311 increased funding for studentships 329 programme targets researchers who have recently completed 199 repatriation component for 186 philanthropists 26 n., 240, 244, 253 Philippines 21, 52, 55, 75, 222, 266, 268 n., 288 n. H-1B visa share 61 highly-skilled migrants 318 mathematics and computer science graduates 71 nurses 25, 30, 205, 208, 211, 212, 215 physicians 208 pool of key health professionals deployed in depressed areas 225 recruitment agreements signed with 228 remittance income 69 reported to be hurt by migration 174 Phillips, G. 209, 217, 222 PHR (Physicians for Human Rights) 203, 209, 216, 217, 220, 224, 225 physical capital 9 physicians 206, 208, 209, 210, 211, 299 average annual net income 30–1 favoured destination for 210 Filipinos practising overseas 221 labour market for 218 mobility among 210 physics 48 Picasso, Pablo 241 Picture of UN Staff survey (2005) 273–5 Piore, M. 87 n., 88 n., 94 Pittsburgh 241 planned economy 131

PLS Ramboll Management 271 n. POE (periodo ordinario de estudios) 194 POEA (Philippine Overseas Employment Administration) 228 Poland 23, 36, 196 earnings of doctors in public hospitals 216 mobility among physicians 210 students enrolled in health and welfare 308 talent imported from 8 policy issues 9–10, 38–9, 108–10, 251–5, 327–33 political refugees 141 political regimes 34 non-democratic 35 political upheaval 248–51 politics and migration 35 n. Pollack, M. 47, 51, 59, 64, 65, 67, 71 Pollock, Jackson 237, 253 poor migrants 9 population growth l56 Portugal 213, 249 post-adjustment 269, 270–1 postdoctorates 154, 157 n., 196 Postel-Vinay, F. 75 postgraduate courses 311 poverty 31, 246 sending country 68 power distribution 263–97 pragmatic collaboration 106, 107, 108 pragmatist disciplines 104 PRC (periodo de residencia obligatoria en Colombia) 194 President Enterprises 127 price manipulation 131 prices 36 factor 37 relative 169 Pritzker Architectural Prize (2004) 298 private equity ﬁrms 120 private sector 28, 268 international organizations and 272–3 privatization 215 privilege 124 probability model 171 problem-solving 103 n. product differentiation 251 production: small batch 103 n. transferring to a new environment 120 productive activities 31 productive potential 6

359

Index productivity 2, 32, 153, 160, 207 concentration effects important for 8 growth 28 n. marginal 11, 169 national 72 signiﬁcant gains in 163 professional advancement 91 professional associations 89 professional development 216–17 professional mobility 263–97 professional peers 60 professional registers 205 proﬁt sharing deals 244 proﬁtability 28 n., 64 proﬁts: boosting 28 n. high 28 n. prospects for 27 quick 135 super-normal 32 n. programmers 137 project development/ﬁnancing 99–101 promotion systems 218 property rights 124 weak 31, 243 protectionist policies 66 protestant ethic 31 n. Psacharopoulos, G. 171 PSLINK (Public Services Labor Independent Confederation) 207, 208, 225 public employees 33 public health systems 33 public sector 16 international 28, 29 Public Use Microdata Samples (US) 320 n. publications 30, 188, 298 Puerto Escondido 332 n. Puerto Rico 52 pull-and-push factors 23, 55 n., 147, 213, 214–15, 218, 302, 322 qualitative information on 152 pull effect 176 Punjabi traditional music 254 purchasing power 269 purchasing power parity 68 qualiﬁcations 47, 155 academic, gaining more 216 common standards on 253 good 23 minimum 48 mutual recognition of 209

360

nursing 221 veriﬁcations of 213 quality 129 quality of life 254–5 quotas 60, 61, 62, 131, 136 foreign player 326 relaxation of 219 racial harassment 323 racial prejudice 249 racism 255 R&D (research & development) 132, 133, 322 n. demand for staff and professors 312 Europe’s advantages not being converted into commercial success 302 investments in 76, 160, 164 low cost location for labs 139 researchers in 146 science and technology 59 Ramo, Dr (technological consultant) 125 Ramp Networks 137 random effects models 183 Rapoport, H. 44, 52 rate of return migrants 72 Rath, J. 27 n. real wage gaps 37 rebellion against patriarchy 249 reciprocity 74 recruitment 75, 211, 215, 225, 266, 267 n., 268 cumbersome, prolonged job search arising from 229 direct consequences for 216 drives by other countries 213 ethical 15, 207–8, 331 highly qualiﬁed staff 269 n. not truly global 326 overseas strategies 213, 218 targeted 218 see also international recruitment recruitment agencies 214 fees charged by 220, 229 growth of 219 invited to sign up to code of practice 227 key role 219 poor practice of 229 Red Caldas 162, 196 Red de Talentos para Innovacion 98 Rediff Communications 135 refugees 255

