ldcr2012 ch4 en PDF

UNCTAD/LDC/2012
U n i t e d N at i o n s C o n f e r e n c e o n T r a d e A n d D e v e l o p m e n t
The Least Developed Countries Report 2012

Harnessing Remittances and Diaspora Knowledge to Build Productive Capacities
Chapter 4
Mobilizing the Diaspora:
From Brain Drain to Brain Gain
New York and Geneva, 2013

4
CHAPTER
Mobilizing the Diaspora:
From Brain Drain to Brain Gain
86 The Least Developed Countries Report 2012
A. Introduction
The present chapter analyses two aspects of international migration in the

LDCs not yet discussed in this Report. First, it studies the flows of knowledge and
technology stemming from the international movement of labour — particularly
from the migration of so-called high-skilled persons — , their impact on the
Brain drain is more prevalent human capital endowment and technological accumulation of LDCs, and the
in LDCs than in other developing emergence of diaspora knowledge networks. Second, the chapter examines
the impact of international migration on the business activities of these countries
countries.
through two mechanisms: international trade and investment flows between
home and host countries; and returnee entrepreneurship.
The issues of brain drain, brain gain, brain circulation and the effects of
diaspora networks on home countries are very contentious. They involve complex
processes produced by economic, political and social factors and strongly
influenced by policies in both sending and receiving countries. Mainstream
academic and policy discussions have swung from a pessimistic view to a
rather optimistic position on these processes. A significant share of the literature
is theoretical, but lacks empirical validation. Another portion of research focuses
on national or local case studies, the conclusions of which cannot always be
generalized. There is scarcely any study of these processes for the group of
The potential contribution stemming LDCs, which is what this chapter strives to do.1 It shows that brain drain is
from diaspora is not automatically more prevalent in LDCs than in other developing countries and is especially
realized. strong in islands and some African LDCs. However, the potential contribution
to the home country stemming from the strong presence abroad of high-skilled
LDC nationals and other members of the diaspora is not automatically realized.
This is especially true of knowledge transfer and sharing, the strengthening of
trade and investment linkages, or the contribution of returnees to their home
country. Achieving this potential depends on a series of institutional, economic
and political conditions, which are so far missing in most LDCs. Therefore, policy
action by home and host countries, as well as by the international community, is
crucial in order to foster or strengthen positive diaspora effects on LDCs.
The chapter is organized as follows. Section AB explains how home country

Policy action is crucial in order economies can be adversely affected by brain drain and analyses its trends
to foster or strengthen positive globally and in the LDCs. Incorporating more recent research on the issue,
diaspora effects on LDCs. Section C analyses how the international movement of skilled persons has
the potential to benefit the countries of origin, and examines to what extent
LDCs are availing themselves of these opportunities. Section D summarizes and
concludes.
B. Brain drain and its adverse

implications for home countries
All international movement of labour

1. Analytical framework
entails some degree of knowledge
flow across countries. Labour movements and knowledge flows. All international movement of
labour entails some degree of knowledge flow across countries, which takes
place in two basic forms. First, embodied knowledge directly accompanies
people whenever they move across borders temporarily or permanently, “carrying
with them” the knowledge which has been accumulated through education,
learning and/or experience. Second, once migrants are settled abroad they
can share their knowledge, skills and technology with their home country at a
CHAPTER 4. Mobilizing the Diaspora: From Brain Drain to Brain Gain 87
distance (e.g. through information and communication technologties (ICTs)), i.e.

without this involving the cross-border movement of natural persons.
International migrants consist of people with all levels of educational

background, including those with no formal education and those with some
degree of primary, secondary or tertiary education. Differences in knowledge
and skills between non-migrants and migrants and among the latter tend to Time spent studying, living and
become more accentuated as the migratory experience unfolds. Time spent working abroad usually allows
studying, living and working abroad usually allows migrants to be exposed to migrants to acquire new skills.
different cultural and business environments and to acquire new skills, such as
language, craft, technological, academic, professional, managerial, networking
and relational capabilities. This human capital accumulation abroad takes place
through different mechanisms, including formal education, informal channels
(e.g. on-the-job training, learning by doing while working) and/or accumulated
experience (Dustmann et al., 2011; Domingues dos Santos and Postel-Vinay,
2003). All emigrants can acquire some type of new skills and knowledge, but
this tends to happen more intensively the more skilled emigrants are, through a
process of cumulative causation driven by the increasing returns that are typical
of knowledge and its accumulation.
All emigrants can acquire some type
While all international migrants have some knowledge and skills, a large of new skills and knowledge, but this
portion of the research and policy discussions on brain drain and brain
tends to happen more intensively
circulation focuses on so-called “high-skilled migrants”. These are migrants who
have some length of tertiary (i.e. university-level) education, ranging from one the more skilled emigrants are.
year of study at this level to post-doctorate graduates.2 Statistics generally use
this definition of high-skilled worker. Accordingly, brain drain has been defined as
“the migration of engineers, physicians, scientists, and other very highly skilled
professionals with university training” (Docquier and Rapoport, 2008).
Two other categories largely overlap with that of high-skilled workers:

knowledge workers and talent. Knowledge workers are those persons who
possess specialized knowledge and are involved in high value-added and
high-productivity jobs that are essential for the global knowledge economy and
society. The category of internationally mobile talent is composed of three broad Brain drain is the migration of
types: 1. directly productive talent (entrepreneurs, executives, managers, and
engineers, physicians, scientists,
technical engineers); 2. scientific talent (academics, scientists and international
and other very highly skilled
students); and 3. health and cultural talent (physicians, nurses, artists, musicians,
writers, and media-related people) (Solimano, 2008). professionals with university training.
The knowledge-based economy and brain drain. International movements

of skilled people or talent are a feature of the knowledge-based economy (David
and Foray, 2002; Foray, 2006; Hollanders et al., 1999). The latter also has the
following defining features:
• It produces increasingly knowledge-intensive goods and services, which in

turn require skilled labour inputs for their production. This raises demand for
skills (or talent) both in terms of the number of workers and in terms of the
skill level of each worker;
• The intangible capital stock (resulting from investment in education, training, International movements of skilled
research and development, health, etc.) tends to become larger than people or talent are a feature of the
physical capital (physical infrastructure and equipment, natural resources, knowledge-based economy.
etc.);
• Knowledge is increasingly becoming the crucial determinant of countries’
long-term growth and international competitiveness.
Given these developments, knowledge is part of UNCTAD’s definition of

productive capacities and plays an essential role in the development of LDCs
(UNCTAD, 2006: 59–84, 2007: 1–10).
The agglomeration economies typical of knowledge-intensive activities lead

to the concentration of high-skilled people in a few locations (nationally) or
countries (internationally). Talented individuals rarely develop their full potential
by working in isolation. A new idea, a new product, a new production process
or a new scientific theory requires human interaction and cooperation. An
entrepreneur needs access to capital, markets and technology to develop his
or her new ideas and visions. A scientist needs a certain number of peers to
discuss his or her theories and present research papers. As a result, highly
skilled people from both developed and developing countries — including LDCs
The agglomeration economies of — who decide to emigrate mainly choose developed countries as their migration
knowledge-intensive activities lead destination (see subsection B2a below).
to the concentration of high-skilled
people in a few countries. Recent research3 on high-skilled labour identifies the following main factors
that drive its international mobility:
• More favourable conditions for professional development in host countries.

In destination countries, high-skilled emigrants typically earn higher salaries
than in their home countries. The pay gap is such that salaries in developed
destination countries are sometimes 20 times higher than in LDC countries
of origin. Host countries allow higher labour productivity, thanks to a
better institutional environment and to the externalities stemming from the
agglomeration of knowledge workers. Complementarities between talent,
capital and technology reinforce these agglomeration economies. Moreover,
destination countries offer better opportunities for professional development
in terms of career advancement prospects as well as better living conditions
The main factors driving international for emigrants and their families, superior infrastructure necessary for work
mobility of high-skilled labour are: and daily life, and political stability. In most cases, host countries offer more
(a) More favourable conditions for favourable conditions for research and academic interaction for scientists,
professional development in host as well as more secure property rights for entrepreneurs;
countries; (b) Adverse conditions in • Adverse conditions in home countries (e.g. political strife, civil conflict,
home countries; (c) Lower relative insecurity), which act as push factors of international migration;
migration costs for the high-skilled;
• Lower relative migration costs for the high-skilled as compared to the low-
(d) Selective immigration policies for skilled, given the former’s easier access to information on host country
attracting foreign talent. labour markets, more favourable migration conditions and their greater
access to transportation;
• Selective immigration policies for attracting foreign talent enacted especially
by several developed countries.
2. Brain drain trends
The following section briefly analyses global trends and future prospects for
international flows of high-skilled labour, in order to put trends concerning brain
drain and knowledge circulation in LDCs into perspective.
a) Global trends
Current flows of high-skilled workers. Brain drain has been increasing

Brain drain has been increasing worldwide in absolute figures. The number of high-skilled international migrants
worldwide in absolute figures. climbed from 16.4 million in 1990 to 26.2 million in 2000, which implies an annual
growth rate of 4.8 per cent. Between 2000 and 2010, the emigration of highly
educated persons continued to increase, rising at an estimated annual pace of 4
per cent (based on figures for the United States, the largest destination for brain
drain worldwide and home to some 40 per cent of all high-skilled emigrants).
Complete data on worldwide bilateral flows of high-skilled labour are available
for 1990 and 2000, because at the time of writing this Report, most results of
the 2010 round of population censuses (the major primary source for brain drain
statistics) had not yet been published.4 The UNCTAD secretariat has collected
more updated indicators and information on high-skilled emigration from LDCs

and has also commissioned case studies on some of these countries. Together,
these sources of information and data provide solid evidence for analysing major
flows, trends and structural features of brain drain.
International immigration is selective, since it is skewed towards highly International immigration is selective,
educated people. Twenty-six per cent of all international migrants are tertiary- since it is skewed towards highly
educated (according to data for 2000), while only 11.3 per cent of the world educated people.
labour force have tertiary education. In developing countries, university-level
workers account for a much lower five per cent of the labour force.
The selectivity of international migration is also reflected by the different

emigration rates, i.e. the number of emigrants as a share of the corresponding
labour force segment. Worldwide, the emigration rate is 6.6 per cent for all
tertiary-educated people, well above the 2.63 per cent emigration rate of low-
skilled people. Moreover, the degree of skill-based selectivity of immigration
varies sharply according to the development level of the host country, rising The degree of skill-based selectivity
with the development level of the destination country of international migrants. of immigration rises with the
In developed countries, 35 per cent of immigrants are tertiary-educated, while in development level of the
other developing countries (i.e. those developing countries which are not LDCs)
destination country.
this share is one-third of that level: 13 per cent. In LDCs, by contrast, a mere
four per cent of immigrants are highly skilled (chart 33). Immigration selectivity
has been increasing. Worldwide, the total stock of high-skilled immigrants rose
by 60 per cent between 1990 and 2000, while that of low-skilled migrants went
up by a modest 16 per cent. This is largely driven by immigration trends in
developed countries. There, the selection rate (i.e. the tertiary-educated as a
share of all immigrants) rose by six percentage points in the ten years to 2000.
This confirms the tendency of human capital to agglomerate in locations where it
More than half of international high-
is already relatively abundant (Docquier, Marfouk et al. 2011), a tendency which
is reinforced by selective immigration policies in major destination countries. skilled migration is South–North.
More than half of international high-skilled migration is South–North.

The second most important flow of tertiary-educated people is North–
North: migration among developed countries amounts to almost one-third of
Chart 33. Immigrant selection rate of major host country groups, 2000
(Share of worldwide and LDC immigrants with tertiary education)
40
35.3 34.6
30
Percentage
20 18.7
12.9
10 9.4
4.6 4.1
1.0
0
Developed Transition Other developing LDCs
countries economies countries
All immigrants LDC immigrants
Source: UNCTAD secretariat calculations, based on data from Docquier et al. (2011).
international skilled labour flows. Skilled migration flows are highly concentrated
in a few destination countries, and developed countries absorb some 80 per
cent of all international high-skilled migratory flows. The major country is the
United States, which hosts some 40 per cent of all internationally mobile high-
Skilled migration flows are highly
skilled people. It is followed by Canada, Australia, United Kingdom, Germany,
concentrated in a few destination
Russian Federation and France.5 The professions most affected by brain drain
countries, and developed countries are computer specialists, accountants, managers, medical doctors and nurses
absorb some 80 per cent of these and, among higher education levels, scientists and academics.
flows.
The gender balance of brain drain seems to be closely associated with the
level of development of destination countries. In developed countries, high-
skilled men and women each account for half of total high-skilled immigration.
In the group of other developing countries, two-thirds of all tertiary-educated
immigrants are male, while in LDCs this share is 71 per cent. In developing
countries of origin, genders differ slightly in their brain drain rates (i.e. the number
of tertiary-educated emigrants as a share of the labour force at the same level
of education in the home country). They are five per cent for males and six per
cent for females. The main reason for this discrepancy is that tertiary education
enrolment in home countries is higher for males than for females (Docquier and
The international mobility of high- Rapoport, 2012).
skilled persons is likely to continue
in the future. Future outlook. Based on underlying forces pushing current international
migratory flows, and barring major disruptions in the international economy, the
international mobility of high-skilled persons is likely to continue in the future,
largely as a result of the following trends:
• The growing knowledge intensity of the world economy (see section B1);
• The decline in demographic growth and consequent ageing of the world
population, as well as the expanding demand for health services which
accompanies development;
• The steadily falling costs of transportation and communication;
• Economic interdependence brought about by globalization;
An estimated 1.3 million workers
• The lingering income gaps between professionals in developed and in
with university-level education had
developing countries.
emigrated from LDCs by 2000.
The first two processes above are progressing at a faster pace in developed
countries than in developing countries. Together with the other three, they are
likely to continue driving international movement of skilled labour in the future.6
b) LDC trends
An estimated 1.3 million workers with university-level education had emigrated

from LDCs by 2000. While this was 58 per cent more than a decade earlier,
bilateral flows developed unevenly. The greatest increase was in emigration to
developed countries, which almost doubled during this period (table 13). By
During the 2000s, the number of now the total stock is estimated to have exceeded two million.
high-skilled persons migrating
from LDCs to the main destination During the 2000s, the number of high-skilled persons migrating from LDCs
countries continued to grow. to the main destination countries continued to grow. In the United States,
the number of tertiary-educated residents born in LDCs rose by 78.7 per
cent between 2000 and 2010. Table 14 provides the corresponding data, as
well as indirect evidence of developments in brain drain from LDCs to major
destination countries.7 These data indicate continuing growth in migration
of high-skilled LDC nationals to other developed countries. Such a result is
somewhat surprising, since it comes in spite of two major developments that
are likely to have depressed immigration in those countries in the 2000s: first,
the immigration backlash following the 9/11 attacks; and, second, the world
economic and financial crises which started in 2007. These developments seem
Table 13. International high-skilled migration corridors fom LDCs, 2000

