Magazine 2013
International Peer-Reviewed Journal
RH, VOL. 3 JULY 2013
Brain - Drain Versus Brain- Gain
Daksha Dave
ABSTRACT
Migration is a very common phenomenon in world history. A person is moving from one place to
another place in search of employment, opportunities, political and social reasons. When a highly
skilled person is moving from native place to developed countries for better opportunities is consider as
a brain –drain. After globalization India is the second country in world, for exporting a highest number
of highly skilled person in developed countries. This brain- drain is considered as a huge economic
loss. Fortunately India has converted her loss in to gain. This paper is focusing how India has converted
her brain- drain into brain- gain and how to reach win- win scenario. The paper is based on secondary
data. The paper made a positive analysis of emigration of highly skilled persons. The result of analysis
proved that emigration of highly skilled persons is benefiting to both countries. India is receiving
advantages from migrants in terms of remittance, exchanges of technological knowledge, growing
bilateral investment, and expansions of international trade.
Keywords - Brain Drain, Brain-Gain, Bilateral Investment, Remittance, Technological Development.
Introduction
In the global era, the free movement of capital goods, technology, information and highly skilled labour
has become a key component of economic growth. In competitive age every country tries to increase their
market share in international trade, the developed countries are facing shortage of highly qualified labour
therefor they attracting the best and brightest mind from developing countries to win the competition. With a
well-educated and large work force India, is an important provider of highly skilled specialties for many developed
economies. The departure abroad of a large number of well-trained Indians naturally has led to concerns about
“brain drain” in India. In 2010, India with an estimated stock of 11.4 million emigrants was the second emigration
country in the world, behind Mexico (11.9million).
The available data on the numbers of highly skilled Indian emigrants suggest that the country does not
suffer seriously from brain drain, Because the emigration rate of tertiary-educated population from India had
estimated low (in 2000 just only 4.3%), as with other emerging economies and certainly compared to small
countries like Guyana, which has 89% of its tertiary-educated population abroad, or Grenada and Jamaica with
a highly skilled emigration rate of 85.1%. Here an attempt has made to how dose India converted her problem
of brain –drain in to brain –gain and win position in the world economy.
Review of literature
According to Meyer & Brown (1999) in his study on “Brain Gain, ‘he indicated two ways to implement the
brain gain: either through the return of the expatriates to the country of origin (return option) or through their
remote mobilization and association to the development of home country (Diaspora option).
According to Dustmann and Krichkamp (2002), in his study on “Migration’, Emigrated successful skilled
persons are returning as an entrepreneur to their home country and contributing in nation’s development.
Tette (2003) proposed three strategies for addressing the problem of brain drain: the retention, return, and
Diaspora options.
According to Uwe Hunger (2009), India is a prime example of how Third World elites (former brain drain
emigrants) may contribute to the development of their home country. Although it is still a developing country,
India now appears to be one of the most attractive and dynamic centers for technology development worldwide.
The role of information technology in India is seen as an opportunity for the country to overcome poverty and
underdevelopment (UNDP 2001a).
The recent theoretical and empirical literature on skilled migration from less developed countries has
reevaluated the possibility that international labor mobility may benefit human capital in the sending countries
in the long run. There are three channels that have been emphasized: incentives, remittances and returns.
Beginning with Elmenstein and Stark (1998) and followed by Beine, Docquierand Rapoport (2001), Stark
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(
2003) and Schiff (2005) and Beine, Docquier and Rapoport (2006), the theoretical literature on international
migration of highly skilled workers has noticed that, at least in theory, access to international labor markets,
where returns to human capital are higher than domestic returns, may induce people in less developed countries
to pursue higher education.
The origins of problem: “Emigration has a positive effect on Indian Economy.”
Objectives of the study: The objective of the study is to analyze and interpret the Indian migration trend,
especially in Europeans countries and gaining through migrants. The paper is an attempt to analyze the benefit
India is gaining from emigration of skilled persons.to examine the India’s migration trends in global context,how
dose India converted her problem of brain –drain in to brain –gain and win in the global competition.
