Brain Drain or Brain Circulation?

The aversion to brain drain is understandable; but upon examining the case of the relationship between China, India, and Silicon Valley in detail, researchers such as Annalee Saxenian[1] have shown that the process of brain mobilization can become balanced – that is, a reversible process – instead of uni-directional.

 

The process goes from brain drain to brain circulation.  

 

Just as what is observed when a substance experiences a change of phase, if the conditions are right, a fraction of the molecules that transitioned will return to the first state.

The key is that the professionals who have pursued their education abroad maintain the ties to their home economies, which nurtures the development of those economies. Eventually, the growth reaches the point at which the conditions are favorable for the professionals to go back. Unexpectedly, their having stayed abroad is what has facilitated their return.

This is what has been observed in the case of information technology, including hardware and software. It is worth finding out if the same can happen with other industries.

It is understandable that by the year 2000, approximately half of the engineers and scientists in Silicon Valley were foreigners, mainly from China and India. Silicon Valley offers an enriching work environment and satisfactory monetary compensation.

Saxenian suggests that like technical knowledge and skills, the transfer of knowledge about business models and financing methods is also essential. The entrepreneurs educated abroad bring this wealth of knowledge to their home economies.

The know-how for business models and financing is indispensable, but perhaps the most exotic ingredient in this recipe is related to risk management, since these entrepreneurs have experience in evaluating risk for technology businesses.

In the Asian economies that have benefitted from this phenomenon, according to Saxenian, government officials have had a desire to learn firsthand about the financial institutions used in the technology hubs. The engineers aren’t the only important ones, but also those with experience in the administration of these businesses.

The high-risk/early-phase Silicon Valley model began to be transferred toward Taiwan and Israel in the 1980s. In this way, Israel and Taiwan have become the markets with the highest risk outside the United States. Both have the highest rates of startup creation. China and India have followed suit and currently both are experiencing the greatest transformation in their risk markets due to the return of highly skilled workers.

Greater efficiency and lower transportation costs, as well as the reduction of commercial barriers and bureaucratic interference have also been essential ingredients that have enhanced the development of local high-tech startups.

However, it appears that the accumulation of a critical mass of professionals is the key to catalyzing technology hubs.

This perception is strengthened upon considering that the salary increase in centers of technology concentration has not affected the conglomeration of new startups. On the contrary, it would seem to be its main attraction. Ironically, programmers cluster, naturally, although they end up competing in a life-or-death climate.

What can be learned?

First, the more nationals who are getting advanced degrees abroad, the better.

Brain drain is nothing to be afraid of. As is the case with phase changes, if only one molecule goes from one phase to the other, it’s very likely that it will never return. But that number is improved when many molecules make the transition.

Students should be encouraged to get advanced degrees abroad as a way to access the most sophisticated markets, because the methods at the forefront of these markets are not efficiently learned in the classroom: they have to be experienced.

For an emerging economy, the cost of sending workers to get advanced degrees in developed countries is marginal, and is equal to the cost of motivating young people to pursue such studies. No “scholarship” funding is necessary because developed countries gladly accept students and finance their postgraduate studies.

It is essential to remember that more liberty is always better. Students should be encouraged to pursue their own opportunities.

Government participation should initially be focused on strengthening a cutting-edge basic education in which students are bilingual by the time they begin their university studies.

[1]Studies in Comparative International Development, Summer 2005, Vol. 40, No. 2, pp. 35-61

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