(Number of high-skilled migrants and percentage)
Country of destination
Developed Other developing LDCs
Transition
North economies
Country of origin Asia Pacific Europe Africa America Asia Africa Asia Total
America
Number of migrants
LDC Africa 14,245 170,814 178,561 55 86,763 380 44,696 29,809 - 525,323
LDC Americas 20 2,127 150,999 0 19 8,138 11 - - 161,314
LDC Asia 37,179 67,041 192,243 218 2,297 17 295,669 - 2,703 597,367
LDC Pacific 10,450 354 5,762 1 4 1 6 - - 16,578
LDC Total 61,894 240,336 527,565 274 89,083 8,536 340,382 29,809 2,703 1,300,582
Percentage of destination
LDC Africa 23.0 71.1 33.8 20.1 97.4 4.5 13.1 100 - 40.4
LDC Americas - 0.9 28.6 - - 95.3 - - - 12.4
LDC Asia 60.1 27.9 36.4 79.6 2.6 0.2 86.9 - 100 45.9
LDC Pacific 16.9 0.1 1.1 0.4 - - - - - 1.3
LDC Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100 100 100.0
Percentage of origin
LDC Africa 2.7 32.5 34.0 - 16.5 0.1 8.5 5.7 - 100.0
LDC Americas - 1.3 93.6 - - 5.0 - - - 100.0
LDC Asia 6.2 11.2 32.2 - 0.4 - 49.5 - 0.5 100.0
LDC Pacific 63.0 2.1 34.8 - - - - - 0.0 100.0
LDC Total 4.8 18.5 40.6 - 6.8 0.7 26.2 2.3 0.2 100.0
Source: UNCTAD secretariat calculations based on data from Docquier et al. (2011).
Table 14. Indicators of high-skilled immigration from LDCs to selected host countries in the 2000s
(Persons and percentage)
Initial Latest Persons Change
Host country Indicator period (A) period (B) (A) (B) (B/A : %)
United Statesa,b Number of tertiary-educated residents from 15 LDCs 2000 2010 381,425 681,485 78.7
(amounting to 91 per cent of total LDC high-skilled
residents in 2000)
Number of non-resident visas for skilled persons 1998-2000 2008-2010 1,289 1,364 5.9
granted to nationals from all LDCs
Canadac Permanent residents born in all LDCs 1999-2001 2009-2011 15,950 22,813 43.0
Arrival of students born in all LDCs 1999-2001 2009-2011 1,514 2,406 58.9
United Kingdomd Nationals from all LDCs given work permit for jobs 2004 2009 676 1,581 133.9
other than domestic work
Nationals from all LDCs granted entry into the UK 2009 2010 788 1,077 36.7
under PBS Tier 1 (Highly skilled workers) and PBS
Tier 2 (Skilled workers) schemes
Francee Number of workers’ visas granted to nationals from 2004-2005 2007-2008 324 1,214 274.7
all LDCs
Number of student visas granted to nationals from all 2004-2005 2007-2008 4,841 4,446 -8.2
LDCs
Australiaf Number of high-skilled nationals from all LDCs 2000-2001 2010-2011 964 1,121 16.3
arriving for permanent settlement
Source: UNCTAD secretariat elaboration based on the sources quoted in the notes (see below).
Notes: When periods are indicated, data refer to annual averages. The destination countries above hosted 55 per cent of high-skilled
emigration from LDCs in 2000.
a US Census 2010 (for 2010); American Community Survey 2010 (for 2010) for the number of tertiary-educated residents from 15
LDCs.
b State Department, for the number of non-resident visas for skilled persons. Includes the following visa types: H1-B, H1-C, L1, O1
and E-2.
c Statistics Canada.
d Home Office and National Statistics. PBS: Points Based System for immigration, introduced in 2008.
e Institut national d'études démographiques.
f Department of Immigration and Citizenship.
to have been offset by the continuing operation of the push and pull forces
driving brain drain mentioned in section B1.
Host countries. Almost two-thirds of LDC high-skilled emigrants live in

developed countries, while one-third moved to other developing countries.
Skilled migratory flows from LDCs are directed mainly to developed America
and Europe, oil-exporting developing countries and neighbouring countries
Skilled migratory flows from LDCs
(chart 34). The major destination country of the LDC brain drain is the United
are directed mainly to developed
States, which hosts one-fourth of all LDC high-skilled emigrants. Other major
America and Europe, oil-exporting destination countries are Saudi Arabia, Canada, the United Kingdom, India and
developing countries and France (chart 35). North America hosts almost the entirety of the Haitian brain
neighbouring countries. drain and approximately one-third of high-skilled emigration from the LDCs of
Africa, Asia and the Pacific (table 13). The remaining flows from each of these
regions differ geographically. For African LDCs, the other major destination is
developed Europe (especially the United Kingdom, France and Belgium) and, to
a lesser extent, other developing African countries (mainly Côte d’Ivoire, South
Africa and Kenya). Asian LDCs are the group for which intraregional South-
South flows are the most pronounced: almost half of their high-skilled emigrants
live in other Asian developing countries (especially India, Saudi Arabia, Thailand,
Iran and the Gulf States). For Pacific LDCs, New Zealand and Australia host
almost two-thirds of their high-skilled emigrants.
The selection rate of immigration
from LDCs is directly related to The selection rate of immigration from LDCs is directly related to the income
the income level of destination level of destination countries, as is the case for immigrants from all other
countries. countries. In developed countries, the selection rate is highest: 35 per cent of all
immigrants born in LDCs are tertiary-educated. In other developing countries,
the corresponding share is much lower (five per cent), while in the case of other
LDCs it is a scant one per cent. In other words, intra-LDC migration largely
consists of low-skilled persons. The total selection rate of LDC immigrants in
developed countries is similar to that of immigrants coming from other regions. In
developing countries, by contrast, immigration from LDCs is much less selective
than migratory flows originating in other country groups (chart 33). This confirms
the strong Northern bias of LDC skilled emigration. Available data indicate that
LDC emigration selectivity rose in the 2000s. In the United States (the largest
host country for LDC high-skilled emigrants), the selection rate for LDC nationals
The major source of high-skilled
rose from 32.4 per cent in 2000 to 48.3 per cent in 2010 (based on the same
LDC emigrants is Asia (45.9 per cent sample as table 14).
of the LDC brain drain) followed by
African LDCs (40.4 per cent). Home countries. The major source of high-skilled LDC emigrants is Asia,
which generates 45.9 per cent of tertiary educated migrants from LDCs. It is
followed by African LDCs, which account for 40.4 per cent of the LDC brain
drain (table 13). Regional figures, however, mask a very strong concentration of
migratory flows in a few countries. The largest LDCs of origin for skilled migrants
are Bangladesh and Haiti, both of which have more than 160,000 high-skilled
nationals living abroad. These two countries account for 30 per cent of all LDC
migration. They are followed by Afghanistan, Yemen, Sudan, Lao People’s
Democratic Republic, Ethiopia and Cambodia, each of which have more than
50,000 high-skilled people living abroad (chart 36). Taken together, these nine
countries account for almost two-thirds of LDC brain drain. Data on the major
The LDCs are by far the group most bilateral high-skilled migration corridors originating in LDCs are shown in table
seriously affected by brain drain. 15.
Brain drain rates. Collectively, the LDCs are by far the most seriously
affected by brain drain among the country groups shown in chart 37. They have
an average brain drain rate of 18.4 per cent, much higher than other developing
countries (10 per cent). Regionally, the worst affected subgroups are LDCs from
the Americas (Haiti), Pacific and Africa, which have higher brain drain rates than
all other groups of developing countries except the Pacific ODCs. The LDC
regional group with the lowest brain drain rate is Asian LDCs (chart 37).
Chart 34. Main LDC high-skilled emigration corridors
192
67
179
North America Europe
151
to North America
171 Asian LDCs

Haiti Asia 6
from Pacific 296
Islands LDCs African LDCs 45
CHAPTER 4. Mobilizing the Diaspora: From Brain Drain to Brain Gain
South America
Sao Tome
& Principe
Africa Kiribati
37 Solomon
Comoros Islands
Tuvalu
Pacific Island
LDCs
87 10 Samoa
Vanuatu
14
Australia &
New Zealand
Brain drain rate Skilled emigrants in 2000

0 - 10% 150,000-300,000 people
10 - 20% 30,000-100,000 people
20 - 30% 10,000-20,000 people
>30% 5,000-10,000 people
Source: UNCTAD secretariat elaboration based on data from Docquier et al. (2011).
93
Chart 35. Major destination countries of high-skilled LDC emigrants, 1990 and 2000
(Thousand persons)
United States
Saudi Arabia
Canada
United Kingdom
India
France
Australia
Germany
Thailand
Belgium
Côte d'Ivoire
South Africa
Iran
United Arab Emirates
Oman
0 100 200 300 400 500
2000 1990
The LDCs most affected by brain drain are islands or relatively small African
countries. For example, six LDCs have more high-skilled professionals living
abroad than at home: Haiti, Samoa, the Gambia, Tuvalu, Kiribati and Sierra
Leone. However, the case of Haiti stands out (box 5). Apart from the six LDCs
already mentioned, 11 other LDCs also have more than 30 per cent of their
high-skilled labour force living abroad. These are mostly African countries
Brain drain has both adverse and (Liberia, Eritrea, Somalia, Rwanda, Uganda, Mozambique, Togo and Guinea-
beneficial effects on the countries Bissau), and three are Asian LDCs: Yemen, Lao People’s Democratic Republic
of origin. and Afghanistan (chart 38). The majority are post-conflict States.
3. Adverse impacts
Brain drain has both adverse and beneficial effects on the countries of
origin of high-skilled emigrants, as summarized in table 16. While the positive
aspects are discussed later in section C, the negative implications are analysed
below. The adverse impacts of brain drain can be especially damaging when
Brain drain deprives countries of the countries of origin are developing countries and/or they have a small pool of
origin of some of the most qualified highly qualified human resources.
persons whom they have educated
and trained. a) Shrinking human capital stock and slower economic and
productivity growth
Brain drain deprives countries of origin of some of the most qualified persons
whom they have educated and trained. In the source country, it reduces the
stock of human capital, a factor which is already scarce in developing countries,
especially in LDCs (box 6). This effect is particularly strong if a large share of
Chart 36. Number of skilled emigrants from LDCs, 1990 and 2000
(Thousand persons)
Bangladesh
Haiti
Afghanistan
Yemen
Sudan
Lao People's Dem. Republic
Ethiopia
Cambodia
Myanmar
Dem. Rep. of the Congo
Uganda
United Rep. of Tanzania
Somalia
Nepal
Zambia
Liberia
Senegal
Eritrea
Togo
Sierra Leone
Samoa
Madagascar
Benin
Angola
Burkina Faso
Mali
Rwanda
Malawi
Mozambique
Burundi
Guinea
Mauritania
Gambia
Chad
East Timor
Niger
Equatorial Guinea
Central African Republic
Lesotho
Guinea-Bissau
Comoros
Kiribati
Solomon Islands
Djibouti
Sao Tome and Principe
Vanuatu
Bhutan
Tuvalu
0 50 100 150 200 250
2000 1990
high-skilled people emigrate (Berry and Soligo, 1969; Bhagwati and Hamada,
1974). Given the fundamental role played by human capital in long-term growth
and development, brain drain could have the impact of slowing down the origin
country’s economic growth rate (Miyagiwa, 1991; Haque and Kim, 1995; Wong
and Yip, 1999). The adverse impact of shrinking human capital on development
is especially acute as the world economy becomes increasingly knowledge-
based.
Table 15. Largest bilateral migration corridors for skilled emigrants from LDCs, 2000
(Number of migrants)
Originating LDC Destination country Skilled migrant stock
Haiti United States 126,524
Bangladesh India 70,092
Bangladesh United States 41,920
Lao People's Democratic Republic United States 41,440
Bangladesh Saudi Arabia 41,222
Yemen Saudi Arabia 39,200
Ethiopia United States 34,428
Cambodia United States 32,955
Haiti Canada 24,475
Sudan Saudi Arabia 22,399
Afghanistan Iran 20,715
Afghanistan United States 19,246
Liberia United States 18,436
Democratic Republic of the Congo Belgium 18,428
Myanmar United States 18,047
Uganda United Kingdom 17,600
Myanmar Thailand 15,742
Bangladesh United Kingdom 15,507
Afghanistan Germany 14,519
Bangladesh Oman 12,625
United Republic of Tanzania Canada 12,220
Nepal India 11,179
Bangladesh Canada 11,065
United Republic of Tanzania United Kingdom 10,535
Source: UNCTAD secretariat calculations based on data from Docquier et al. (2011).
Chart 37. Brain drain rate of country groups, 2000