Evaluation of Indian Migration Trend
The geographical distribution of Indian migrant destination countries is defined by the level of qualification.
The migration flows of the highly skilled are oriented towards traditional Indian destinations, namely: the US,
Canada, and the UK and more recently toward non-English speaking EU countries. This wave was accelerated
by Indian integration into the world economy. Semi-skilled and unskilled Indian workers are predominantly
concentrated in the high-income countries of the Gulf Cooperation Council. These migrants have also been
viewed for a long time as key providers of remittances. Current emigrants from India show an evolution of
Indian labour migration, confirmed by the presence of highly-skilled flows towards the Gulf, a destination
traditionally reserved for un skilled and semi-skilled Indians. The same trend is recorded regarding highly-
skilled flows towards the US, Canada, Australia and Europe where unskilled Indian migrants mix with more
qualified categories.
The internationalization of knowledge creation and the rapid expansion of R&D activities determined the
diversification of receiving countries for professionals and skilled workers from India. Traditional migration
streams of highly skilled Indian were directed toward the United States and the UK. In the2000s, new non-
English-speaking destinations emerged in Europe such as Italy, France, Germany, and other European countries.
The number of skilled Indian migrants moving to U.S. Canada, Australia, and Europe where unskilled Indian
migrants mix with categories that are more qualified.
Converting Indian brain drain into brain gain
The brain drain is effectively an export of human resources such as – “education services” which has
inadvertently “become a money machine for countries such as the US contributing over $7bn to the US
economy”. However it is important to note the knowledge and wealth generated is twofold, both for the
country of origin and host country, who acquire an additional human capital to fill labour gaps thus increasing
economic development. The country of origin exporting their skilled and highly educated workforce benefit
from a brain gain both in terms of the increase in the labour power they possess, but also in the fact “skilled
migrants leaving the country generate increased demand for higher level education amongst the population”.
Furthermore, the sending back of remittances increases economic development in the country and standard
of living. Thus, in the end brain drain may be converting into brain gain something particularly relevant to India.
Remittance: The role of the overseas Indian community in the development of the homeland concerned only
financial resources. Estimated at 30 million and with a presence in 189 countries, the Indian Diaspora produces
an annual economic income of about $400 billion, almost 30 percent of India’s GDP. Desai, Kapur and McHale
(
2001) found that the 1 million Indians in the United States who represent only 0.1 percent of India’s population
earn the equivalent of about 10% of India’s national income. The estimated volume of remittances in 2010 was
55 billion or 3.9% as a share of GDP. Despite the economic crisis since 2008, the volume of remittances has
$
remained resilient due to the geographical diversification of Indian migrants. After a 1% fall off in 2009 compared
to 2008($49.9 billion), in 2010 the total amount climbed to $55 billion. Naturally, these financial resources
contributed to development processes in India.
FIG: 1 REMITTACNE INFLOWS IN INDIA (IN MILLION US$)
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From the above figure it is clear that India’s remittances increased from 2384 million (1990) US$ to 64000
million (2011) US$ within two decades, it increased nearly 280 times which has greatly contributed in India’s
economic development.
Transition to a knowledge economy
The contribution of US-based Indian IT specialists to the growth of the software industry in India is an
illustration of a win-win scenario, in which the international mobility of Indian skilled professionals has helped
India’s transition to a knowledge economy, has led to the development, and has increased the innovation
capacity of the host country. Currently, about 14% of India’s net domestic product is composed of knowledge
intensive activities, mostly in the services sector. The Indian IT-BPO industry had revenues of $71.7 billion in
2009, with the IT software and services industry accounting for $60 billion of these revenues. During this period,
India’s direct employment increased nearly 2.23 million, an addition of 2, 26,000 employees, while indirect job
increased 8 million. As a proportion of national GDP, IT sector revenues have increasedfrom 1.2% in 1998 to
5
.8% in 2009. Export revenues are estimated at $47.3 billion in 2009, representing 66% of the total IT-BPO
industry revenues. Software and services exports are
expected to constitute more than 99 percent of total exports, employing over 1.76 million employees. Following
table represent the export market distribution for Indian IT-BPO
Table: Exports markets distribution for Indian IT-BPO
Country
2005
68.30%
25.13%
8.6%
2006
2007
61.40%
31.00%
8.5%
2008
America
67.18%
30.10%
7.69%
60.00%
Europe23.10%
Rest of the world
9.00%
Source: Indian IT-BPO Industry 2009: NASSCOM Analysis
Indian IT specialists settled abroad are bringing benefits for both home and for host country. India
accelerated its transition to a knowledge economy taking advantage of the updated skills of its highly skilled
workers abroad and the entrepreneurial networks that they established there.
