Institutional impact of brain drain, human capital, and inequality: A political economy analysis

This paper uses an “exit and voice” political economy model to examine the institutional impact of brain drain, human capital, and inequality. Some of the main findings are: 1 the impact of brain drain m on institutional quality is U-shaped, with a maximum at m = 0; 2 the institutional impact of human capital h is U-shaped; 3 the likelihood that institutions will improve with m (h) is inversely related to international (domestic) inequality. Thus, the prospect that institutions will improve with human capital is likely to be small in SSA and LAC, where income inequality is substantially higher than in East Asia.