(Percentage)
90
80
70
60
Percentage
50
40
30
20
10
0
LDCs - LDCs - ODCs - LDCs - LDCs - LDCs - ODCs - ODCs - ODCs - ODCs - Transition Developed
America Pacific Pacific Africa Total Asia Africa America Total Asia economies economies
Note: The brain drain rate is the emigrants’ share of the correponding age and educational group in the home country.
Box 5. Brain drain and the labour market in Haiti

Most LDCs with very high brain drain rates are countries with a small population. Haiti is an exception. Its population
was 8.6 million in 2000 and currently stands at 10.3 million. Yet it has the highest brain drain rate of all LDCs (83.4 per cent).
This places Haiti worldwide among the countries most affected by brain drain, since only six other countries have brain drain
rates above 80 per cent.
Labour market conditions in the country largely explain the extent of brain drain, according to the national case study
prepared for this Report. Although some 200,000 people enter the labour market every year, labour demand does not even
represent 10 per cent of this supply. Moreover, almost half of all Haitians over 65 continue to work, due to the lack of a well-
functioning retirement pension system. The chances of finding a job are higher for university graduates than for secondary-
educated people, but they are still low. Nevertheless, this situation acts as an incentive with regard to higher education,
although the additional supply of skills is not met by demand.
A major job website for qualified professionals posted 2,230 positions between 2008 and 2010. Based on the highly
conservative assumption that only five per cent of available jobs are advertised, this would bring the total number of jobs to
44,600 for the three-year period, far from matching a labour market supply of 600,000. In view of this labour supply mismatch,
especially for skilled labour, there are only two options: resort to informality, which is already the main sector of employment
in the country,1 or emigrate. Orozco (2006) points out that close to 90 per cent of Haiti´s skilled emigrants moved abroad due
to lack of job opportunities.
Apart from the very difficult conditions of the labour market, other features push skilled Haitians abroad, such as insecurity
and the political situation. Conditions were worsened by the earthquake of 2010. It is estimated that after this natural disaster,
one-third of the remaining high-skilled persons living in the country decided to emigrate.
1 Some 57 per cent of employment in Haiti takes place in the informal sector (IHSI, 2010).
Table 16. Possible effects of brain drain on (developing) home countries

Effect types / Processes Adverse Beneficial
Knowledge and human • Shrinking human capital base • Brain gain
capital • Less innovation • Transfer/sharing of skills/technology
• Sectoral impacts, especially health and • Diaspora knowledge networks
education • Acccumulation of broader/deeper knowledge/
• Brain waste skills/experience
Macroeconomic processes • Slower economic growth • Returnee entrepreneurship

• Declining high-skill labour externalities
• Lower productivity growth
• Less entrepreneurship
• (Fiscal) cost of educating high-skilled persons
• Foregone taxes paid by high-skilled persons
Trade / capital flows • Changing relative resource endowments away • Remittances

from skills • Diaspora savings: bonds, deposits, loans, funds,
etc.
• Diaspora effects and business networks:
• creation/strengthening of trade flows:
merchandise and services (e.g. tourism)
• creation/stregthening of foreign direct
investment
Institutional processes • Lower supply of/demand for institutions • Diaspora assistance in/pressure for institution-
building
• Returnee supply of/demand for institutions
Source: UNCTAD secretariat.
Note: The table presents the potential effects of brain drain which can generally affect home economies negatively or positively. The
actual impact on individual countries depends on their specific conditions and on their level of economic, social and instiutional
development.
Brain drain reduces welfare due to the loss of externalities. The high-skilled
labour force tends to have a positive externality on the rest of the labour force,
since the latter emulates the better qualified workers and thereby achieves
higher productivity. Therefore, the positive impact of highly talented persons
Brain drain can have an adverse
goes well beyond their small numbers in the population. If many of the most
effect on local science and
highly skilled workers leave the country, this externality is considerably reduced
(Haque, 2005). knowledge systems.
Apart from this general formulation on human capital, brain drain can have
an adverse effect on local science and knowledge systems (box 7 provides
the example of Ethiopia), impairing the economy’s capacity to produce and
Chart 38. Brain drain rate of LDCs, 1990 and 2000

(Percentage)
Haiti
Samoa
Gambia
Tuvalu
Kiribati
Sierra Leone
Liberia
Eritrea
Somalia
Rwanda
Yemen
Uganda
Lao People's Dem. Rep.
Mozambique
Afghanistan
Togo
Guinea-Bissau
Mali
Malawi
Equatorial Guinea
Sao Tome and Principe
Solomon Islands
Zambia
Lesotho
Comoros
Cambodia
Senegal
Sudan
Benin
Mauritania
Chad
East Timor
Dem. Rep. of the Congo
Burundi
United Rep. of Tanzania
Niger
Burkina Faso
Bangladesh
Ethiopia
Nepal
Central African Republic
Vanuatu
Guinea
Madagascar
Myanmar
Angola
Djibouti
Bhutan
0 10 20 30 40 50 60 70 80 90
2000 1990
implement innovation. This, in turn, slows down productivity growth (Kapur and
McHale, 2005; Agrawal et al., 2011). Schiff and Wang (2009) empirically estimate
that higher brain drain rates reduce the technological absorptive capacity of
home countries and thereby the degree to which they incorporate technological
innovation. As a result, brain drain could lead to lower productivity growth.
Box 6. Human capital endowments and international labour and resource flows
Least developed countries have relatively more low-skilled than high-skilled labour. In the LDCs, the ratio of the former
to the latter is 42. This is more than double the level in other developing countries (16) and more than ten times higher than
in developed countries, where the ratio is just 4.1 Prima facie, it could be expected that high-skilled labour has the highest
return where it is relatively scarcer, i.e. in developing countries and especially in LDCs. Therefore, highly qualified labour should
apparently flow to the latter countries, where human capital is most scarce and knowledge stocks are lowest. In absolute
figures, the prediction of the conventional view is verified: low-skilled emigration from LDCs outpaces high-skilled emigration
by a ratio of 11. Yet this same ratio shows that LDCs are exporting high-skilled labour more intensively than low-skilled labour,
since the low/high-skilled ratio of “labour exports” (i.e. emigration) corresponds to just one-fourth of the ratio of endowments.
Another way of measuring the relative “export intensity” at the different skill levels is through the emigration rates for low-skilled
and high-skilled labour.2 In 43 out of the 48 LDCs, the emigration rate of high-skilled labour is higher than that of low-skilled
labour, and the opposite is true in only five of these countries.
The above data reveal that the vast majority of LDCs export high-skilled labour more intensively than low-skilled labour.
This finding contradicts the expectations mentioned above based on apparent returns to knowledge. The explanation for
this apparent paradox seems to lie in the particular nature of human capital embodied in people. Knowledge is subject to
increasing returns and to positive agglomeration effects. Agglomeration economies generate centripetal forces, so that human
resources tend to agglomerate in locations which already have a considerably stock of qualified persons. Agglomeration
leads to higher productivity and earnings in these locations. For instance, Clemens et al. (2008) estimate that on average,
Haitians moving to the United States boost their incomes almost sevenfold. Beyond earnings differentials, the significance of
agglomeration effects is particularly strong for research and scientific production, which depend on the availability of scientific
infrastructure (laboratories, measurement instruments, specific materials, sophisticated machinery, access to databases and
libraries, interaction with colleagues, face-to-face discussions and collaboration, etc.).
South–North migration of high-skilled labour amounts to an international transfer of (human) resources from the poorest
countries to the richest. Similarly, South–South flows of high-skilled people from LDCs (around one-third of the total) are
directed to developing countries with a relatively higher development and income level.
1 Data are for 2000, the year for which the latest bilateral high-skilled migration matrix is available.
2 The emigration rate is the number of emigrants divided by the corresponding skill and age group. In the case of high-skilled labour, it is the
brain drain rate.
Box 7. The effects of brain drain on higher education and academic research in Ethiopia
The exponential growth of higher education in Ethiopia over the last 15 years (section C1) hides the extent to which the
sector is adversely affected by brain drain. The number of students graduating at the bachelor’s level rose sharply from 29,800
in 2007 to 75,300 in 2011. At the same time, however, the corresponding figure for higher level education (master’s and PhD)
rose much more moderately: from 2,700 to 6,200.
As a result, there is a dearth of people with doctorate-level degrees in Ethiopia, and this is especially true where they are
most needed, i.e. in higher education. Among the 15,192 teachers and researchers working in the country’s 25 universities,
only 979 (6.4 per cent) hold a doctoral degree. Moreover, PhD holders are very unevenly distributed, since half of them work at
the University of Addis Ababa. The bulk of the country’s university teachers and researchers have only a master’s degree (43.4
per cent) or a bachelor’s degree (42.6 per cent). Ethiopian higher education institutions sorely lack very high-skilled people.
The number of PhD-holding teachers and researchers active in the country’s universities is much lower than the members of
the Ethiopian diaspora just in the United States and Canada who have that level of education: 1,600, according to conservative
estimates. The case study on the Ethiopian academic diaspora prepared for this Report identified 200 Ethiopian professors
currently working in foreign universities, of whom 148 are active in the United States. Among these, 72 are full professors. In
Ethiopia, by contrast, only 65 persons hold an equivalent position. In other words, there are more Ethiopian full professors
working in the United States than in Ethiopia itself, in spite of the strong need of Ethiopian universities for very highly skilled
people.
In order to respond to the stringent need for more qualified university teachers and professors, the Ethiopian Government
has launched a campaign to recruit 631 teachers and researchers, especially from India. Whether this programme will succeed is
not yet clear. Nevertheless, if properly implemented, its implications for the country’s limited foreign exchange will be significant.
Brain drain can also comprise entrepreneurs and students (i.e. future
professionals). The former’s departure deprives the home country of some of
the people who create businesses and employment. As for students, most
developing countries send some of them abroad for tertiary-level studies, as
a means of expanding and improving the human capital stock of the home
country. However, this often becomes a route to brain drain. The greater the gap
between the conditions in the study country and those in the home country, the
higher the probability of graduates staying abroad (Finn, 2010), which shrinks
the human capital base of the home country.
b) Sectoral impacts
The impact of reduced availability of qualified professionals could be more

acute in some sectors, for instance education and scientific activities (box 7)
and health (box 8). These are the main sectors responsible for building and
improving countries’ human capital endowment. Their malfunction due to brain
drain hampers the continuing formation of human capital, which in turn is likely
to depress the national long-term growth rate.
The impact of reduced availability
c) Fiscal costs and foregone revenues
of qualified professionals could be
more acute in some sectors, for Expanding a country’s human capital base through education has a high
instance education and scientific cost, which is financed to a large extent by the State.8 Typically, the persons
activities. thus trained work, live and pay taxes in the home country upon completion
of education (at whatever level). This allows the State to partly recoup the
investment through the taxes (income, property, indirect, etc.) generated
by these people. In the case of brain drain, however, this payback does not
occur, because emigrants generally live, work and pay taxes abroad (Bhagwati
and Hamada 1974; Grubel and Scott 1966; Berry and Soligo 1969; Johnson
1967; Kwok and Leland 1982). Although these effects take place for all sorts
of migrants, they are strongest in the case of high-skilled migrants. Their
education costs the most for the home country and, since they have the highest
earnings, the corresponding foregone fiscal revenues are the highest. Gibson
and McKenzie (2010) present the results of survey micro-data for high-skilled
emigrants from Tonga, Federated States of Micronesia, Papua New Guinea,
Ghana and New Zealand. The developing countries in the sample share several
structural characteristics with Pacific and African LDCs. They estimate the net
If brain drain is significant, it annual fiscal cost per high-skilled emigrant at $6,300–16,900 in Ghana and
can alter the relative resource Papua New Guinea, but a much lower $500–1,000 in Tonga and Micronesia,
endowment of both origin and which have very low tax rates.9
destination countries.
d) Changing relative resource endowments
If brain drain is significant, it can alter the relative resource endowment of

both origin and destination countries. By reducing the human capital stock of
countries of origin, it tilts the relative factor endowment of the domestic economy
towards other factors (e.g. natural resources), thereby altering the patterns of
comparative advantage. At a minimum, it can reinforce the home country’s
specialization away from skill-intensive sectors or activities.10 Worldwide, tertiary
graduates tend to agglomerate in the United States, the United Kingdom,
Australia, Canada and some other developed countries. The pre-existing
polarization of the geographical distribution of talent is reinforced by the South–
North migration of high-skilled people. These flows amount to a net transfer of
resources from the country of origin to the country of destination (box 6).
The degree of brain waste depends e) Brain waste

to a large extent on home country
In the context of international labour mobility, brain waste refers to the fact
characteristics. that some immigrants can only find jobs in the host country which are below the
skills corresponding to their education level. This happens for instance when
medical doctors work as nurses or university graduates work as taxi drivers
or waiters. The degree of brain waste depends to a large extent on home
country characteristics. In the case of the United States, Mattoo et al. (2008)
note that the probability of skilled immigrants finding a job corresponding to
their education level rises with the income level of the country of origin and with
the level of the latter’s expenditure on education. Educated immigrants from
Latin America, Eastern Europe and Africa are more likely to take jobs below
their education skill level than immigrants from Asia and industrial countries. In
Box 8. Medical brain drain