Index Regets, M. C. 24 reggae 254 regional integration schemes 4 registered nurses 209, 211 employed in US 210 underemployment among 208 registration 205, 211, 212, 219 regulation(s) 158, 208 conﬂicting, cumbersome and anachronistic 136 violated 194 regulatory oversight 124 regulatory procedures 130, 131 relocation 7 remittances 12, 69–70, 75, 177 n., 221 aggregate 124 collective 90–1 inﬂows of currency through 330 scale of 221 sending countries beneﬁt via 74 source countries beneﬁt from 203 substantial 207 remuneration 216 cash 271 ﬂat structures 33 good 49 micro 37 rents 32 associated with special abilities 31 super-normal 33 reparation 75 repatriation: encouraging 16 programmes 154–5 reporting standards 130 reputation 50, 152, 159 damaged 272–3 US universities 288 research facilities 6 research institutions 124 researchers 145–67 residency programmes 219 resource allocation 48, 156 resource misallocation 31 resource mobilization 13 agents of 25 resourcing 75 restaurants 26, 321 restriction 75 restrictive policy 223 retention 223, 224, 225

return migration 12, 14 determinants of 147–52 policies 152–60, 229 returnees 59, 73, 92, 128, 136 engineers 14, 119 entrepreneurs 14, 120, 123, 124, 130, 141, 142 inducing 75, 154 knowledge and skills acquired by 221 networks established overseas brought by 152 permanent 137 postdoctorates graduated in US 12 researchers 147–52 scientists 35, 119, 147–52 senior management teams 133 students 72, 159 US-trained PhDs 59 returns on investment 13 returns to ability 33 reverse migration 158, 159 rewards 30–3, 71, 155, 156, 158 enormous differences in 244 Richards, Robin 134–5 rights 34, 89 broadcasting and sponsoring 326 extent to which respected 35 fundamental and inalienable 203 shareholder 132 n. risk aversion 27, 109, 126, 127 risk-taking activities 31 n., 110 entrepreneur is typically prone to 27 favourable attitude towards 13 Rivera, Diego 255 Rivlin, Gary 132 n. Rockefeller, J. D. 26 Rodrik, D. 75 n. role models 123 root-cause analysis 103 n., 104 Rothschild banking dynasty 26 Rowson, M. 227 Royal College of Art 241 royalties 246, 253 Rubens, Peter Paul 236 rule of law 151 rules: following 102–3 immigration, relaxation of 218–20 overlooked 130 rural families 49 rural–urban migration 246 Rushdie, Salman 255

361

Index Russia 3, 51, 75, 95, 141 ageing population 74 main source of engineers 23 massive emigration of young talent 74 outﬂow of scientists and professionals 36 scientists R&D sector emigrated 67 talent imported from 8 Rybczynski theorem 168–9 Saatchi, Charles 244 Sabel, C. 64, 73, 332 S&E (science and engineering) 302 changes in global job markets for 24 doctorates 23, 62, 72 expansion of graduate education in 159 foreign-born in US 58 St Ives 248 St Petersburg 141 salaries 25, 30, 155 benchmark 272 classiﬁcation of posts complicates comparison of 270 compensation for loss of 154 dispersion of 36 frozen 35 gap between Silicon Valley and Bangalore narrowed 66–7 high(er) 23, 272 increased 224 international civil servants 269 n. international differentials 33 internationally competitive 29 IT structure 50 low 23, 56, 216, 327 minimal 270 national administrations 271 post-adjustment as an integral and signiﬁcant part of 269 reasonable 152 world-class experts 272 salary convergence 66 Samoa 266 n. Samsung 95 San Francisco 127, 134 San Jose 98–9 SANSA (South African Network of Skills Abroad) 162 sans-papiers 247, 248 Santa Clara 135, 137, 138 Santagata, W. 252 Sao Paulo 72, 159, 251 Sao Tome and Principe 266 n. Sargent, John Singer 241

