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Brain Drain Controversy Master thesis BRAIN DRAIN CONTROVERSY Prepared by Oxana Borta Supervised by Professor Geoffrey Gooch Linköping University Department of Management and Economics Master’s of International and European Relations [email protected] Linköping, Sweden January 2007 Brain Drain Controversy Prepared by Oxana Borta ACKNOWLEDGEMENTS This thesis benefited from the help of few contributors. To begin with, I would like to express special thanks to the Swedish Institute, which has granted me a scholarship during my whole study-stay in Sweden. Also, special thanks I give to my supervisor Geoffrey Gooch, who patiently supported me with advices and fermenting ideas about the brain drain controversy. Moreover, I would like to thank my dearest friends Teona Kupunia, Serghei Samarkin, Ivan Timbs, and Eirini Souri who have shared their friendship with me and supported me whenever I needed it. I am most grateful to my dearest family for providing inspiration at the embryonic stages of the preparation of the thesis. I thank my husband and my mother for their support and love; and my most inner gratitude goes to my dearest daughter Roxana for her patience and love on these days where we were physically away from each other. This thesis is dedicated to my daughter Roxana 1 Brain Drain Controversy Prepared by Oxana Borta Table of Contents Abstract.............................................................................................................................. 4 The list of acronyms.......................................................................................................... 5 PART 1: Preliminary part ............................................................................................... 6 Chapter I: Introduction.................................................................................................... 6 1.1. Background & Problem definition.................................................................. 6 1.2. Conceptualizing brain drain/brain gain ......................................................... 7 1.3. Aim of the study & Research questions........................................................... 7 1.4. Theoretical and Empirical literature.............................................................. 8 1.5. Delimitation & Structure of the thesis ............................................................ 9 Chapter 2: Method and Methodology........................................................................... 12 2.1. Qualitative social research........................................................................... 12 2.2. An epistemological position.......................................................................... 13 2.3. An ontological position................................................................................. 14 2.4. The view of theory......................................................................................... 14 2.5. Documents as sources of data....................................................................... 15 2.6. Criticizing Qualitative Methods.................................................................... 15 Chapter 3: Theoretical brain drain/gain controversy .................................................... 17 3.1. Developing countries profile and human capital as a mean of development18 3.2. Workers’ aspirations as determinants of migration ..................................... 19 3.3. Traditional view of the brain drain phenomena ........................................... 21 3.4. Brain Gain hypothesis................................................................................... 21 3.5. Assessing brain drain/gain academic debate ............................................... 22 3.6. Three generations of the brain drain controversy ........................................ 23 3.6.1. First generation from the 1960s to the 1968th: The debate between Don Pantinkin and Harry Johnson; and the neoclassical growth model of the “laissez passer…” .............................................................................................................. 24 3.6.2. Second generation of the brain drain controversy from the 1970s to the 1990s: Towards a negative Brain Drain? ............................................................ 26 3.6.3. Third generation of the brain drain controversy-from 1990s and beyond: Towards a beneficial brain drain?.......................................................... 31 3.7. Conclusion .................................................................................................... 35 PART 2: Brain drain controversy through institutional lenses.................................. 36 Chapter 4: Brain Drain occurrence through the OECD’s lenses .................................. 36 4.1. Background................................................................................................... 36 4.2. Who is moving?............................................................................................. 38 4.3. The role of skilled workers for the economy of a country............................. 39 4.4. What drives highly skilled people to move internationally?......................... 40 4.5. What is the impact of brain drain on the source countries?......................... 43 4.6. Assessing some potential brain drain’ positive effects on the source countries 44 4.6.1. Remittances’ role .................................................................................. 44 4.6.2. “Boomerang effects” of remittances .................................................... 47 4.7. What is the impact of highly skilled migration on receiving countries?....... 48 4.8. Some OECD’s suggestions and policies....................................................... 49 2 Brain Drain Controversy Prepared by Oxana Borta Chapter 5: Brain Drain occurrence through WB’s lenses............................................. 51 5.1. WB’s profile .................................................................................................. 51 5.2. WB’s foreword .............................................................................................. 52 5.3. Knowledge economies as present reality and preferred future .................... 53 5.4. Drivers of Developing-to-Developed brain drain migration........................ 54 5.5. Brain drain impacts ...................................................................................... 55 5.5.1. Brain drain impacts on receiving countries.......................................... 56 5.5.2. Brain drain impact on sending countries.............................................. 56 5.5.3. But high-skilled migration is often beneficial for origin countries....... 57 5.6. The return migration as a tool for the beneficial brain drain ...................... 58 5.7. “Temporary” skilled Labor Migration as a permanent way of life.............. 58 5.8. Remittances’ effect on the source country .................................................... 59 5.8.1. Remittances: streamlining transmission and increasing developmental impact 60 5.8.2. Remittances can improve country creditworthiness and thereby improve its access to international capital markets............................................................ 60 5.8.3. Remittance securitization can help countries raise external financing by using structured finance techniques...................................................................... 61 5.8.4. Remittances are stable and may be countercyclical............................. 61 5.8.5. Large remittance inflows can lead to exchange rate appreciation and lower export competitiveness................................................................................ 61 5.8.6. The effect of remittances on inequality is unclear ................................ 62 5.8.7. Government policies can affect remittance flows ................................. 62 5.9. Diaspora Networks as a tool for the beneficial brain drain......................... 64 5.9.1. Organizing the Diaspora ...................................................................... 64 5.9.2. Leveraging Diasporas of Talent ........................................................... 66 5.9.3. Diaspora activities are easy to initiate, but problematic to carry on... 66 5.10. Other productive choices to migrate......................................................... 67 PART 3: Analyzing Brain Drain Controversy............................................................. 68 Chapter 6: Analyzing the outcomes of the research ..................................................... 68 6.1. How has been brain drain/gain theoretical debate been contrived?............ 68 6.2. The OECD and WB’s 3 Rs strategies as possible tools for a beneficial brain drain 70 6.2.1. Analyzing the 1st R: Recruitment........................................................... 70 6.2.2. Analyzing the 2nd R: Remittances ........................................................ 72 6.2.3. Analyzing the 3rd R: Return skilled- migration.................................... 74 6.3. Where do OECD and WB stand in the brain drain/gain debate?................. 76 Chapter 7: Conclusion: Back to the brain drain controversy........................................ 80 Bibliography .................................................................................................................... 83 3 Brain Drain Controversy Prepared by Oxana Borta Abstract Like many birds, but unlike most other animals, humans are a migratory species. Indeed, migration is as old
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