LDCs form the group of countries with the lowest medical density: 0.12 physician/1000 inhabitants, well below the
acceptable threshold recommended by the World Health Organization of 2/1000. The medical density in other developing
countries is nine times higher than in LDCs, whereas in developed countries it reaches a multiple of 24. The emigration of
doctors from developing countries aggravates these disparities: LDCs also have the highest rate of medical brain drain, i.e.
the number of nationally trained physicians who work abroad as a share of those who work at home or abroad. This rate is
highest in Haiti (35 per cent) and African LDCs (14 per cent) (box chart 2).1 Medical brain drain has been growing since the
1990s in both the LDCs and in other developing countries.
In the case study on Ethiopia prepared for this Report, it is estimated that around 1000 Ethiopian medical doctors work
in the United States, whereas the number of physicians working in the home country in 2009 was 2,154. Therefore, it can be
surmised that out of all Ethiopian doctors, between one-third and one-half work abroad. Bangladesh has a physician density
of 0.25/1000 inhabitants and 32 medical schools. Some 2,000 persons graduate annually, of whom some 300 emigrate.
Although the share is low, these are generally the best and the brightest. The quality of medical research and intellectual
development at the top institutions in the country suffers from this brain drain (Rahman and Khan, 2007).
The main development problems associated with medical brain drain in LDCs are its impacts on the health of the population
and the cost of medical education in these countries. Higher brain drain rates are associated with higher infant and child
mortality and lower vaccination rates in developing countries, as well as higher adult mortality due to AIDS in the case of
sub-Saharan Africa (Bhargava et al., 2011; Bhargava and Docquier, 2008). They also have an indirect negative impact on
medical research and innovation in home countries. More broadly, the adverse impact on national health systems has long-
term negative consequences on the human capital formation and accumulation of LDCs. Still, brain drain is only one factor
in the sub-standard performance of health systems in most LDCs. In various African countries, a number of doctors and
nurses are inactive or unemployed, indicating that understaffing of health systems is also due to factors other than brain
drain (Skeldon, 2005).
The education of doctors has a very high cost for LDCs, and medical brain drain largely prevents these countries from
recouping the educational investment made. It has been estimated that the full cost of educating a medical doctor in sub-
Saharan Africa from primary school to university is $66,000, while the corresponding cost of educating a nurse is $43,000. If
this investment is lost to the home country, the opportunity cost could be at least $364,000 and $238,000, respectively, for
each emigrated professional (Kirigia et al., 2006). These amounts far exceed the remittances that these professionals could
send home during their working life.
1 These rates are low as compared with those for total brain drain quoted in the main text. This is due to methodological differences in computing
both sets of rates. The present ones are based on the country of training and on emigration to just 12 developed countries. By contrast, the
figures for total brain drain in the main text are based on nationality or country of birth and on all host countries. Clemens and Pettersson (2008)
estimate medical brain drain for African countries based on physicians’ country of birth and reach rates much higher than the ones quoted in
this box. Their median medical brain drain rate for African LDCs is 39 per cent, as opposed to 14 per cent in the database used in the present
box. These authors do not provide data for non-African countries.
Box chart 2. Medical brain drain and physician density by country groups, 2004
40
Haiti
35
30
Medical brain drain rate (%)
25
20
LDCs Africa
15
10
LDCs Asia Developed
ODC countries
5 Transition
economies
0
0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
Physicians / 1'000 inhabitants
Source: UNCTAD secretariat calculations, based on data from Bhargava et al. (2011).
other words, the lower the economic and institutional development of the home
country, the more likely that brain waste takes place.
These findings can be expected to apply to LDCs. The occupational profile

of high-skilled emigrants from some of these countries deteriorates with
emigration, according to survey data. Comparing the occupations of tertiary-
educated migrants from Uganda, Senegal and Burkina Faso before and after
migration shows an abrupt fall in the share of managerial posts (by at least 15
percentage points). By contrast, the share of persons performing technical and
associated professional occupations rises strongly (by 19 percentage points
The departure of the most qualified in the case of Senegal) (table 17). Similarly, in interviews undertaken for this
people potentially reduces both Report with a sample of high-skilled Haitian emigrants living in the United States,
the demand and the supply Canada, France and Spain, 47 per cent indicated that their present job requires
of the institutions required for less knowledge than what they had acquired in the home country. Nevertheless,
16 per cent stated that it required the same level and 38 per cent indicated
development.
higher skill requirements that those mastered before emigration.
f) Institution-building
Typically, the most skilled people are those who are best qualified to build
and run institutions which are required for the national development process
(State and government institutions, policymaking organizations, political debate,
etc.).11 At the same time, the most qualified people are those who are most
likely to demand good-quality institutions and press for them. Their departure
therefore potentially reduces both the demand and the supply of the institutions
required for development and may slow the long-term development of the home
country.
The net impact of brain drain on 4. Implications for LDCs

home countries depends to a large Lack of more comprehensive data makes it difficult to estimate the exact
extent on the intensity of brain drain. impact of brain drain on home economies, especially LDCs. Existing research
has postulated that the net impact of brain drain on home countries depends
to a large extent on the intensity of brain drain, though this relationship is not
always linear. Some degree of brain drain may be tolerated because of its
potential positive effects (discussed in section C below). By contrast, at high
brain drain rates, the negative consequences mentioned above are likely to
predominate, as they tend to outweigh the positive effects. Therefore, it has
been posited that there is some “optimal” level of brain drain, at which the net
balance of positive and negative effects on the domestic economies reaches the
Table 17. Occupation of high-skilled international migrants from selected LDCs in home and host countries, 2009
Home country
Uganda Senegal Burkina Faso
Occupation
Where occupation performed
Homea Hostb Homea Hostb Homea Hostb
Managersc 54.9 3.0 27.7 8.7 48.7 33.7
Professionals 10.9 29.4 18.3 0.6 30.9
Technicians and associate professionals 3.5 10.9 17.4 36.3
Clerical support workers 1.2 5.7 1.5 8.8
Service and sales workers 11.7 1.1 1.4
Other 18.7 12.9 33.3 9.2 - -
Don't know 10.9 26.5 0.6 35.0 51.3 35.5
Memo item: Share of high-skilled out of international migrants surveyed 31.5 6.6 0.4
Source: UNCTAD secretariat calculations based on data from the World Bank Migration and Remittances Household Surveys 2009 (available
at http://microdata.worldbank.org/index.php/catalog/534).
a Occupation performed in home country before migration.
b Occupation currently performed in the host country (in 2009, date of the surveys).
c Includes "Senior management employees" in the case of Burkina Faso.
maximum level. It has been estimated that an “optimal” high-skilled emigration

rate lies between five per cent and 10 per cent of the high-skilled workforce, on
the basis of a series of empirical studies on the effects of brain drain (Docquier,
2006). By contrast, “high” brain drain rates are considered to be those above
the 15–20 per cent range. Beyond this level, the likelihood increases that the
negative impacts of brain drain will outweigh its positive consequences.
The actual brain drain rate is “high”
The actual brain drain rate is “high” in 30 of the 48 LDCs; conversely, it is close
to the “optimal” level in only five of these countries. Given the intensity of the in 30 of the 48 LDCs; conversely, it
phenomenon in these countries, it is likely that economic development in most is close to the “optimal” level in only
LDCs has been adversely affected both directly and indirectly. It is, however, not five of these countries.
possible to arrive at a precise estimate of the magnitude of its macroeconomic
impact in terms of economic or productivity growth rates. Concerning sectoral
impacts, by contrast, there is ample evidence of the adverse effect of brain drain
on LDCs, especially with regard to health, education and science, technology
and innovation (STI). The poor performance of STI in LDCs has adverse second-
round impacts across all economic sectors and on LDCs’ development of
productive capacities (UNCTAD, 2007: 139–160), although brain drain is not the
only factor explaining such poor performance.
C. Turning brain drain into

benefits for home countries
There is ample evidence of the
Since the 1990s, the so-called “new economics of the brain drain” has adverse effect of brain drain on
argued that brain drain can be beneficial to developing countries, through the LDCs, especially with regard to
so-called “beneficial brain drain” or “brain gain”.12 This potential positive effect health, education and STI.
of labour migration comes alongside other possible beneficial effects of labour
migration, which were already recognized by the early literature on migration but
have recently received increased attention (table 18). These beneficial effects are
presented below and their operation in LDCs is analysed.
1. Brain gain
Beneficial brain drain. The brain gain literature argues that brain drain raises
returns to education, providing an incentive for people to obtain additional
education in order to increase their chances of emigrating. Out of these educated
people, many emigrate (i.e. brain drain). At the same time, some eventually do
not settle abroad and thereby help raise the human capital endowment of the
home country with respect to what would have been the case if the migration
incentive had not been present (i.e. a net brain gain). The evidence on the
benefits of migration stressed by the new migration literature is still inconclusive
(Solimano, 2010). Schiff (2006) questions the assumptions and conclusions of The net impacts of brain drain on
this literature, arguing that the actual brain gain effect is smaller than what these home countries are negative for
authors claim and that they fail to take into account several negative externalities
countries with high brain drain rates.
caused by brain drain. Still, both he and these authors agree that the net impacts
of brain drain on home countries vary with brain intensity and are negative for
countries with high brain drain rates.
Tertiary education has been expanding in most LDCs since the 1990s.
Between 1999–2000 and 2009–2010, the number of graduates in all tertiary-
level programmes in a sample of 16 LDCs more than doubled from 182,000 to
455,000, which corresponds to a 19 per cent annual growth rate.13 This has
been driven by the efforts of the educational sector – mainly public but also
private – to respond to previously unmet demand for university-level education
in many LDCs.14 However, it is difficult to attribute this rapid expansion in higher
education to the incentive effect of emigration prospects. While part of the

repressed demand may have had this motivation, it has probably not been the
most important one. In recent decades, the rate of growth of university-level
education in LDCs has far outpaced that of high-skilled emigration. Among the
sample of Haitian qualified emigrants interviewed for this Report, none indicated
the prospect of emigration as a motivation for obtaining tertiary education. In the
While part of the repressed demand case of Bangladesh, the case study carried out for this Report indicated that if
for tertiary education may have emigration had been a major motivation for university education, the subjects
chosen most frequently would have been different from the actual ones.15
had the motivation of emigration,
it has probably not been the most Given the difficulties of making direct empirical measures of brain gain, Beine
important one. et al. (2008) perform an econometric estimation of the impact of emigration
prospects on human capital formation. They find a positive effect for countries
at all income levels. However, in order to estimate the net effect after accounting
for emigration, they compare the actual human capital stock to what it would
have been if high-skilled workers had been allowed to emigrate at the same rate
as low-skilled workers. In the case of the LDCs, the negative effect of brain drain
on human capital formation predominates (in 20 out of 41 countries) and it is nil
in 11 countries, due to the high rates of brain drain in these countries. The effect
is positive (i.e. net brain gain) in only 10 LDCs and even there its intensity is low,
since the estimated impact is at most an expansion of 0.2 percentage points in
the proportion of the high-skilled in the labour force. These findings confirm that
the brain gain effect of high-skilled emigration is largely absent from most LDCs.
Broader meaning of brain gain. Besides the technical meaning of brain gain
postulated by the “new economics of the brain drain” as mentioned above (i.e.
In LDCs, the negative effect of brain the additional education taken thanks to the migration motivation but which
drain on human capital formation does not actually lead to brain drain), “brain gain” is commonly used in a broader
predominates (in 20 out of 41 sense. As such, it refers to the expansion of human capital, skills and knowledge
which accrue to the home country as an indirect effect of migration, but working
countries) and it is nil
through other channels. This includes the use of remittances for education,
in 11 countries. temporary return of high-skilled diaspora members or definitive return of qualified
emigrants.
In home countries, remittances can be used to pay for education, so that

recipients of those flows can either finance additional education or avoid taking
children out of school (Özden and Schiff 2006; Acosta et al., 2007). In such
cases, remittances release the liquidity constraint preventing further education.
Evidence on the use of remittances in LDCs (section C2 of chapter 3 of this
Report) seems to indicate that the mechanism is at work in some of these
countries.
The other channels of “brain gain” in this broader meaning are analysed in
sections C3 to C5 below.
In home countries, remittances can

be used to pay for education. 2. Financial flows
The most tangible positive impacts of both high- and low-skilled migration
are the financial flows to the home country that they generate. These flows are
mainly remittances, diaspora bonds and foreign direct investment (FDI). The
trends and economic impacts of remittance to LDCs are analysed in detail
in chapter 3 of this Report. Therefore, this section focuses on two issues: 1.
differences in remitting patterns between emigrants according to their skill profile;
and 2. whether remittances offset the costs of brain drain. Diaspora bonds are
mentioned in this section, while diaspora FDI is discussed in section C4 below.
a) Brain drain and remittances
It is often difficult to differentiate between remittances flows generated by high-

