Brain drain or brain gain?

When I was introduced by my host at a recent wedding as an economist, the eyes of the others at the table didn’t glow at all.
It appeared that the last thing they wanted at that time was to sit with one of the boring species of the world. But, all of them, perfunctorily, nodded their heads noting me: a businessman and his wife, a senior public servant and his wife, a medical practitioner and a young man described as an accountant.

“He’s leaving our shores shortly for a lucrative job as an accountant in the Middle East” my host pointed to the young man. He wriggled uneasily in his seat as if a crime he had committed has been unfolded.

The businessman cast a disapproving look at the young man and then looked at me. “It’s a shame that all our good brains are leaving the country. How can we develop this country when all our brains are drained out?” he commented.

The public servant nodded in agreement. “All these people are educated at state’s expense. So, they should first of all serve the country,” he said.

“They should be asked to pay the full cost to the state before they’re permitted to leave,” said the wife of the public servant in support of her husband. The medical practitioner remained silent, but the look on his face showed that he too endorsed the views of others.

The young man, visibly uncomfortable now, cast a pleading look at me.

I too intervened in the discussion. “It’s really a problem if we have a shortage of people with skills to fill the available vacancies.

Then, of course, we wouldn’t be able to run our industries smoothly,” I said.

They just continued to stare at me so I felt that I owed them a more detailed explanation. “Our present situation is that we train more doctors, accountants, managers and so on than we could absorb into productive work. Therefore, there is always an acute unemployment problem among these young people and remember that they have invested a great deal of their time and money to acquire those talents, in addition to what the state has spent. If they can’t realize their wishes, they add to the brewing social unrest which leads to a complete social explosion one day. So, foreign jobs are simply a safety valve to release the excess pressure in the system.” I spied on the young man and observed a smile slowly lighting his face.

“But, it’s not those young people who’re leaving. These are people already employed and trained by their employers,” the businessman interjected.

“True,” I said. “But, when they leave, a young man can always fill the vacancy. So, from the economy’s point of view, there’s no loss. Besides, salaries of those remaining will also go up, because a few people are there to compete now,”

“What about the training cost of the new man? It’s a cost to the employer,” the public servant said, countering my view.

“A modern employer has to train his workers continuously, because knowledge is changing and advancing day by day. So, it doesn’t matter, an employer has to incur this cost even if the old man remains on the job. In this world, it’s the human knowledge which becomes obsolete faster than any other thing.”

“What about the cost to the state and the society?” the wife of the public servant said, raising a very valid question.

“Labour, that’s the service of people, is mobile from one place to another seeking the highest income. In this modern world where economies are all integrated into a single economy, territorial boundaries don’t matter. You can remain here in Sri Lanka, but serve an employer elsewhere. You don’t have to be physically present in a foreign country to do so. Wherever you’re, a part of your earnings is made available to your country. So, the question of reimbursing the cost doesn’t arise. It automatically happens”

“Does it mean that we should send more of our workers to work abroad?” said the medical practitioner, speaking for the first time. “Precisely,” I said. “Our migrant workers send close to three billion dollars back to Sri Lanka. That’s sufficient to meet our annual oil import bill. So, we drive our vehicles thanks to that condemned brain drain.”

“Isn’t it those poor housemaids who send that money?” asked the wife of the public servant. “They also send a fair amount. But, given their low salaries, the total amount they send is not that much. The bulk of the remittances is sent by professionals who work in western countries,” I said.

The young man who up to that time looked like a hounded rabbit was suddenly enlivened and spoke for the first time.

“Wasn’t it Bela Balassa who first theorized this concept?”

“Yes. It’s called Balassa Effect. It says that young people in developing countries have incentives to go and work in developed countries because of high salaries. They return with huge savings and enjoy a good life later.

Similarly, retirees from developed countries have incentives to spend their retired life in developing countries because of the cheaper services. So, it’s no longer brain drain. It’s now brain gain on both counts.”