362

SAS (Silicon Automation Systems) 136 Saskatchewan 331 n. S&T (science and technology) 300–11 advanced degrees in 60 advancement of 16 adversely affecting the development of 11 budget cuts in 59 declining enrolments 58 emphasis placed on 195 EU graduates 298 spending on 47 strengthening the infrastructure for 158 Saudi Arabia savings 28 n., 75 n. Saxenian, A. L. 26 n., 46, 84, 89 n., 92, 94, 109, 161, 330 scholars 12 scholarship credit 193, 194 scholarships: funding 252 limited 288 Schram, A. 135 Schultz, T. W. 170 Schumpeter, J. A. 25, 27, 32 science: ditching of university courses 330 role of trust in 152 see also S&E; S&T scientiﬁc equipment 152 n. scientists 23–4, 151–2 attracted towards expertise and cutting-edge institutions 152 award given to the most distinguished 192 Chinese 118 encouraging return of 306 foreign-born 118, 319 international mobility of 145–67 outﬂow of 36 overseas, using as a resource 160–3 repatriation component for 186 research 46 n. retaining and attracting 156 returning 35, 119 Scotland 10 diaspora 95, 96–8, 101–2 Scott, A. 168, 169, 170 Scottish Enterprise 96, 98 Biotechnology Framework for Action 97 sculptors 236, 248

Index search networks 85, 86, 88, 108, 110 dynamic and resilient 109 from hierarchies to 102–5 incubators of 98 institutionalized 89, 90, 96 successful 96 thick 89 thin 89, 90 transnational 91, 94–9 turning diaspora networks into 99–102 Seattle 136 Second World War 249 Seed Fund (Taiwan) 109, 127, 128 self-actualization 91 self-conﬁdence 34 self-discovery problem 108 self-employment 319, 320–1 guest workers likely to choose 321 prominence of South Asians in 320 self-ﬁnancing 310 semiconductors 127, 128, 132, 134 high proﬁle foundry 130 semi-skilled workers 70, 75 n. Sen, A. 287 n. Senegal 243, 251 seniority 158 serendipity 96, 99 service industries 253 Shanda Interactive Entertainment 132 Shanghai 72, 130, 133, 134, 139 central role in promoting cross-Paciﬁc start-ups 131 ‘me too’ Internet ventures 140 venture capital ﬁrms 129 Shanghai Stock Exchange 131 Shapin, S. 151–2 Shenzhen 133, 134 NASDAQ type market planned 130, 131 venture capital ﬁrms 129 Shenzhen Stock Exchange 131 Shih, Stan 125 Shonibare, Yinka 255 short-term contracts 278, 279 ‘showcase’ donations 100 Sibelius Academy 236 Silberman, Bernard S. 293 n. Silicon Valley 2, 319 clustering of computer and communications related ﬁrms 140 entrepreneurial immigrants into 13 failed attempts to ‘grow the next’ 123 ﬁrst generation immigrants in 122 foreign-born scientists and engineers 118

important human resource in creation of high-tech industries 28 Indian and Chinese entrepreneurs 60, 65 Iranian and Vietnamese immigrants 141 Korean and Japanese communities 142 national institutions that support the system 124 number of foreign-born high-skilled workers 117 permanent returnees to India from 137 R&D oversight from 133 resident Indian technical talent in 69 return immigrant entrepreneurs and engineers from 14 salary gap narrowed between Bangalore and 66–7 Taiwanese in 109, 142 technological entrepreneurs 26 n. TiE 72 transfer of the model to home countries 119, 125–9 venture capital industries with links to 120, 130, 131, 132, 133, 134, 135, 138 Silicon Valley Bank 133 Silicon-Ware 128 Simón Bolivar University 287 n. simultaneous engineering 103, 104, 109 Singapore 10, 72, 141, 142, 208, 252, 268 n. shortages of IT labour 65 Singapore Youth Festival 252 Singh, Pradeep 136 SIPA (Silicon Valley Indian Professionals Association) 162 skill substitution 225 skill transfers 207 skilled workers 169 demand by developing countries for temporary movement of 45 facilitating the circulation of 330 global availability of 44 large pools of 240 new opportunities for developing countries endowed with 44 powerful and useful asset 161 region with high share temporarily admitted to US under H visa category 181 relaxation of immigration policies 60–3, 211 strong increase in demand for 152 see also high-skilled workers; less-skilled workers