skilled and low-skilled emigrants. However, some recent evidence suggests that
high-skilled emigrants have a lower propensity to send remittances but those
who do send money transfer larger amounts than the low-skilled emigrants, High-skilled emigrants have a lower
thanks to their higher earnings abroad (Bollard et al. 2011). The contribution of propensity to send remittances but
high-skilled emigrants to total remittances thus depends on their propensity to those who do send money transfer
remit and on their share of total migrant stocks. larger amounts than the low-skilled
Available data for LDCs reveal mixed patterns. High-skilled emigrants have emigrants.
a lower propensity to remit in Senegal, but the opposite is true in Uganda
and Burkina Faso. The average amount sent home by high-skilled remitters
is predictably a multiple of that of low-skilled emigrants (except for Senegal,
where the difference is very small). Consequently, the contribution of high-skilled
remitters to the total flow of remittances to the home country is higher than their
share of the group of emigrants who do send money home. In Uganda, where
almost half of the international remitting emigrants are high-skilled, they account
for two-thirds of total remittance flows to the country. In Senegal and Burkina
Faso, by contrast, where only a fraction of the remittance-sending emigrants are High-skilled emigrants have a lower
tertiary-educated, their contribution to total remittances flows is less than 10 per propensity to remit in Senegal, but
cent (table 18). the opposite is true in Uganda and
Burkina Faso.
b) Brain drain costs and remittances
While data on remittances have been calculated and/or estimated and made
publicly available, there is no comparable information on the costs and benefits
of brain drain. Given the complexity of the multiple impacts of brain drain (table
16) it is very difficult to compute the welfare gains/losses of home and host
countries, especially with regard to the associated externalities (both positive
and negative) and the value of knowledge flows. Haque (2005), for instance,
argues that remittances should not be compared with the externalities generated While data on remittances have
by human capital. been estimated, there is no
comparable information on the
Nevertheless, some attempts have been made to appreciate the net results
costs and benefits of brain drain.
of some of the effects. Easterly and Nyarko (2009) estimate that in Ghana,
remittances exceed costs of training tertiary brain-drained citizens (when
only the cost of tertiary education is considered). They claim that as long as
the remittances of the typical person exceed 30 per cent of GDP per capita
of the home country, they exceed the cost of (tertiary) education. LDC mean
remittances correspond to four per cent of GDP per capita, exceeding 30 per
Table 18. Emigrant skills and remittance patterns in selected LDCs, 2009
(Percentage, unless otherwise indicated)
Home country
Uganda Senegal Burkina Faso
Remitting propensity of international migrants (share of migrants who ever sent remittances)
Low-skilled 27.9 78.8 60.8
High-skilled 51.1 60.6 76.8
Annual amount of money sent per remitter ($)
Low-skilled 782 1538 98
High-skilled 1882 1545 679
Composition of group of emigrants who ever sent remittances
Low-skilled 54.2 94.9 99.5
Origin of total remittances sent
Low-skilled 33.2 94.8 96.9
Source: UNCTAD secretariat calculations, based on data from the World Bank Migration and Remittances Household Surveys 2009
(available at http://microdata.worldbank.org/index.php/catalog/534).
cent in only one case (Lesotho) (table 6, chapter 3).16 Thus, indications are
that remittances do not offset the costs of educating people who leave the
country (even if computing solely the costs of higher education). Therefore, it is
more likely that these countries lose out on balance when comparing costs of
education and remittance recepits.
Indications are that remittances do c) Other financial flows

not offset the costs of educating
people who leave the LDCs. Beyond remittances, diasporas can also be a source of savings, which can
be channelled as capital inflows to home countries. Home-based economic
agents such as governments mobilize these savings through diaspora bonds
and other financial instruments like deposit accounts, transnational loans and
diaspora mutual funds (Terrazas, 2010). Among LDCs, Ehtiopia, Nepal and
Rwanda have issued diaspora bonds.
3. Diaspora knowledge networks
Beyond remittances, diasporas can a) Diasporas as a knowledge pool

also be a source of savings, which
can be channelled as capital inflows The stock of knowledge and skills of emigrants can potentially contribute
to the accumulation of human capital and technological capabilities in the
to home countries.
home country, mainly through two mechanisms: first, the operation of diaspora
knowledge networks, analysed below; and second, the return to the home
country of students17 and long-term emigrants (whose impacts are discussed
in subsection C5).
Diasporas. A diaspora refers to a community of expatriates who are spread

or dispersed around the world, outside their homeland. A distinctive feature
of diasporas is the sense of national identity and emotional attachment to the
homeland. Diasporas are often heterogeneous groups. The degree of cohesion,
shared values and motivations may vary depending on the type of diaspora and
their histories. Some diasporas have greater political and national motivation
and corresponding willingness to contribute to the homeland. Yet this may cut
A diaspora refers to a community
both ways: some diaspora groups that are affected by internal conflicts, exile or
of expatriates who are spread or persecution may be reluctant to engage if they perceive governments at home
dispersed around the world, outside as hostile and unfriendly to them. By contrast, other types of diaspora groups,
their homeland. e.g. those formed by internationally mobile professionals and entrepreneurs,
can be willing and prepared to cooperate with their homeland in the transfer
of knowledge, as well as capital, networks and other attributes if they see the
home conditions as propitious and/or a possible source of commercial gain
(Solimano, 2010).
Diaspora knowledge networks. Diasporas can thus serve as “brain banks”

abroad; when properly organized, they can become a source of knowledge
sharing and technology transfer with their home country (Mahroum et al., 2006).
Technology appears to diffuse more efficiently through culturally and nationally
Diasporas can be willing to linked groups. As shown in chapter 5 of this Report, by facilitating international
cooperate with their homeland in knowledge flows and technology diffusion, diasporas can act as “knowledge
brokers” and promote innovation in the home country (Agrawal et al., 2008,
the transfer of knowledge, as well
2011). The skills of diaspora members are deemed especially appropriate,
as capital, networks and other
thanks to their combination of technical and substantive expertise with their
attributes. acquaintance with local conditions (language, institutions, culture, etc.).
However, the intensity and quality of knowledge flows and transfer between host
and home countries depends on how they are organized, the actors involved,
the amount of finance mobilized, the commitment of diaspora members, and
the institutional and economic development of the home countries. High-skilled
emigrants tend to share little knowledge with home countries if these are small or
low-income economies which are not undergoing rapid structural transformation.

There, information flows tend to concentrate mostly on emigration itself (i.e.
work opportunities abroad, migration mechanisms, etc.) (Gibson and McKenzie,
2010). This is in sharp contrast with the case of home economies which are
large or growing rapidly and undergoing structural transformation. Successful
examples of diaspora knowledge mobilization (e.g. Israel, Taiwan Province
of China, India and China, discussed in chapter 5 of this Report) show that High-skilled emigrants tend to
diaspora technological entrepreneurs overseas can play an important role in share little knowledge with home
helping to develop technological firms at home and serve as a two-way link for
countries if these are small or
market knowledge, connections and technological transfer across countries.
low-income economies which are
not undergoing rapid structural
b) Initiatives to harness diaspora knowledge flows to LDCs
transformation.
The channels used to date to foster the transfer and sharing of diaspora
knowledge and skills with LDCs home countries can be grouped into two
categories: 1. diaspora-inspired initiatives; and 2. multilateral and bilateral
programmes.
Diaspora initiatives. While most LDC diaspora associations, organizations

and NGOs have philanthropic objectives, some of them are aimed at assisting
home countries in benefiting from the expertise, skills and experience
accumulated by diaspora members. This is the case with diaspora associations
of medical doctors, scientists, engineers, etc., which strive to transfer and share
knowledge and technology with researchers, scientists and entrepreneurs in
the country of origin. Most LDC diaspora organizations are based in developed
countries. Examples of successful knowledge initiatives and programmes are While most LDC diaspora
provided in box 9. associations have philanthropic
objectives, some of them are aimed
Bilateral and multilateral programmes. These include programmes initiated
by international organizations (typically acting in collaboration with national at assisting home countries in
governments of both home and host countries) or knowledge components of benefiting from the expertise and
wider agreements between origin and destination countries initiated to influence skills of diaspora members.
bilateral migration and the ensuing flows of expertise and business. The
knowledge components of these programmes take the form of either advisory
missions or participation in specific projects in the home country. The main
beneficiaries in the LDC home countries are universities, government institutions,
civil society and the private sector.
At the multilateral level, the United National Development Programme (UNDP)

launched the Transfer of Knowledge Through Expatriate Nationals (TOKTEN)
in 1977. The International Organization for Migration (IOM) has also been
running the Temporary Return of Qualified Nationals (TRQN) and Migration for
Development in Africa (MIDA), the latter since 2001. Through MIDA, the following
LDCs have created partnerships with destination countries and expatriates:
Benin, Burkina Faso, Burundi, the Democratic Republic of the Congo, Ethiopia,
Several bilateral programmes have
Guinea, Mali, Mauritania, Rwanda, Senegal, Sierra Leone and Somalia. Box 10
been launched jointly by host and
provides examples of how international programmes operate in LDCs.
home countries in order to foster
Several bilateral programmes have been launched jointly by host and home cooperation on bilateral migration.
countries in order to foster cooperation on bilateral migration. They typically
deal with different aspects of international labour flows, including diaspora
mobilization though knowledge transfer and direct investment, and assistance
to permanent return migration. One example is the Programme d’Appui aux
Initiatives de Solidarité pour le Développement (PAISD), jointly undertaken by
the Governments of Senegal and France during 2009–2011 in the context of
co-development programmes. With total funding of €9 million, its knowledge
component financed 52 diaspora experts to transfer knowledge and experience
to Senegalese counterparts through short- to medium-term missions. The
sectors targeted were health, agriculture and food industry, management, ICTs
Box 9. Examples of successful LDC diaspora initiatives for knowledge sharing and transfer
The national case studies prepared for this Report highlight some examples of how diaspora knowledge, skills and
resources can be successfully harnessed and transferred to home countries.
Strengthening PhD education at the University of Addis Ababa. Given the obvious need for more and better training
at the doctorate level in Ethiopia, the country’s largest university established several PhD programmes. It realized, however,
that in order to reach its objectives it could not rely uniquely on its own resources. Accordingly, it decided to mobilize the
knowledge of the national diaspora working in foreign academic institutions. To this end, in 2008 it launched a large-scale
programme financed by the Ethiopian Government and the Swedish and French official development aid agencies. The main
participants abroad have been Ethiopians active in US and European universities, who in several cases convinced their non-
Ethiopian colleagues to take part in the project. Their collaboration with the home country has taken the form of participation
in research seminars, book donations, links between laboratories in the universities of Addis Ababa and laboratories abroad,
and thesis direction by diaspora members. The programme has had a considerable impact on several departments.
Decoding the jute genome in Bangladesh. A Bangladeshi microbiologist and biochemist who studied and worked in
the Soviet Union, Germany, United States and Malaysia decoded for the latter country the genome sequencing of its most
important plant, rubber. In order to have his country of origin benefit from his knowledge and skills, he later undertook the
same type of research for jute. This was done in a joint project with the Global Network of Bangladeshi Biotechnologists
(GNOB), the Centre for Chemical Biology, the University of Science (Malaysia) and the University of Hawaii (United States) and
a team of Bangladeshi researchers. The discovery facilitates pest control and the manufacturing of better finished industrial
products out of jute.
Upgrading the national health sector in Ethiopia. The People to People association was established by Ethiopian
diaspora members in the late 1990s with the aim of mobilizing diaspora skills for the benefit of the home country. It operates
in several countries in North America and Europe and has been active above all in the health sector. Its activities have included
participating in medical training in Ethiopia, advocating for diaspora mobilization with international organizations and donor
institutions, mobilizing resources abroad for medical programmes in Ethiopia, setting up a telemedicine system in the home
country, restructuring university hospitals, organizing an annual conference on health in Ethiopia, awarding a prize for medical
best practice, and maintaining a blog for the exchange of medical best practices and discussions. The association collaborates
with other diaspora organizations, NGOs active in Ethiopia and international organizations (e.g. the World Bank), the United
States National Institute of Health and universities of host countries.
Mobilizing resources and knowledge transfer to Haiti. In Canada, the Regroupement des organismes canado-haïtiens
pour le développement (ROCADH) is an effort to coalesce many philanthropic organizations working for the advancement of
Haitian communities back home. ROCADH brings together some 47 home town associations. It has been active in the fields
of education and capacity-building (including in agricultural, animal breeding techniques, commodity processing, medical and
tourism service skills). ROCADH has been able to channel substantial funding through the Canadian International Development
Agency (CIDA). To be eligible for CIDA funds, ROCADH has to contribute one-third of the value of the project.
Medical diaspora network for Bangladesh. Bangladeshi physicians in North America established the Bangladesh
Medical Association of North America (BMANA) in 1980. It supports the home country by organizing visits of medical teams
to provide training and technology transfer, provision of subsidized/pro bono specialized clinical services, and donation of
books, computers and journals to medical colleges and universities in Bangladesh. Its members have been participating in
activities of knowledge transfer and training in terms of cutting-edge advances in medical specialities, such as neurology,
surgery and infection control.
Water in Ethiopia. A programme of collaboration between an American and an Ethiopian university was put in place in 2009
at the initiative of an Ethiopian working as professor in a United States university, with financing from the United States Agency
for International Development (USAID) under the African American Universities Partnership. It was successful in leveraging
official financing to obtain financing from the American private sector for project activities. It foresees the establishment of
a research centre on water in Ethiopia to conduct academic research and participate in the formulation and planning of the
country’s policies and programmes for water management.
and biotechnology. In some cases, the projects included financing to upgrade

installations and equipment of home country beneficiary institutions (both public
and private).18
To date, many of the efforts to c) Effects on LDCs

establish diaspora knowledge
networks have not succeeded To date, many of the efforts to establish diaspora knowledge networks and
in creating synergies with other foster knowledge transfer and sharing between diaspora members and home
initiatives or ensuring continuity. LDC countries have attained their specific and circumscribed goals. However,
they have not succeeded in creating synergies with other initiatives or ensuring
continuity, both of which are essential for a regular knowledge flow to home
countries. As a result, their development impacts have been limited for a number
of reasons, such as:
Box 10. International programmes to foster diaspora knowledge transfer to LDCs