Growing bilateral investment flows between the country of origin and destination countries
Due to IT industry development a well-known Companies like Microsoft, IBM, Hughes Software, Intel, Oracle,
GE, CISCO established their R&D centers in India. The number of centers related to ICTs grew from fewer than
1
00 in 2003 to about 750 by the end of 2009 (UNESCO Science Report 2010) Today, investment flows are not
only a one-way movement directed toward India but a two-way. Business networks established by Indian
migrants in their countries of destination facilitate capital circulation between India and its foreign partners. The
biggest companies from India, in pursuit of technology, start also to invest abroad.
International Trade Effects
Indians abroad represent an important market for products from India. Their contribution to the
expansion of trade relations is possible through direct or indirect effects. Direct effects come from expatriates’
demands for Indian products. Besides their own consumption, they may induce new consumption habits in the
host country. Indian migrants have demonstrably affected and contributing to the promotion of local goods
such as basmati rice, Indian films, etc. The growing consumption of Basmati rice in the UK due to Diasporas
influence is a key driver of growth of Basmati rice exports. In 2010, the import into the EU from India was
estimated at •33.2 billion and agricultural products represented 8%33. On the one hand, Indians abroad create
a new demand for Indian products and on the other hand, the native population is encouraged to consume as
well. During the last few years, Indo-EU trade relations have been strengthened. The EU is India is largest
trading partner and its main source of foreign direct investment. Available data shows a dramatic increase in
EU-Indian trade. The EU represents 21% of India’s total exports and 16% of India’s total imports. India accounts
for a small but rapidly growing share of EU trade: 2.4% of the EU’s total exports and 1.9% of the EU’s total
imports
The indirect role of overseas Indians in trade expansion is expressing through the importance of networks,
as a source of information and business contacts i.e. Indian doctors settled in the UK permitted India to make
a name in the health care sector resulted in the development of medical tourism in India. According to the
Indian Ministry of Tourism, this market was estimated at $330 million in 2004 and it generated approximately $2
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billion in 2010. Apart from healthcare services, this category of tourists generated other revenues for India by
visiting famous sites in India and by buying traditional products.
7
) Conclusion
This paper is focusing on how Indian expatriates offer opportunities for mutually beneficial growth in both
origin and destination countries. These professionals contribute not only to the development of the country
where they live and work but also to the economy of the country of origin. Indian human capital in abroad can
be leveraged by India to take advantage of its resources but also by destination countries for the fulfillment of
skill shortages. With a large number of young and educated English speaking people, India plays a major role
in international migration. In the context of the intensification of a global knowledge economy, the demographic
trends, and the changes induced by the crisis, the EU could take advantage of Indian migrants turning towards
European destinations. The IT industry in Bangalore created millions of employment and good rapport with
worldwide.
8
) Suggestions
1)
In order to continue to take advantage of the international mobility of highly skilled Indians, India, and
Europe have to cooperate in the formulation of joint measures taking into account the interests of all
stakeholders: country of origin, country of destination and the migrants themselves.
2)
Europe has to promote integration policies for Indian migrants ensuring long-term economic benefits
rather than temporary programs, which offer only short-term solutions to labour shortage problems.
3)
The redirection of mobility flows between evolutionary poles of migration emphasizes the changing
geopolitics at work: asymmetric traditional relationships have diminished and the circulation paradigm
redistributes current moves, opening new options and perspectives.
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