363

Index skills shortages 10 skills transfer 162 small ﬁrms 26, 254 small- and medium-sized enterprises 126 allowed to list on Shenzhen exchange 131 crowding out of 68 see also SMEs Small Industries Development Bank of India Venture Capital 135 SMEs (small manufacturing enterprises) 110, 252 SMIC (semiconductor foundry) 130, 132 smokestack industries 252 SNI (Sistema Nacional de Investigadores) 186, 187–8, 191, 192 soccer, see football social acceptability 49 social capital 101, 148, 321 social integration 32 social marginal product 11 social network theory 148 social problems 147 social talent 4 Socialist countries (former) 23 emigration generally restricted in 35 n. socialization 293 sociocultural afﬁnity 8–9 sociodemographic characteristics 48–9 socioeconomic background 286, 293, 320 elite 285, 287 ‘ﬁrst class’ 289 good 289 means to achieve higher standing 321 privileged 288 sociology of talent 22 Softbank (Japan) 131, 138 software: ﬁrms launched by NRIs from US 73 ﬁrst-comer advantage in exports 75 gaming 97 Internet personalization 137 investing in the industry 138 programming, generic training in 48 security 119 shortage of developers 136 software engineering 49, 69 software services 139, 140 exporting 69 outsourcing of 63 successful 135 Solimano, A. 26 n., 27, 28 n., 47, 51, 59, 64, 65, 67, 71, 72, 210, 325 Somalia 52 Soros, George 26

364

South Africa 213, 216, 222, 225, 242, 322–3 Cuban physicians practising in 209 end of apartheid rule 250, 251 exit of doctors to private sector 222 foreign students in 310 n. health professionals from other parts of Africa 209 healthcare personnel arrangement between UK and 331 music industry 243 nurses 25, 68 n., 217, 222, 225 recruitment of physicians from 331 n. talent imported from 8 trusts recruiting directly from 227 see also SANSA entrepreneurial capabilities 7 South Korea 24 n., 52, 268 n., 330 backward and forward linkages 108 declining fertility rates 74 democratization 250, 251 high investments in research and development 76 holders of student visas who graduate in IT ﬁelds 60 programme aimed at attracting entrepreneurs from 328 n. rate of return migrants 72 reported to be hurt by migration 174 resistance to large scale immigration 74 special programmes for recruitment and permanent residence 60 students coming to US from 12, 63 see also chaebols south–north migration 3, 12, 29, 246 south–south migration 3, 4, 25, 29 cooperation 15 Southeast Asia 26 n. South-eastern Europe 319 Southern Africa 216 Southern Europe: football markets 328 Latin Americans in 300 n. Soviet bloc break up 51 Soviet Union (former) 290 n. collapse of 23, 67 mathematicians from 21 numbers of expatriates with tertiary education 52 research system 157 Soyinka, Wole 249 Spain 13 n., 59, 190, 213, 249, 311 entrepreneurial capabilities 7 research in health science 329

Index Spanish speakers 90 Spear, Steven 103 n. specialization 48, 225 spillovers 11, 160, 221 positive 71 spin-offs 97, 127 sponsorship 219 Sri Lanka 211, 217 female workers from 69 Sridhar, A. V. 135, 137 staff shortages 218–20 STAG (Taiwan Science & Technology Advisory Group) 127 stagnation 31 Stark, O. 172 start-ups 2, 132, 137, 140 cross-regional 131, 133, 136 development centres 139 early stage information technology 138 frustrations from corrupt and restrictive bureaucracy 134 growth of 134 high quality 132 high-tech, low number of 321 proportional representation among 320 successes of 136 venture-backed 128 stationary equilibrium 32 statistical signiﬁcance 183, 184, 185 steel 298 world’s largest company 60 Stiglitz, J. E. 278 n. Stillwell, B. 218 stocks of talent 46–7, 49, 239, 313 establishment of accurate data on health professionals 204 future 65 global, highly-skilled migrants from developing countries 312–19 growth a major contributor to 71 loss of 248 non-OECD economies contributing to OECD countries 56 permanent 68 physician and nurse labour force 206 strategic coordination 106 Stratify 136, 137 Straubhaar, T. 66, 68 n., 71 strikes 218 structural adjustment programmes 206, 213, 216 student mobility schemes 311 student non return 171

study leave 217 Subramanian, K. Ganapathy 138 Sub-Saharan Africa 12, 21, 210 crises 207, 216 health professionals 217 health workforce shortages 202, 203 HIV-AIDS 25, 202, 203, 217 poorest countries 226 suppliers 105 access to 321 development programmes 109–10 forward and backward linkages to 240 monopoly 243 ‘not-for-proﬁt’ 240 potential 110 specialist 240 strategic coordination between customers and 106 supply: and demand 49, 73, 214 skilled workers 44 structural 55–60 supply chains: global 84, 105–6 manufacturing infrastructure 133 Surinam 213 Surrealists 249, 250 Survey of Income and Program Participation (US) 320 n. Survey of Minority Owned Businesses (US) 320 n. Swaziland 225 sweatshops 320 Sweden 52, 300 patents 304 Promotion Reform programme 329 Switzerland 266 census (2000) 321 shortage of IT workers 56 n. Sydney 248 synergies 16, 196 systemic approaches 164 tacit knowledge 87, 104, 119 important transmitters of 146 transfer of 160–1 Taipei 127, 131 Taiwan 55, 73, 120, 134, 250, 330 circulation of Chinese talent between US and 76 education and research centres 71 entrepreneurial immigrants from 13 government role in inducing expatriates to return 75