Afghanistan. Since the 1980s, the resurgent periods of civil conflict in Afghanistan have spurred brain drain (over one-third of
high-skilled workers lived abroad in 2000), low numbers of permanent return migration and the deterioration of the educational
system, which failed to modernize. As part of reconstruction efforts of the 2000s, international organizations mobilized high-
skilled diaspora members to contribute through transfer of skill and knowledge, and local capacity-building. From 2002 until
2006, 38 volunteers provided assistance to the national capacity-building efforts of the Afghan Interim Administration and
the successor government. They were mobilized through the TOKTEN programme of the UNDP. IOM launched a Temporary
Return of Qualified Nationals (TRQN) programme together with the Netherlands. It mobilized and financed the temporary return
(for three or six months) of members of the Afghan diaspora in the Netherlands in the fields of education, health, engineering,
infrastructure and information technology. Despite some initial resistance, diaspora members were able to teach and train
locals in new teaching methods, university organization, medical procedures and equipment, building techniques, use of
computers and the Internet, software previously not in use in Afghanistan, and work and managerial methods and routines.
These innovations had been learned and/or practised by diaspora members in the host country. Participants mentioned as their
motivation identification with the home country and their desire to participate in its rebuilding (Siegel and Kuschminder, 2012).
Great Lakes. The MIDA Great Lakes Programme was launched by IOM in 2001 and is expected to continue until 2012.
Its main objective was to fill technical skills gaps in the fields of health, education and rural development, by tapping into
the knowledge pool of the diasporas of Burundi, Democratic Republic of the Congo and Rwanda in Europe. It started by
identifying the technical skills needs of local beneficiary institutions (universities, hospitals, laboratories, professional training
centres). To match the demand side, the supply side was organized by mobilizing diaspora experts interested in participating
and selecting them. Training and capacity-building activities were undertaken through the return of diaspora members,
which could be temporary (ranging from some weeks to several months), virtual (by means of ICTs and e-learning tools) or
– exceptionally – permanent. More than 400 short-term expert and capacity-building missions were carried out. The main
achievements claimed by the project are training physicians and paramedics; strengthening health institution management
and planning; introducing South–North partnerships of health institutions; improving course quality in universities; relaunching
courses previously inactive for several years; strengthening libraries and IT infrastructure in education institutions; and building
the capacity of ministries and provincial authorities active in rural development. The Programme claims that its actions are
aligned with national priorities. It was foreseen that at the end of the project, the functions of diapora mobilization and matching
of skills would be transferred to the three national governments and to diaspora associations.1
1 Based on information available at the website of the project (http://mida.belgium.iom.int/).
Dispersion and lack of coordination of resources. The spread and

multiplication of actors, initiatives and programmes and the lack of coordination
among them result in the dispersion of efforts, energy and resources.19
Most LDC diaspora associations and NGOs tend to be ad hoc efforts with very
small budgets, and their actions are local and small-scale. Often their members,
although willing to engage, are not experts in the field of development, which
does not allow them to undertake large-scale development projects that could The multiplication of initiatives and
have a region-wide or country-wide impact on the lives of the beneficiaries. In the lack of coordination among them
many cases, emigrants rely on channels such as family members, local chieftains result in the dispersion of resources.
or social and professional networks to carry out their activities, depending on the
level of institutional development of the home country. At the same time, they
often lack more structured institutional support.20 The lack of coordination can
limit the effectiveness of the initiatives and programmes which are implemented
by individual or a small number of organizations and NGOs. This can lead to
situations in which “projects carried out by such [diaspora] organisations
interfere with mainstream policies carried out by the national government or
local organizations” (Zoomers and van Naerssen, 2006: 73).
Coordinating the actions and
Nevertheless, in some cases, diaspora knowledge-sharing initiatives are
programmes of different actors
undertaken in partnership with home country governments or international
can leverage existing resources and
organizations. Coordinating the actions and programmes of different actors can
leverage existing resources and greatly enhance their development impact (box 9). greatly enhance their development
impact.
Official international initiatives for diaspora knowledge-sharing and transfer
through circular migration or return sometimes encounter problems. First,
the financial and human resources involved can be somewhat limited. For
instance, the final report of a large project aimed at clarifying the links between
migration and development and the impact of official programmes for promoting
knowledge transfer concludes that “the numbers are very modest and the
success is limited and the number of beneficiaries is not in proportion to the total
number of migrants and/or expatriates” (Zoomers and van Naerssen, 2006:
29). Second, such initiatives are frequently inconsistent with national priorities.
Knowledge-sharing programmes and activities are often designed without
The number of beneficiaries is not consulting home country governments and are not articulated with broader
in proportion to the total number of development strategies or wider national policies and programmes in mind. This
migrants and/or expatriates. thwarts the desired effectiveness of diaspora knowledge initiatives.
Trust. Trust among different groups of the diaspora and stakeholders of

knowledge transfer is often lacking, hampering collaboration and coordination
between them. In some cases, associations of LDC nationals living abroad prefer
not to undertake projects in collaboration with the national government either
because of the causes of emigration (civil conflict, political strife, etc.) or due to
frustration with bureaucratic delays and uncertainty concerning the use of funds.
In other cases, trust is lacking among diaspora associations themselves.
Limited information. Some LDC governments have initiated programmes

Trust among different groups of and action courses to strengthen the engagement of their diasporas with the
the diaspora and stakeholders of home country (e.g. Bangladesh, Senegal, Mali, Rwanda, Ethiopia and Haiti). One
of the components of these programmes is collecting information on diasporas,
knowledge transfer is often lacking.
including their number, location, professional activities, skills, etc. Information
gathering is the first step towards strengthening the engagement of the diaspora
in the development of the home country. However, those LDCs which have not
initiated an active programme of diaspora engagement are typically not aware of
the potential that diasporas represent in terms of skills and knowledge (but also
in terms of savings and investment potential). This lack of information prevents
them from mobilizing diaspora knowledge effectively.
Differential treatment of nationals. In order to attract diaspora members to

work for the home country (temporarily or permanently), national governments
and international organizations often mobilize financial resources for and/or
Even if it is easier to learn
provide special treatment to these emigrants (e.g. fiscal breaks, special political
from fellow countrymen and rights). Such treatment can generate resentment among national residents
countrywomen than from foreigners, working at a comparable grade (e.g. government officials, experts, professors,
it still entails costs. scientists, researchers), hampering collaboration between national residents
and diaspora members.
Cost of technology transfer. The transfer of knowledge, skills and

technologies requires efforts by beneficiaries and transferors. It therefore entails
costs of local adaptation of procedures, methods and equipment, including
the creation of locally appropriate skills and resources. This feature is well
known from the literature on transfer of technology (Teece, 1977; von Hippel,
1994). Even if it is easier to learn from fellow countrymen and countrywomen
than from foreigners, it still entails costs (Obukhova, 2009). Such costs tend to
be overlooked when planning diaspora knowledge transfer programmes and
Diasporas can contribute to the initiatives.
development of their home country
by facilitating the establishment
of business and trade networks 4. Diaspora business networks
between the home and the host
country. a) Potential business impacts of diasporas
Apart from forming diaspora knowledge networks, diasporas can contribute

to the development of their home country by facilitating the establishment
of business and trade networks between the home and the host country.
Diaspora members can help link people and firms in both countries thanks to
superior knowledge of, or preferential access to, market opportunities, as well
as familiarity with home country markets, language, preferences and business
contacts. Emigrants can also help overcome reputational problems their home
country may have abroad. Diaspora members reduce transaction costs by

means of these specific skills and capabilities.
Diasporas can play an important role in fostering business creation and

Emigrants can help overcome
expansion in the home country by participating in external searches for new
reputational problems their home
market opportunities and domestic institutional reform, through their contacts
with domestic officials concerning the redesign of relevant institutions and firms. country may have abroad.
Diasporas have played a major role in the establishment and development of
high-tech clusters in India, China, Taiwan Province of China, Israel and Ireland
since the 1990s (Saxenian and Sabel, 2008; Saxenian, 2005), as discussed in
greater detail in Chapter 5 of this Report.
Business linkages and economic flows between home and host countries
can come from either high-skilled or low-skilled emigrants, but they are more
likely in the case of high-skilled emigrants, since the latter tend to have wider and
higher-level contacts in both home and host countries (Docquier and Lodigiani, The presence of a diaspora is
2010). often associated with higher
bilateral trade flows.
The presence of a diaspora is therefore often associated with higher bilateral
trade flows (Gould, 1994; Mesnard and Ravallion, 2001; Head and Ries, 1998;
Rauch and Trindade, 2002; Rauch and Casella, 2003; Combes et al., 2005, Peri
and Requena, 2009). The most direct and simple form of a diaspora business
network is when the diaspora itself is a prime market for the exports of home
country goods, in what has been termed “ethnic trade” or “nostalgia trade”.
This consists mainly of foodstuffs, but also includes films and music, reading
material, utensils and dishes, ornaments, textiles and clothing – goods which, in
principle, have more difficulty penetrating international markets than other types The most direct form of a diaspora
of exports (Newland and Taylor, 2010). If home country exporters are successful business network is when the
in exploiting the diaspora market, they can move beyond it to tap other markets. diaspora itself is a prime market for
In this case, diasporas serve as a bridge to wider markets. the exports of home country goods.
Beyond merchandise trade, the presence of diasporas also stimulates the
export of services, especially international tourism. Diaspora tourism offers
domestic agents some advantages over other types of tourism. First, diaspora
tourist spending typically reaches domestic goods and services suppliers more
directly, as nationals tend to use locally-targeted accommodation, shops and
restaurants rather than facilities established for typical international tourists. As
a result, this type of spending reduces the well-known phenomenon of tourism
leakage (Supradist, 2004). Second, diaspora tourists are more widely spread If home country exporters are
over the home country territory. Third, their arrivals can be less seasonal than successful in exploiting the diaspora
those of other tourists (Newland and Taylor, 2010). Diaspora tourism is therefore
market, they can move beyond it to
likely to have a greater developmental impact than other types of tourism.
Moreover, diasporas can serve as a bridge to wider markets by overcoming tap other markets.
reputational problems or a lack of information in host countries concerning their
home country as a tourist destination, as with the case of nostalgia trade. In
most of the countries sampled by Gibson and McKenzie (2010), more than half
of high-skilled emigrants advised other people concerning tourism in their home
country.
Another, non-exclusive possibility of diaspora business networks is for

diaspora members to invest directly in the home economy (Javorcik et al., 2001; Diaspora tourism is likely to have a
Kugler and Rapoport, 2007; Docquier and Lodigiani, 2010). This may take
greater developmental impact than
various forms, such as a capital contribution to family business, the acquisition
of shares in publicly traded firms, or other forms of direct diaspora investment. other types of tourism.
Evidence presented by Gibson and McKenzie (2010) shows that this is the
exception. Only between five and eight per cent of high-skilled migrants from
developing countries invested directly in their home country, and the amounts
invested were relatively small (less than $18,000).
b) Initiatives to strengthen diaspora business effects
In order to engage diasporas and encourage them to invest part of their

savings in LDC home countries, action has been taken at the international,
bilateral and national levels. Programmes have targeted both individual and
collective investment. LDCs like Burundi, Democratic Republic of the Congo,
In order to engage diasporas and Ethiopia, Senegal and Rwanda have launched initiatives to attract direct
encourage them to invest part of investment of their diasporas by organizing roadshows for investor; publishing
investment guides geared to their diasporas; encouraging diaspora investors’
their savings in LDC home countries,
associations; initiating dialogues on major constraints for emigrant investment
action has been taken at the
in the home country, including diaspora investment in bilateral cooperation
international, bilateral and national programmes, etc.
levels.
At the multilateral level, some Migration for Development in Africa (MIDA)
projects carried out by IOM feature a component aimed at strengthening
diaspora investment in the home country and mobilizing diaspora business and
professional networks in order to strengthen international business activity of
home countries. This comes in addition to the MIDA components designed to
foster knowledge flows to home countries.
At the bilateral level, several agreements launched in conjunction with

