Brain Drain and Productivity Growth: Evidence From South Africa, 1947–2019

Abstract

This paper provides empirical evidence of how high-level human capital outflow could affect TFP-based economic development and vice versa. The concern of potential endogeneity between brain drain and economic development is addressed directly. First, structural break tests are employed to identify co-breaks between brain drain and growth. Results confirm that the association is plausibly bidirectional. Accordingly, a multiequation estimation methodology is employed to parameterize the association. Results suggest a negative impact of brain drain on productivity growth and that productivity growth lowers brain drain in South Africa. A set of robustness tests supports using a simultaneous equation estimation methodology for the emigration-productivity growth association.