365

Index Taiwan (cont.) hardware manufacturing 140 higher level design or logistics capability 132–3 important human resource in the creation of high-tech industries 28 IT experts from 21 linking high technology clusters to high-tech regions in US 161 patents 141 programme aimed at attracting entrepreneurs from 328 n. returning migrants from 72, 119, 123 semiconductor and electronic systems producers 139–40 Silicon Valley model transfer 125–9 strengthening the infrastructure for S&T 158 successful in building high-tech industry 38 technological entrepreneurs 26 n. US-educated engineers and entrepreneurs 123 venture capital 108–9, 125, 130, 136 see also HSIP Taiwan Stock Exchange 128, 130–1 Talent Abroad programme (Mexico) 98 Taliban regime 248 Tamil Nadu 49 Tan Lip-Bu 127, 132 Tang Hui-hao 130 n. tangible assets 135 Tangier 332 n. Tanguy, Yves 249 Tanner, Henry Ossawa 249 Taran, P. 206 Tata 134 taxation 153, 170 Bhagwati-type 171 deductible 127 double 253 human capital affects revenue from 10 relation between education and 34 resale 242 stiff 31 Taylor, Timothy 249, 254 teachers 33 teamwork 33, 122 experience gained through 50 technical assistance 332 promoting international development through 29 technical colleges 49

366

technical education 47, 48, 49, 67 advanced systems 55 Asian students dominate 62 consistently expanded 71 greater response to meet growing demand 50 growth in 49 high quality, limited availability of 5 perceived as gateway to well paid employment 49 perceived to enhance employment prospects in poor countries 56 rapid industrial development based on 55 state-driven 75 technical talent 6, 22–3 demand for 313 international mobility of 44–83 technological capabilities 121 technological change 178 technological development proxy 183 technological innovation 126 technology 134–5 adaptation to local circumstances 120 and demand for talent 8 emerging 139 important transmitters of 146 intangible 130 rapid and easy diffusion of 251 specialized 140 state of the art 196 wireless 140 technology boom (1990s) 72, 136 technology entrepreneurs 12, 26 n. technology exchange 94 technology parks 71 technology recession (post-2001) 123 technology stocks: collapse (2001) 131 excessive valuations of 132 technology transfer 3, 72, 160, 298 boosting 160, 161 up-to-date 121 TEFAF (European Fine Art Foundation) 241 n. temporary international movement of workers 45, 75 tennis players 33 tenured positions 35 Tequila Crisis (Mexico 1994) 178 tertiary education 11, 46, 179, 182, 300 class bias inherent in 48 growth in the system 71 largest receiving region for students foreign 307

Index main beneﬁciaries of 48 main countries of destination of individuals with 3 numbers of expatriates with 52 resources devoted in developing countries 48 strengthening 159 technical 67 youth population lacking at lower levels 302 Thailand 222, 266, 268 n. Third European Report on Science and Technology Indicators 302 third force psychology 91 Third World countries 118 Thorn, K. 46 n., 59, 64 ‘three-for-one’ programme 90 Tiananmen Square massacre (1989) 51 TiE (The Indus Entrepreneurs) 72, 89, 91 Times, The 322 n. Timor-Leste 266 n. Tirole, J. 34 Tjadens, F. 213 TN (NAFTA trade-related) work visas 62 Tobin, J. 168 Todaro, M. P. 118, 147, 214, 246 Tokyo 269 Tommaso, Giulio de 270 n. tourism 253, 332 n. Toyota 103 n. trade barriers: informational 122 reduction of 123 training 228 doctor 225 ﬁrm-speciﬁc 50 funding of 221 job-speciﬁc 50 nurse 217, 224, 225 professional 49, 216–17 specialist 217 technical 48, 76 vocational 46 transactions 99, 100–1 transnational corporations 28 transnationalism 148, 152 transparency 124, 157, 219, 229 transparency lack of 130 transportation costs 2 Tremblay, K. 58 Trinidad and Tobago 224 trust 123, 152 Tsinghua University 133

