The Migration of Knowledge Workers: Second Generation Effects of India’s Brain Drain

Citation

Sanyal, A. (2001), "The Migration of Knowledge Workers: Second Generation Effects of India’s Brain Drain", International Journal of Social Economics, Vol. 28 No. 4, pp. 380-391. https://doi.org/10.1108/ijse.2001.28.4.380.3

In the past the question of the emigration of skilled and educated professionals had engaged European scholars and policy makers when the so‐called “Brain Drain” to North America assumed worrisome proportions. More recently the question has reappeared as a major concern for developing countries, which appear to be losing their skilled professionals to the markets of North America and Europe. Basic questions in this literature, however, remain unresolved: how much of the emigration is actually a loss to the sending country, how can it be measured, how much does the host country gain, can the emigration be taken calmly as just a factor price equalisation process that leaves everyone better off?

The author of the interesting monograph under review labels this genre of questions as belonging to the first generation issues of the brain‐drain problem. It is time, he argues, that emigration of professionals to richer countries be taken as a datum of the problematic, and research effort be focused on exploring how a developing country can benefit from its nationals abroad. Rather than worrying about the flow, he suggests that we take the stock of a country’s professionals abroad as given and explore ways of maximising the sending country’s returns from this stock. The book explores this and related questions – the second generation problems in his terminology – and focuses on the possible routes by which the Indian society can get a “return” from its large and well‐established stock of emigrant professionals in the USA.

The author reports that the reverse flow of resources from the Indian diaspora abroad has taken three major forms: portfolio investment, direct investment projects located in India and the return of professionals to India to work on some of these direct investment projects. The author collates relevant information from various sources to show that project investment and return of personnel to work on productive projects do not appear to be very significant. Portfolio investment, on the other hand, is quantitatively significant but its benefit to the economy is doubtful. Given that the government of India provides a number of incentives to attract foreign exchange from nationals abroad, the author argues that these funds could be procured commercially at equivalent if not lower costs. The author then asks whether attracting emigrants’ resources through these avenues into general business and industry is at all a useful exercise. The underlying suggestion is that return to business projects cannot be any higher in India than elsewhere, and thus attracting funds in these areas would require substantial incentives that would defeat the purpose.

Given these observations, the author asks if there are sectors where the social return to investment is much higher than the market return, while the latter equals global competitive rates of return. These could be sectors where non‐resident funds could be profitably channelled. Even accounting for some incentive costs for attracting these funds, the society can reap a higher return on such investments, while non‐resident funds get a competitive return plus incentive. The author identifies health and education as two major sectors that qualify.

To argue his case, the author suggests a model of skill outflow from India. The model, though not fully articulated, is based on the following propositions. The outflow of human resources is driven by the mismatch of the potential productivity of skilled professionals trained by the Indian education system, and the ability of the economic system to offer jobs that pay them at their potential productivity. Though in the first instance it looks like a failure of the economic system which is unable to produce competitive real wages for skilled professionals, actually it is nested in a basic failure of the system of human capital formation, comprising education and health. An illiterate workforce, the outcome of the same system that produces India’s emigrant knowledge workers, and poor health, perpetuate the low productivity of the economic system. The resulting low income creates the incapacity of low‐income families to finance the education of their children, or even to bear the opportunity cost of a child going to school when education is free. Poor health, malnutrition and child mortality reduce the scope and effectiveness of schooling when it is pursued. The chain of causation is completed when the resulting low productivity of the system constrains the potential earnings of high‐skilled professionals, the luckier products of the same education system. The same overall low productivity also limits the improvement and extension of the health and education systems as well, creating a second loop that reproduces and perpetuates the structure.

Given this vision the social returns on investment in the education and health sectors not only are much higher than their market returns, but also are capable of eventually correcting the structure that is responsible for the brain drain in the first place. The author therefore suggests that a more useful approach to non‐residents’ contribution would be to channel it into education and health, than to try to attract it into general business and industry. The education and health sectors are also more suited as receptacles for the skills of Indians abroad who are mostly professionals: doctors, engineers, scientists, academics and high‐skilled workers. If non‐residents’ contributions of money, skill and vision can be utilised to make a dent in the baneful cycle, it may help to restore the human capital taken away from the system and may some day even produce a break for the first generation problem itself.

The book presents interesting sociological data on the emigrants to the USA who left India at various times in the past. The analysis tries to relate the length of stay in the USA with the emigrants’ possible US visa status, tenure situation, income and wealth. The correlation is then used to partition the emigrants into two groups, those having left India before 1980 and those since, expecting different modes of involvement from these two groups in possible projects in India. The difference is expected to be in terms of the nature of principal contribution to projects in India: money, expertise or actual skilled manpower.

The book reports a series of interesting interviews with non‐resident Indians, former non‐residents who subsequently came back to India, and residents who are involved with these issues in various capacities. These interviews show that a number of non‐residents or returnees are actually working in the health and education sectors in India. While the size of such involvement is not significant, the interviews throw light on the hurdles to such participation and what kind of incentives can be useful. It may be a rewarding effort to design appropriate strategies and supporting institutions for the large‐scale involvement of emigrants’ resources, money, skill and vision, for transforming India’s education and health sectors.

The book has a wealth of data on emigrants from India spread over 50 tables, besides sociological material. It also provides a useful overview of the literature on the brain drain in general and the Indian emigration in particular. In a separate chapter the author summarises the stereotyped but unsettled perceptions about the brain drain that have arisen in the literature over the years, and provides useful references to related work.