TY - JOUR
T1 - Do brain drain and poverty result from coordination failures?
AU - de la Croix, David
AU - Docquier, Frédéric
PY - 2012/3
Y1 - 2012/3
N2 - The bidirectional causal links between high-skilled emigration and poverty can give rise to multiple equilibria and coordination failures. Two countries sharing identical characteristics may end up in either a "low poverty-low brain drain" equilibrium or in a "high poverty-high brain drain" equilibrium. In this paper, we build a model which endogenizes high-skilled emigration and economic performances in order to derive the conditions under which multiplicity occurs. After identifying country-specific parameters, we find that in the majority of developing countries, the best equilibrium is selected and that the observed brain drain is inevitable. In 22 small developing countries however, the worse equilibrium prevails, implying that poverty and brain drain are increased by coordination failure. These countries require appropriate development policies, such as a temporary subsidization of the repatriation of their high-skilled expatriates. Our results are robust to the inclusion of a brain gain mechanism.
AB - The bidirectional causal links between high-skilled emigration and poverty can give rise to multiple equilibria and coordination failures. Two countries sharing identical characteristics may end up in either a "low poverty-low brain drain" equilibrium or in a "high poverty-high brain drain" equilibrium. In this paper, we build a model which endogenizes high-skilled emigration and economic performances in order to derive the conditions under which multiplicity occurs. After identifying country-specific parameters, we find that in the majority of developing countries, the best equilibrium is selected and that the observed brain drain is inevitable. In 22 small developing countries however, the worse equilibrium prevails, implying that poverty and brain drain are increased by coordination failure. These countries require appropriate development policies, such as a temporary subsidization of the repatriation of their high-skilled expatriates. Our results are robust to the inclusion of a brain gain mechanism.
KW - Brain drain
KW - Coordination failure
KW - Development
KW - Multiple equilibria
UR - http://www.mendeley.com/research/brain-drain-poverty-result-coordination-failures
U2 - 10.1007/s10887-011-9073-2
DO - 10.1007/s10887-011-9073-2
M3 - Article
SN - 1381-4338
VL - 17
SP - 1
EP - 26
JO - Journal of Economic Growth
JF - Journal of Economic Growth
IS - 1
ER -