TSMC (Taiwan Semiconductor Manufacturing Company) 119, 128, 133 Tsuda, T. 44–5, 58 n., 60 n. tuition fees 329 Turkey/Turks 54, 69 n., 254, 321 Turkish carpet and furniture business 26–7 Turkmenistan 266 n. UAM (Universidad Autónoma Metropolitana) 190 UC Berkeley 133 Udom, U. E. 263 n. UK (United Kingdom) 190, 228, 266, 268 Afro-Caribbean community 254 beneﬁt from foreign students who pay for education 66 capital from 7 common ethnicity attracts Americans and Australians to 52 English-speaking south Asians prefer 52 ethnic minority owned businesses 320 healthcare personnel arrangement between South Africa and 331 important destination 51 Indians, Pakistanis and Bangladeshis in 52 international recruitment 218 international students studying in 311 n. intra-company transfers 56 long historical ﬂows of migrants from Africa 319 medical doctors 24, 206, 211, 213 nationals working for UN 286, 287 nurses 24, 25, 208, 209, 211, 213, 219, 323 patents 304 permanent settlers in Australia 52 PhD studentships, increased funding for 329 skills-based migration programme 328 visas 10, 62, 218, 329 see also NHS Ukraine 51, 95 UMAX Data Systems 128 UMC 128 UN (United Nations) 118, 265 biographies of senior ofﬁcials 289 n. career prospects 277, 287, 291 damaged reputation 272–3 developing countries diplomats attracted to senior positions 285

367

Index UN (United Nations) (cont.) downside of professional culture 280 dysfunctional characteristics 278 French professionals working for 286 hierarchical structure of most institutions 280 Japanese women at 277 n. negative effects on functioning of 270 number of regular budget posts in the system 279 posturing of leadership 281–2 programmes for economic development 170 salaries 269–71 staff in Europe 298 survey on what motivates or demotivates staff 273–5 underinstitutionalization 281 unsystematic character of 281 see also DPKO; FAO; IAEA; ICJ; PBPS; WFP; WIPO; also under various headings below preﬁxed ‘UN’ UN General Assembly 269 n. UN Organizational Integrity Survey (2004) 281 UN Secretariat 265 n., 266, 280 UNCTAD (UN Conference on Trade and Development) 238–9, 251 underemployment 208, 246, 302 undersupply 299 UNDP (UN Development Program) 265 n., 272, 332 unemployment 246 ‘search’ 245 UNEP (UN Environmental Program) 265 n., 278 n. UNESCO (UN Educational, Scientiﬁc and Cultural Organization) 146, 265 n. UNFPA (UN Population Fund) 206, 223, 230 UNHCR (UN High Commissioner for Refugees) 265 n. UNICEF (UN Children’s Fund) 265 n., 276 n. UNIFEM (UN Development Fund for Women) 276 n. Union Trust of India Ventures 135 United Arab Emirates 266 n. Universidad Autónoma de Nuevo León 190 universities 268, 323 best 287 n. collaboration with industry 158–9 entrepreneurs help to establish 26 n. ﬁrst-rate, advanced degrees earned in 29

368

ﬂexible and open career structure 158 good 33, 288 n. hostile public policies towards 35 international, most prestigious 192–3 massive emigration of professors 35 strengthening of positions of junior staff 329 University Mobility in Asia and the Paciﬁc 311 University of Amsterdam 194 University of Campinas 287 n. University of Cape Town Science and Technology Policy Centre 162 University of Maryland Biotechnology Institute 98 University of São Paulo 287 n. University of Strathclyde 97 University of Tokyo 286 unmanaged migration 229 UNODCCP (UN Ofﬁce of Drug Control and Crime Prevention) 265 n. UNRWA (UN Relief and Works Agency for Palestine Refugees in the Near East) 265 n. unskilled workers 7, 70, 75 n., 88, 169 help to increase and sustain growth 28 n. UNSpecial (magazine) 273 n., 275 n. UNU (UN University) 265 n. upgrading 141 upstream activities 238, 239, 245, 247, 251, 252 urban regeneration schemes 252 Uruguay 35, 213 US (United States) 13 n., 266, 268, 285, 286, 319 access to education 124 advanced research programmes 311 arts 249 beneﬁt from foreign students who pay for education 66 Canada physicians going to 25 census data 319, 320 centrality in international distribution of power 283 Chinese students who tend to stay after graduation 12 civil service 269 n. collaborations with large ﬁnancial institutions 126–7 Colombian diaspora in 196 cross-country variation in return rates of postdoctorates graduated in 12