European co-development initiatives have incorporated a component to foster
diaspora investment in the home country. In some cases, programmes foresee
co-financing of development projects by diasporas and donor countries.
In 2009, Senegal launched the Plateforme d’appui au Secteur Privé et à la
Valorisation de la Diaspora Sénégalaise en Italie (PLASEPRI) together with Italy,
There is a very high participation of and another programme, Programme d’Appui aux Initiatives de Solidarité pour
migrants in the United States in the le Développement (PAISD), together with France. These three-year programmes
market for home-country goods. aim to boost SME development and employment generation in regions with high
emigration rates.
Among national initiatives, in 2009, Senegal launched the Fonds d’Appui aux
Investissements des Sénégalais de l’Extérieur (FAISE), aimed at encouraging
diaspora members to invest in their region of origin.
c) Diaspora business effects in LDCs
There is a very high participation of migrants in the United States in the

market for home-country goods, according to Orozco (2008). Each migrant
spends almost $1000 per year on nostalgia products, and the total may exceed
$20 billion annually. Orozco and Burgess (2011) estimate that some 90 per cent
of Haitians living in the United States consume nostalgia goods to the tune of
$800 per person per year, which amounts to a potential market of some $285
million. For the home country, this represents a major export market allowing
Diasporas represents a major export the diversification of its exports. While 80 per cent of Haitian exports consist of
market allowing the diversification of manufactures, nostalgia goods are mostly agriculture-based. Similarly, Debass
home country exports. and Orozco (2008) estimate that the Ethiopian diaspora in the United States
spends $1,077 on nostalgia goods annually. Going beyond diaspora markets,
in the United Kingdom, part of the Ethiopian diaspora has established a niche
market by marketing home coffee to independent delicatessens, ethically aware
food shops, corporate purchasers and faith groups through the Oromo Coffee
company (Newland and Taylor, 2010).
Econometric evidence computed by the UNCTAD secretariat indicates

that worldwide, the presence of both skilled and unskilled immigrants helps to
expand merchandise trade between home and host countries. The former have
a trade-creating impact which is double that of the latter. In the case of the
LDCs, by contrast, unskilled immigrants have such an impact, but there is little
corresponding evidence in the case of skilled immigrants. This indicates that so
far, low-skilled LDC immigrants have been more involved in facilitating bilateral
trade in their destination countries than their more educated fellow countrymen
and countrywomen.
With regard to tourism, 70 per cent of the 254,000 tourists arriving in Haiti
are Haitian-born or of Haitian origin, with the United States, Canada, France So far, low-skilled LDC immigrants
and the Dominican Republic as the leading sources (data for 2011). These are have been more involved in
the main host countries of the Haitian diaspora. Haitian diaspora tourists spend facilitating bilateral trade in their
amounts ranging from $1000-5000 per person on each trip, and it is therefore destination countries than their more
likely that they account for a larger share of the country’s tourism receipts than educated fellow countrymen and
the number of tourists arriving in the country. countrywomen.
The diapora business network effect of generating bilateral FDI is expected

to vary according to the size of the diaspora and of the home country (Docquier
and Lodigiani, 2010). FDI by diasporas in LDC home countries (which are mostly
small economies) is still limited. According to concerns expressed by potential
LDC diaspora investors, the main reported deterrents are lack of support from
the home government, a dearth of incentives for investment, and diasporas’
demand for guarantees for their investments. Still, some LDC diasporas have
started gearing up to invest in their home country. Members of the Haiti diaspora Seventy per cent of the tourists
are active in FDI in the areas of mining, tourism, energy and financial services. arriving in Haiti are Haitian-born
They seem to be cautious and risk-averse, typically taking minority stakes in
or of Haitian origin.
projects and companies and shunning larger investment projects. The diasporas
of Rwanda and Liberia have launched or planned diaspora funds, which are
professionally managed vehicles that allow individual investors to diversify risk
by purchasing shares of a basket of investment products – typically including
money market funds, sovereign and corporate bonds, and equities (Terrazas,
2010).
In Senegal, PAISD provided technical assistance for 221 investment projects

in the country in agriculture, domestic trade, handicraft, services, tourism,
ICT, consultancy, etc. Half of them were undertaken by diaspora members
who remained in France, while the others were implemented by investors who Some LDC diasporas have started
returned permanently to Senegal to oversee their projects. The total value of the gearing up to invest in their home
beneficiary investment projects was $4 million, which represents around 0.1%
country.
of gross fixed capital formation in 2010. Some $400 million were mobilized to
co-finance them. 21 PLASEPRI had a budget of €24 million, consisting mainly
of credits to SMEs and microfinance institutions as well as a grant component.
Also in Senegal, in 2010 FAISE had a budget of $323,000 to finance 31 diaspora
projects, mainly in fisheries, small industry and services (ANSD, 2011).
5. Returnees
a) Potential contribution to the home country

The potential contributions of
The potential contributions of permanent returnees to the home country permanent returnees to the home
are many and often depend on the level of development of the home country
country are many and often depend
and the range of opportunities for the involvement of returnees. Some of the
on the level of development of
potential contributions are discussed below.
the home country.
Knowledge. Returnees can deploy their skills and experience accumulated
abroad by working in knowledge-intensive activities, e.g. government,
consultancies, managerial positions in firms, etc. (Dustmann and Kirchkamp
2002). They can also forge and sustain simultaneous and multi-stranded
relationships that link their societies of origin and destination (Glick Schiller et
al., 1992). There is ample evidence demonstrating that the knowledge and skills
accumulated abroad and brought home by returnees have significantly boosted
the technological capability and innovation activities of economies that have

successfully undergone structural change, as shown in chapter 5 of this Report.
Entrepreneurship. Returnees can use their entrepreneurial capabilities to

establish new businesses,22 which may be in technologically more advanced
sectors. Compared with their fellow countrymen and countrywomen who did
Returnees are more likely to be not emigrate, returnees are more likely to be entrepreneurs thanks to:
entrepreneurs than their fellow • Savings accumulated during emigration;
countrymen and countrywomen • Additional skills acquired abroad (McCormick and Wahba, 2001; Wahba
who did not emigrate. and Zenou, 2011);
• Connections to business networks established while living abroad, which
can be mobilized for the purposes of foreign trade, marketing, financing,
access to technology, etc.
Entrepreneurial activities of returnees can arise from both high-skilled and

low-skilled emigration, but are more likely to have an impact in the former case.
High-skilled emigrants are more likely to have acquired managerial experience
abroad and to have put aside savings necessary to start businesses.
Institutions. Returnees can participate in institution-building in the home

Returnees can participate in
country by strengthening both supply of and demand for institutions (Docquier,
institution-building in the home Ldogiani et al., 2011; Easterly and Nyarko 2009). This is a mirror effect of the
country by strengthening both loss incurred by the home country due to brain drain (see section B3f above),
supply of and demand for with the major difference that returnee actions are enriched by their learning and
institutions. experience abroad.
However, the various potential positive contributions of permanent returnees

to the home country mentioned above are not always realized. This depends
on the conditions of return, in particular returnees’ motivation, preparedness
and time spent abroad (Cassarino, 2004), as well as local conditions. Typically,
home economies that are not undergoing structural transformation are less
likely to attract returnees who want to participate actively in local development.
By contrast, highly dynamic home economies stand a greater chance of luring
migrants back. Sustained growth over many years tends to precede permanent
return, especially for high-skilled migrants. This has been the experience of
Sustained growth over many years
Republic of Korea and Taiwan Province of China. It means that permanent return
tends to precede permanent return, of the high-skilled is more often a consequence than a trigger of economic
especially for high-skilled migrants. growth (Docquier, 2006).
b) The experience of LDCs
The conditions of LDCs have generally not been very conducive to active
contributions by permanent returnees to home country development. The
major driver is family reasons, but other motivations seem to vary according to
conditions prevailing locally in LDCs. In Haiti, these include above all involuntary
return (e.g. deportation, work permit expiry, failure to find a job, etc.). In Senegal,
Uganda and Burkina Faso, the fact that emigrants had no intention of staying
The conditions of LDCs have abroad is the second most important reason quoted for return. By contrast,
generally not been very conducive Bangladeshi returnees interviewed for this Report cited positive motivations
to active contributions by permanent besides family reasons, such as the desire to have a greater impact on society
returnees to home country and willingness to make own knowledge and experience available to the home
development. country.
Most LDCs have only been able to attract return migration in very low
numbers, a factor which has constrained their contribution to home country
development. The rate of return (i.e. the number of returnees as a share of the
emigrant stock plus returnees) in a selection of LDCs varies from six per cent in
Uganda to 10 per cent in Senegal and approximately 15 per cent in Haiti and
Burkina Faso. As a share of the population, they account for less than two per
cent in all four cases.23 It should be borne in mind that in these countries (except
for Uganda) the vast majority of returnees are low-skilled, which means that they
are less likely to have accumulated resources and new knowledge abroad. As
for the time spent abroad, in Haiti, out of returned emigrants 78.4 per cent have
lived six years or less abroad. Only 6.7 per cent of all returnees have spent ten
years or more abroad, which means that most returnees have had little time to
accumulate resources.
On the whole, professional and business development opportunities have Professional and business
not been very common in most LDCs, so they have not been very successful development opportunities have not
in attracting returnees and benefiting from their professional and entrepreneurial been very common in most LDCs.
activities. In many cases, LDC returnees have tried to start new businesses,
but have been discouraged by lack of support for enterprise development
(extension services, financing, etc.) or have found bureaucratic requirements
too demanding. This contrasts with the experience of more vibrant economies
which offer wider opportunities for returnees in terms of both economic activities
and professional prospects, as exemplified by Bangladesh (box 11).
Despite these caveats, there is evidence of positive effects for migration

and returnees’ activities in the home country and for returnees’ contribution to
economic activities in LDCs. In Senegal, research findings show that returnees
Box 11. Contributions of returnees to the Bangladeshi economy and society
The highly skilled knowledge workers who migrated from Bangladesh through State-sponsored scholarships from the
1950s to the 1980s rarely returned or circulated to the home country. Since the 1990s, however, private universities, technical
institutions, research bodies and NGOs have provided a launching pad for temporary or permanent return. At present, the
country has reached a social and economic stage where the return and circulation of knowledge workers are sustainable
(RMMRU-DRC, 2005). Some examples of the contribution of permanent returnees to Bangladesh in different domains are
given below.1
Education. After studying and working at Harvard University (United States), a scientist returned to Bangladesh, where
he is contributing to the development of a leading private university. He has successfully developed collaborative research
relationship with different United States and United Kingdom universities, including for an international centre for climate change
and development in his institution. After having studied and worked in the United States, a computer scientist returned to
Bangladesh to become a professor of computer science and engineering at a public university. He is a public activist and part
of the nationwide campaign using contests and science fairs, for example, to encourage young students to concentrate on
science and mathematics. He has been a member of the technical committee which prepared the draft national education policy.
Medicine. After working as a senior physician in a leading US hospital, a Bangladeshi doctor returned to his home
country to use his expertise in pathology and improve the quality of pathology tests. There are only a few individuals in the
country with exposure to leading-edge pathology, which is one of the most technology-intensive branches of medicine.
Some Bangladeshi doctors, after finishing their post-graduate studies in Japan, returned to their home country, where they
established the Japan Bangladesh Friendship Hospital (JBFH) in 1993 in partnership with Japanese doctors. The Hospital has
initiated a grassroots programme entitled “Krishoker Sashtho Seba” (health care for farmers). It has been conducted in the
remote areas of Bangladesh in order to provide health-care facilities to farmers since 2006. JBFH also provides health-care
facilities to the marginal and underprivileged and organizes workshops on issues such as first aid training and awareness of
common diseases.
Telecommunications. A top Bangladeshi manager studied in the United States, where he worked in both the public
and private sectors. He returned to his home country, where he contributed to providing access to telephone services and
increasing self-employment opportunities for the rural poor through connectivity. In 1993, he started a company with the
backing of a Norwegian telecom company and financing from aid agencies and development banks. The company later
became a major telephone operator, with 16 million subscribers providing telephone access to more than 100 million people
covering 60,000 villages.
Finance. A Bangladeshi returnee from the United States and one from the United Kingdom have successfully contributed
to the strong spread of microcredit in Bangladesh, first to the country’s subsistence farmers then to urban areas. Rahman
(2010) argues that this helped foster entrepreneurship among the rural poor.
Media. Two communications professionals developed international careers as journalists and worked for several public
affairs and media bodies in Asia, North America and Europe, including international organizations. They later returned to
Bangladesh, where they launched a newspaper in 1991, with the stated aim of strengthening democracy and freedom of
expression. The newspaper has become the country’s English-language daily with the largest circulation.
1 The individual cases presented in this Box as examples derive from a country study prepared for this Report.
have some characteristics which differentiate them favourably from non-

migrants: 1. returnees have higher labour force participation rates and have a
stronger tendency to be self-employed; 2. they are more likely to have skilled
jobs; 3. they are more present in commercial and handicraft activities; 4. they
have higher earnings (Mezger, 2008; Mezger and Flahaux, 2010). Beyond
self-selection at the moment of deciding whether to migrate or not, it is likely
In Senegal, returnees have some that the knowledge and experience accumulated abroad contribute to further
characteristics which differentiate differentiating returnees from non-migrants.
them favourably from non-migrants.
Survey evidence on the investment activity of returnees in LDCs shows that
in Burkina Faso, 32.5 per cent of them have invested based on the savings
accumulated abroad, whereas in Senegal the corresponding share is 17.3 per
cent.24 In the former country, all individual returnee amounts invested were
smaller than $5,000, while in Senegal they ranged as high as $20,000. The
total cumulative amount invested by returnees in Senegal corresponds to
2.6 per cent of the country’s gross fixed capital formation in 2009, whereas
in Burkina Faso, the corresponding share is a higher 6.2 per cent. 25 In both
countries, returnees have invested mainly in traditional sectors. In Burkina Faso,
In Senegal and Burkina Faso, the primary sector accounted for 65 per cent of returnee investment projects,
whereas in Senegal, 60 per cent of the projects were in trade and services, while
returnees have invested mainly
the remainder was in the primary sector and real estate. A fraction of returnee
in traditional sectors. investment involved international partners: two per cent or less in both cases.
It is likely that a significant share of these business partnerships resulted from
contacts held while living abroad, possibly indicating some form of diaspora
business network.
These case studies do not correspond to the typical examples of

