What is your opinion: are developing countries at a loss due to youth studying abroad which may result in brain drain?
So brain drain refers to the phenomenon indicating that developed countries are able to retain the best brains through immigration policies that allow foreign students to remain in the developed countries where they originally go for higher education. This is referred to brain drain from the country of origin's point of view (and brain gain from the country of destination).
The relation between brain drain and capital formation in developing countries is not straight forward.
Using new data on emigration rates by education level, Michel Beine (2008) examined the impact of brain drain migration on human capital formation in developing countries; and find evidence of a positive effect of skilled migration prospects on gross human capital formation in a cross-section of 127 countries.
Using geographical and genetic distance‐based instrumental variables for emigration and a dynamic panel estimation method, Li, Xiaoyang (2017) reported that human capital emigration helps the home country's political institutions, but hurts economic institutions.
References:
Beine, Michel, Frederic Docquier, and Hillel Rapoport. "Brain drain and human capital formation in developing countries: winners and losers." The Economic Journal 118, no. 528 (2008): 631-652.
Li, Xiaoyang, John McHale, and Xuan Zhou. "Does brain drain lead to institutional gain?." The World Economy 40, no. 7 (2017): 1454-1472.
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