Index Cuban expatriates in 54 cultural and educational exchange programmes 309 cultural disposition toward, by Chinese and Indian technical talent 59 development of science and technologies 11 doctoral recipients from India and China 24 n., 149 engineers educated and trained in 121 English-speaking south Asians prefer 52 European and Asian students in 62–3 Federal Government civilians employed overseas 276 n. ﬁlm industry 240 foreign PhD graduates in 149 health workers 8, 24, 31, 206, 208, 210 highly-skilled migrants 315, 318 immigrant labour force 94 important destination 51 increasing number of foreign-born S&E in 58 Indian-born individuals in 12, 65, 70 inequality 37 international recruitment 218 intra-company transfers 56 Italian immigrants to 88 n. Jewish emigration to 26 n., 51 linking high technology clusters in Taiwan and China to high-tech regions in 161 major destination country for overseas trained health professionals 210 Mexican workers in 70 most important player in attracting global talent 60 network of inﬂuential Chileans in 96 opportunities for immigrant entrepreneurs 72 overseas Chinese attracted to return from 128 patents 302, 304 PhDs to S&E students 302 public libraries 26 n. returnees from 136, 159 Russian scientiﬁc workforce in 68 scientiﬁc and engineering degrees 23 student migration to 12, 24, 168–201, 307 technology boom (1990s) 72, 136 technology stock collapse (2001) 131 transfer of British textile and German steel technology to 119 universities 145, 158, 272, 286, 323

visas 10, 23 n., 61–2, 63, 65, 218, 299 see also Silicon Valley utility 215 Uzbekistan 51 V2V 131 Valdivia Center of Scientiﬁc Research 16 value-added 252 value chains 102–8 values 31 Van Eyck, K. 206, 210, 215, 217, 222 Vanderbilt, C. 26 Vargas Llosa, Mario 3 n. Vaubel, R. 263 n. Veerina, Mahesh 137 Velázquez, Diego 236 Venables, A. 240 Venezuela 52, 157, 179, 287 n. outﬂows 62 n. students in US 63 Venice 251 venture capital 46, 108–9, 125, 126, 129–39, 313 creation of industries with close links to Silicon Valley 120 spread of 119 transfer of 123, 124 underdevelopment of 321 Veracruz 255 Verdier, T. 31 veriﬁcation 205, 213 Vermeer, Johannes 241 Vertex 131 vested/entrenched interests 108 Vichy France 249 Vienna 27 n. Vietnam 52, 55, 157, 268 n. highly-skilled migrants 318 visas 322 costs of 330 n. entry 204 exchange visitor 218 F1 171, 179, 182, 184 favourable 23 H-1B 23 n., 61–2, 63, 136, 218, 299 help to obtain 248 L1 programme 62, 63 ‘scientiﬁc’ 328 special programmes 10 status adjustment 171 student 60, 329, 330 n. temporary 56, 60, 61, 68, 76, 136 trade-related 62

369

Index visas (cont.) waiver 219 working, easier access to 25 vision 133 Vlok, Dr (SA medic) 322 n. vocational training 46 Vodusek, Z. 28 n. ‘voice’ and ‘exit’ 249 voluntary migration 35 n. voodoo 245 Vujicic, M. 216 Wacquant, L. J. D. 293 n. wage convergence 36–7 necessary 74 n. wage differentials 171 geographical 214 importance of 147–52 large 50–1, 216 source–destination country 216 wage dispersion 36 wages: annual increases 135 expected 172 high(er) 37, 87, 172, 174 low 105, 123 moderating the growth of 28 n. pushed down 24 technical talent, rising 58 n. upward pressure on 215 waiver visas 219 Walcott, Derek 250 Walden International Investment Group (WIIG) 109, 127, 132, 138 Warburg Pincus 131 Warhol, Andy 241 Washington, DC 269 n., 278 Wa Thiongo, Ngugi 249 Watts, J. R. 58, 61, 66, 76 n. WDI (World Development Indicators) 182 Weah, George 327 wealth accumulation 34 wealth creation 26, 31 Weber, Max 31 n. WebEx 134 websites 138, 162, 196 directory of family doctors in South Africa 322 n. WEF (World Economic Forum) Global Competitiveness Report 151 weightless economy 49 Weiss, T. G. 263 n., 289 n.

370

welfare 254 gains 155 global 2 losses 92, 168 meaningful 1 reduction of services 10 source countries 13–14 welfare states 206 Wescott , C. 92 West Africa 255, 288 n. WestBridge Capital Partners 139 Western Europe 51, 179, 298–337 Brazilian emigration directed toward 54 Chinese students returned from 72 Colombian diaspora in 196 guest workers 87 network of inﬂuential Chileans in 96 WFP (World Food Programme) 265 n. white collar acceptability 49 Whitwell, C. 51 WHO (World Health Organization) 202, 204, 206, 216, 220, 229, 230, 265 n. wholesaling 321 WI Harper 127, 131 Wickramasekara, P. 51, 62, 64, 67, 75 Williamson, Jeffrey 37 Wilson Sonsini Goodrich & Rosati 130 Winbond 128 Winkler, D. 170 winners 108, 110 Winters, L. A. 64 WIPO (World Intellectual Property Organization 265 n. Wipro 135, 137, 138 wireless technology 140 women 276 emotional labour expended by 206 international organizations and 292 opportunities for 49, 276 violence against 249 work effort 32 work permits 204, 218 challenge of obtaining 288 working conditions 205, 214, 222 deteriorating 322 measures to address 223 pay and 223–5 poor 215, 217, 220 unattractive 208

