Brain Drain or Brain Gain? The New Economics of Brain Drain Reconsidered

Abstract

The debate on the economic implications of skilled migration for the home countries is a long-lasting phenomenon. This issue has been discussed for almost fifty years. During this period, most of the scholars (eg. Bhagwati and Hamada 1974, Portes, 1976) believed that skilled migration is detrimental for the countries of origin, while the host economies benefited from the inflow of skilled labor. Thus the notion of brain drain - harmful for the developing economies, and brain gain - profitable for developed countries - came into being, and is still present in the literature. However, in the mid of 1990s, a new strand of research on skilled migration became visible. This new school - the new economics of brain drain - argued that brain drain must not be detrimental for the countries of origin. Under certain circumstances, migration of professionals from developing economies may be in fact a "blessing in disguise" - and the potential gains could be higher than costs.The economists (such as Mountford, 1997, Beine et al., 2001 and 2003, Stark, 2005) from the new economics of brain drain have renewed the discussion on the economic consequences of skilled migration. However, their optimistic view of brain drain has been heavily criticized. The paper presents the main propositions of this new approach. Then it discusses the claims of the opponents of new economics of brain drain and brings new explanations why the brain drain is detrimental: both on theoretical and empirical ground.