transformative returnee entrepreneurship in modern sectors which assists the
structural transformation of home country economies, as was the case with
a few successful dynamic developing countries mentioned above. Still, they
do show that the potential of returnees and their entrepreneurship is far from
negligible. The example of the contribution of Bangladeshi returnees (box 7)
Given a conducive domestic
reveals that, given a conducive domestic environment and policy action, this
environment and policy action, the potential can be developed to a much greater extent.
potential of returnees and their
entrepreneurship can be developed c) International programmes to assist permanent return
to a much greater extent.
International action has striven to assist return migration by facilitating their
permanent resettlement in the home country and providing financial assistance
in that respect. This was the case for the Return and Reintegration of Qualified
Nationals (RQN) programmes of the International Organization for Migration
(IOM) and the Transfer of Knowledge Through Expatriate Nationals (TOKTEN)
programme of the United Nations Development Programme (UNDP), mentioned
above. However, these programmes have generally failed to meet expectations.
They have been very costly, considering the amounts allocated to individual
returnees. At the same time, the financing required to effectively help returnees
The emphasis of international resettle in their home country has been much higher than what is available
programmes has mostly shifted to through the programmes. In several cases, beneficiary nationals returned to the
temporary return, i.e. from return home country temporarily but subsequently emigrated again.26 Therefore, the
migration to circular migration. emphasis of international programmes has mostly shifted to temporary return,
i.e. from return migration to circular migration. TOKTEN was mainly reoriented
towards temporary return. IOM has launched the Temporary Return of Qualified
Nationals (TRQN) and Migration for Development in Africa (MIDA) focusing on
temporary return to replace previous programmes aimed at permanent return
(see section C3b above).27 In bilateral initiatives, by contrast, assistance to
permanent return remains one of the components, as in the case of the bilateral
programmes and agreements on co-development to which European countries
are a party.
D. Conclusions
According to Gibson and McKenzie (2011: 125), “we are still some way
from a comprehensive global answer on the effect of brain drain on sending
country growth and development outcomes”. This is certainly true of LDCs.
Nevertheless, this chapter has presented analysis and information which help us
to identify some major features of high-skilled migration and the potential impact We are still some way from a
of diasporas on LDC home country development. comprehensive global answer on
the effect of brain drain on sending
On average, LDCs are more affected by brain drain than any other group of country growth and development
countries. The intensity is especially acute in islands (where more than half of the outcomes.
high-skilled workers often live abroad) and in African LDCs, 21 of which have
more than one-fifth of their high-skilled population abroad. The brain drain rate is
lower is Asian LDCs, though even there it is still higher than in other developing
countries. There is strong variation in the rates of brain drain of LDCs, but it
is close to the estimated “optimal” level (5–10 per cent) in only five of these
countries. Apart from the likely adverse macroeconomic effects to be expected
at these high rates of brain drain, emigration of highly qualified LDC nationals
has adverse consequences, especially in the activities of health, education and
STI. This brain drain primarily amounts to a South–North transfer of resources.
The (positive) developmental
Available evidence shows that the (positive) developmental impacts of brain impacts of brain drain on LDCs
drain on LDCs have been limited so far. Concerning their human capital base, have been limited so far.
since the 1990s, education enrolment in most LDCs has been expanding rapidly
at all levels, including the tertiary stage. This expansion is driven mainly by public
policies and by the increased supply of educational services. It is very difficult
to attribute improving educational attainment (or a significant share of it) to the
incentive effect of emigration, although some observers argue that it has been
one of the factors pushing demand for higher education.
There are indications of embryonic diaspora business network effects in a

few LDCs. With respect to financial and capital flows, beyond the remittances
analysed in chapter 3 of this Report, a few LDCs have taken initial steps to Some fledgling diaspora business
mobilize the savings of their diaspora through diaspora bonds and FDI. Some network effects are starting to
fledgling diaspora business network effects are starting to appear in terms of appear.
strengthening trade and investment ties between home and host countries.
The current impact pertains especially to bilateral trade in services (especially
tourism) and goods (e.g. nostalgia trade). LDC diaspora FDI in home countries is
still very limited compared to its potential.
Diaspora knowledge networks are incipient in most LDCs. A number of

initiatives and programmes to leverage diaspora knowledge for the benefit of
LDC home country development have been launched. They are undertaken by
individuals, diaspora associations and NGOs, national home and host country
The few cases of more effective
governments and/or international organizations, often in an uncoordinated way.
They generally have positive effects, but these are very localized and specific. In diaspora mobilization initiatives have
most cases, these initiatives do not have a broader impact because the multitude typically been a result of coordinated
of actions by different stakeholders tends to dilute resources, efforts and action by different stakeholders,
energies. They are often isolated programmes, which are not linked to broader which creates synergies among
development strategies and policies. The few cases of more effective initiatives agents and leverages resources.
have typically been a result of coordinated action by different stakeholders —
including the home government —, which creates synergies among agents and
leverages resources.
Returnees’ contribution to investment, innovation and institution-building in

LDCs has varied according to local conditions in home countries. Where local
conditions are unfavourable to investment and innovation and/or policy has
not been supportive, returnee investment has been limited and has tended to
reinforce existing patterns of specialization. By contrast, in some larger LDC
economies or those that are growing and undergoing structural transformation,
The contribution of diasporas returnees have made significant contributions to economic activity and social
and other positive effects of brain innovation.
circulation to the development of
LDCs is below its potential. The contribution of diasporas and other positive effects of brain circulation
to the development of LDCs is below its potential. There are two main reasons
for this: the development stage of LDCs themselves, and the initiatives put in
place. First, prevailing conditions in most LDCs are quite different from those
in countries which benefitted greatly from diaspora knowledge and business
networks and were able to attract return emigrants. In the latter case, diaporas
contributed significantly to home country development, helping many of these
Initiatives can be taken to strengthen
countries to become high-income countries.
the home country benefits
associated with brain drain. This Second, although most LDCs at present reap limited gains from their
will require policy action by LDC diasporas, it is likely that the positive effects of brain circulation will strengthen
themselves and by the later during the economic development of these countries. While this is a long-
international community. term perspective, initiatives can be taken in the short term to strengthen the
home country benefits associated with brain drain. This will require policy action
by LDC themselves and by the international community. The next chapter of this
Report provides an analysis of policy alternatives and options needed to achieve
this objective.
Notes
1 This chapter builds on UNCTAD (2007: 139–160) by updating the statistical
information and broadening the scope of analysis and policy recommendations.
2 By contrast, low-skilled migrants are those whose highest educational attainment is
at the secondary or primary level or who did not undergo any formal schooling.
3 Bhagwati and Hanson (2009); Docquier and Rapoport (2012); Kapur and McHale
(2005); IOM (2008); Solimano (2010); Pritchett (2006).
4 The most widely used database on worldwide brain drain is that of Docquier and
Marfouk (2006), which was later revised to provide a gender breakdown (Docquier,
Lowell and Marfouk, 2009). It was subsequently expanded in Docquier et al. (2011),
which includes non-OECD host countries and therefore captures South–South
flows. The first version of this database was kindly made available to the UNCTAD
secretariat by its authors.
5 High-skilled people flows are in sharp contrast with those of overall migration, where
South–South movements predominate, as seen in chapter 2 of this Report. The latter
are strongly influenced by the migration of low-skilled people.
6 Given the preponderance of oil exporters among developing host countries,
developments in the price of this commodity are also likely to play a role in determining
brain drain trends in the future.
7 The indicators include the number of LDC students, since studying abroad is often
the first step towards long-term emigration.
8 Even if education is financed privately, this is an investment in human capital formation
made under the expectation that it will bring returns.
9 These costs are net of: 1. the estimated fiscal gains from domestic consumption
funded by remittances; and 2. the Government savings from not having to provide
services to people who no longer live in the home country.
10 By the same token, host countries become better endowed with skills or human
capital, which tends to reinforce their specialization in the corresponding goods and
services.
11 On the importance of institutions to economic growth and development, see Szirmai
(2012) and Bluhm and Szirmai (2012).
12 Mountford (1997); Stark (2004); Stark et al. (1997, 1998); Vidal (1998); Beine et al.
(2001); Docquier and Rapoport (2007, 2012); Kangasniemi et al. (2007); Commander
et al. (2004).
13 Angola, Bangladesh, Benin, Burundi, Cambodia, Comoros, Djibouti, Eritrea, Ethiopia,
Lao People’s Democratic Republic, Lesotho, Madagascar, Malawi, Niger, Uganda
and United Republic of Tanzania (UNCTAD secretariat estimates, based on data
from the UNESCO Institute for Statistics: http//www.uis.unesco.org, accessed on
22/06/2012).
14 In Ethiopia, for example, in the mid-1990s, university-level institutions hosted
only 15,000 students, but received 300,000 applications annually. However, the
introduction of new policies by the Government to boost investment in human capital
formation resulted in a rapid expansion of the number of universities and students.
During the academic year 2006/2007, universities hosted 203,000 students at
the bachelor’s level and within five years the number of enrolments had more than
doubled to 448,000. Similarly, in Senegal, the number of students enrolled in tertiary-
level education institutions swelled from 30,000 in 2001 to 86,000 in 2008, as the
expansion rate was double that of the preceding decade. By 2012, total enrolment
had reached 91,000.
15 Similarly, in Gibson and McKenzie’s (2010) survey data for high-skilled emigration
from Tonga, Federated States of Micronesia, Papua New Guinea, Ghana and New
Zealand, the migration incentive generally pushed respondents to learn a language or
take test preparation classes, but not to lengthen schooling itself.
16 Even considering that high-skilled emigrants tend to remit more than low-skilled
emigrants (and remittance data refer to all migrants), remittances as a share of GDP
per capita exceed 20 per cent in only four LDCs: Lesotho, Haiti, Samoa and Nepal.
17 Rogers (2004) finds that countries with relatively high numbers of students studying
science and engineering abroad experience faster subsequent growth.
18 Source: http://www.codev.gouv.sn.
19 The Government of Senegal, for instance, has recorded as many as 741 associations
of the Senegalese diaspora (ANSD, 2011).
20 The lack of linkages to national government sometimes stems from limited trust of
diaspora organizations in the latter or from missing interest or institutional capacity
of the national government to engage with diaspora organizations active in specific
projects.
21 This share provides an order of magnitude, since the diaspora investment was made
over several years.
22 A survey of Turkish returnees shows that more than half are economically active
upon return and most of them engage in entrepreneurial activities (Dustmann and
Kirchkamp 2002). In Egypt, returning migrants tend to have higher levels of human
capital than non-migrants, and are likely to be more entrepreneurial the longer they
have worked abroad (McCormick and Wahba 2001; Wahba 2007).
23 Data for 2009 for Uganda, Senegal and Burkina Faso, and for 2001 in the case of
Haiti.
24 Based on the same source as table 17.
25 These shares provide an order of magnitude, since the returnee investment was
made over several years.
26 In Ethiopia, out of 30 expatriates who participated in a TOKTEN programme in the
home country, only one decided to resettle there permanently (Adredo, 2002).
27 In the MIDA Great Lakes Programme (box 10), just 15 permanent returnees were
aided financially, as compared with more than 400 missions, often involving more
than one expert.

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UNCTAD/LDC/2012

The Least Developed Countries Report 2012

New York and Geneva, 2013

The present chapter analyses two aspects of international migration in the

The chapter is organized as follows. Section AB explains how home country

B. Brain drain and its adverse

All international movement of labour

distance (e.g. through information and communication technologties (ICTs)), i.e.

International migrants consist of people with all levels of educational

Two other categories largely overlap with that of high-skilled workers:

The knowledge-based economy and brain drain. International movements

• It produces increasingly knowledge-intensive goods and services, which in

Given these developments, knowledge is part of UNCTAD’s definition of

The agglomeration economies typical of knowledge-intensive activities lead

• More favourable conditions for professional development in host countries.

2. Brain drain trends

Current flows of high-skilled workers. Brain drain has been increasing

more updated indicators and information on high-skilled emigration from LDCs

The selectivity of international migration is also reflected by the different

More than half of international high-skilled migration is South–North.

All immigrants LDC immigrants

An estimated 1.3 million workers with university-level education had emigrated

Table 13. International high-skilled migration corridors fom LDCs, 2000

Host countries. Almost two-thirds of LDC high-skilled emigrants live in

171 Asian LDCs

Brain drain rate Skilled emigrants in 2000

United Arab Emirates

Chart 37. Brain drain rate of country groups, 2000

Box 5. Brain drain and the labour market in Haiti

Table 16. Possible effects of brain drain on (developing) home countries

Macroeconomic processes • Slower economic growth • Returnee entrepreneurship

Trade / capital flows • Changing relative resource endowments away • Remittances

Chart 38. Brain drain rate of LDCs, 1990 and 2000

The impact of reduced availability of qualified professionals could be more

If brain drain is significant, it can alter the relative resource endowment of

The degree of brain waste depends e) Brain waste

Box 8. Medical brain drain

These findings can be expected to apply to LDCs. The occupational profile

The net impact of brain drain on 4. Implications for LDCs

maximum level. It has been estimated that an “optimal” high-skilled emigration

C. Turning brain drain into

education to the incentive effect of emigration prospects. While part of the

In home countries, remittances can be used to pay for education, so that

In home countries, remittances can

a) Brain drain and remittances

It is often difficult to differentiate between remittances flows generated by high-

Indications are that remittances do c) Other financial flows

3. Diaspora knowledge networks

Beyond remittances, diasporas can a) Diasporas as a knowledge pool

Diasporas. A diaspora refers to a community of expatriates who are spread

Diaspora knowledge networks. Diasporas can thus serve as “brain banks”

low-income economies which are not undergoing rapid structural transformation.

Diaspora initiatives. While most LDC diaspora associations, organizations

At the multilateral level, the United National Development Programme (UNDP)

and biotechnology. In some cases, the projects included financing to upgrade

To date, many of the efforts to c) Effects on LDCs

Box 10. International programmes to foster diaspora knowledge transfer to LDCs

Dispersion and lack of coordination of resources. The spread and

Trust. Trust among different groups of the diaspora and stakeholders of