Exploring the Nexus between Highly-Skilled Migrants, the Kafala System, and Development in the UAE

Abstract This article explores the nexus between immigration of highly-skilled persons and economic growth in the Arab Gulf states, until now a significantly understudied topic. It is argued that long-term growth primarily stems from technological progress and the article conducts a qualitative analysis of the degree to which the group of highly skilled migrants contributes to technological progress. The paper focusses on the United Arab Emirates (UAE) but reflects general issues pertaining to the Arab Gulf states. It concludes that the policy framework that manages the migration system, the so-called Kafala (sponsorship) system, indeed has positive effects, namely that it ensures that all migrants are in employment and the skills of the migrants complement rather than overlap with the skills of the locals. However, asymmetric power balance between sponsor and migrant, the built-in inflexibility in relation to job mobility, and the lack of a broader sense of inclusion in the hosting country all diminish the contribution of the highly-skilled migrants to these economies. A culture of transience prevails which leads to short term thinking, less innovation and less likelihood of entrepreneurship. Finally, the article finds that due to demographic realities, lack of incentives for the migrants to pursue knowledge transfer and the general educational level in society, transfer of technology most likely takes place from one migrant to the next, thereby bypassing the local population.