Index World Bank 16, 69, 98, 216, 229, 265, 271 n., 277, 287 n., 313 n. always headed by an American 285 n. AnnualReport 2005 266–7 gender balance 276 marketability in the private sector 273 relatively small size work force 278 World Bank salaries 270 n. World Bank salaries of professionals 270 World Development Indicators 151 World Health Assembly (2004) 202, 220 world music 248 writers 30, 237, 249, 251, 255 WTO (World Trade Organization) 203, 266 Wu Miin 128

Xaba, J. 209, 217, 222 xenophobic sentiments 66 Yang, Howard 132 Young British Artists movement 254 Young Investigators Program (Germany) 329 n. Yugoslavia (former) 52 Zacatecas 90 Zambia 209, 216 Zanzibar 332 n. zero immigration policies 332 Zhao, J. 51, 56, 65 Zhu Min 134 Zimbabwe 209, 254 Zurich 26

371

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Insurance against Poverty (UNU-WIDER Studies in Development Economics)

New Sources of Development Finance (UNU-WIDER Studies in Development Economics)

The Quality of Life (Wider Studies in Development Economics)

Hunger and Public Action (Wider Studies in Development Economics)

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The Strategic Development of Talent

Health Inequality and Development (Studies in Development Economics and Policy)

Entrepreneurship and Economic Development (Studies in Development Economics and Policy)

Labour Relations in Development (Routledge Studies in Development Economics)

International Debt Relief (Routledge Studies in Development Economics)

Poverty of 'Development Economics'

Advancing Development: Core Themes in Global Economics (Studies in Development Economics and Policy)

The Economics of Sustainable Development

The Asymmetries of Globalization (Routledge Studies in Development Economics)

Development Finance in the Global Economy: The Road Ahead (Studies in Development Economics and Policy)

Wider Perspectives on Global Development (Studies in Development Ec and Policy)

The Politics of Technology in Latin America (Unu Intech Studies in New Technologies and Development)

Human Development Report 2009: Overcoming Barriers: Human Mobility and Development

Ideas, Policies and Economic Development in the Americas (Routledge Studies in Development Economics)

International experience and international development

Contemporary Issues in Development Economics

Evaluating the Impact of Leadership Development

Landslides: Causes, Types and Effects

Women, Culture, and Development: A Study of Human Capabilities (Studies in Development Economics)

Social Capital and Economic Development (Fundamentals of Development Economics)

Feminist Visions of Development: Gender Analysis and Policy (Routledge Studies in Development Economics)

Microfinance Perils and Prospects (Routledge Studies in Development Economics)

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New Sources of Development Finance (UNU-WIDER Studies in Development Economics)

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Hunger and Public Action (Wider Studies in Development Economics)

Targeting Development (Routledge Studies in Development Economics)

The Strategic Development of Talent

Health Inequality and Development (Studies in Development Economics and Policy)

Entrepreneurship and Economic Development (Studies in Development Economics and Policy)

Labour Relations in Development (Routledge Studies in Development Economics)

International Debt Relief (Routledge Studies in Development Economics)

Poverty of 'Development Economics'

Advancing Development: Core Themes in Global Economics (Studies in Development Economics and Policy)

The Economics of Sustainable Development

The Asymmetries of Globalization (Routledge Studies in Development Economics)

Development Finance in the Global Economy: The Road Ahead (Studies in Development Economics and Policy)

Wider Perspectives on Global Development (Studies in Development Ec and Policy)

The Politics of Technology in Latin America (Unu Intech Studies in New Technologies and Development)

Human Development Report 2009: Overcoming Barriers: Human Mobility and Development

Ideas, Policies and Economic Development in the Americas (Routledge Studies in Development Economics)

International experience and international development

Contemporary Issues in Development Economics

Evaluating the Impact of Leadership Development

Landslides: Causes, Types and Effects

Women, Culture, and Development: A Study of Human Capabilities (Studies in Development Economics)

Social Capital and Economic Development (Fundamentals of Development Economics)

Feminist Visions of Development: Gender Analysis and Policy (Routledge Studies in Development Economics)

Microfinance Perils and Prospects (Routledge Studies in Development Economics)

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