“Human Capital-Arresting the Brain- Drain”

I. Alireza shabanishojaei

Research scholar. Institute of Management in Kerala,

University of Kerala,

Kariyavattom Campus

Email:Alireza.shabani@hotmail.com

ABSTRACT:

The phenomena of “Brain Drain” have a direct impact on “Human capital”. This study attempts

to discover theoretical cause of the “Brain Drain” in different countries and especially in India.

Brain Drain defined as “The movement of highly skilled and qualified people to a country where

they can work in better conditions and earn more money”. With the emigration of educated and

skilled people in fact the home country are losing the Human capitals. A part of this paper

reviewed the policies of India government and Kerala state in the case of “Reverse Brain drain”.

Keywords: Brain Drain, Human Capital, Reverse Brain drain

Importance of Human capital

The origin of human capital goes back to the emergence of classical economics in 1776, and

thereafter developed a scientific theory (Fitzsimons, 1999).In the 60s of the 20th century

“Human capital” topic was further explained by economists, representatives of the Chicago

School. “Attention Chicago economists also focused on building human capital theory, which

was a major contribution to theoretical research in education. Their theory of human capital has

become a decoration ‟ Chicago School,” (Volejníková, 2005). Schultz (the leader of this school)

in 1981 wrote: “Take into account the innate and acquired skills. Those are important and may

invest to expand, will form the human capital.”

The most important author of human capital theory is G. Becker. in 1964 he developed a

theoretical basis for deciding on investment in human capital in his book (Becker, 1993).

Broadly, the concept of human capital is semantically the mixture of human and capital. In the

economic perspective, the capital refers to „factors of production used to create goods or services

that are not themselves significantly consumed in the production process‟ (Boldizzoni, 2008).

Along with the meaning of capital in the economic perspective, the human is the subject to take

charge of all economic activities such as production, consumption, and transaction. On the

establishment of these concepts, it can be recognized that human capital means one of production

elements which can generate added-values through inputting it.

Bontis.N(2011), N. C. Dragonetti, K. Jacobsen a G. Roos(1999) defined the human capital as the

human aspect in the organization; the combined skills, intelligence and expertise that gives the

organization its distinctive character. The human factors of the organization are those that are

capable of learning, innovating, changing and providing the creative thrust which if properly

motivated can ensure the long-run survival of the organization.

According online British Dictionary The human capital is defined as “The collective skills,

knowledge, or other intangible assets of individuals that can be used to create economic value for

the individuals, their employers, or their community”

New theories of economic growth characterized the human capital as the sum of the individual

congenital and acquired skills, knowledge, and experiences of individuals. The Organization for

Economic Co-operation and Development (OECD) defines human capital as knowledge, skills,

abilities, and other characteristics that are relevant for economic activity.

Investment in human capital plays an significant role in a country‟s economic development.

Barro (1991) by examining data in the period 1960-1985 from 98 countries, found a positive

relationship between the growth rate of real per capita Gross Domestic Product (GDP) initial

human capital and. This means that countries with higher human capital may have higher

economic growth.

Higher human capital can basically determine a nation‟s productivity which is considered a very

important source of economic growth besides the expansion of inputs.

The evidence now seems to show that educational growth does contribute to output growth.

There also appear to be grounds for thinking that human capital has a substantial influence on

technological catch-up, possibly through improving a country‟s capacity to adopt new

technologies (Florian 2003).

Brain drain

The migration of talent across borders could be the simplest definition of “Brain drain”. Brain

drain or Human capital flight which refers to the emigration of intelligent, well-educated

individuals to somewhere for better pay or conditions, causing the place they came from to lose

those skilled people, or "brains."

The first expression “brain drain” coined was by the Royal Society in the UK, “brain drain”

describe emigration of "scientists and technologists" to United States and Canada in the 1950s

and early 1960s. Another source indicates that this term was first used in the United Kingdom to

describe the influx of Indian scientists and engineers.

Brain drain cannot happen only when persons educated in their home country emigrate in search

of higher wages or better opportunities, but also occur when individuals who studied and

completed their education abroad do not return to their home country.

Types of brain drain

Brain drain has several types as follows:

Geographical: The emigrated of college graduates or highly trained individuals from

their area of residence, for instance, those migrating from the developing countries to

developed countries .

Organizational: The flight of highly trained, creative and talented employees from large

enterprises (e.g. Yahoo, Microsoft) that happens when employees recognize the

leadership and direction of the company to be stagnant or unstable, and thus, unable to

continue with their personal and professional desires.

Industrial: The movement of traditionally skilled workers from one sector of an industry

to another. For example, jobs in the United States and other governments, also known as

the public sector, have experienced significant generational brain drain as tenured boomer

generation employees retire. Heightened competition for talent from the private sector

and budgetary constraints has made it increasingly difficult to attract replacements for

these retirees.

Causes of Brain Drain

Analysis and Identification of the reasons of emigration of trained scientific and highly qualified

skilled and technological personnel is necessary for reformulating effective international and

national policies that would effort on creating host environment in developing countries for

skilled manpower. The reasons are often seen in a bi-polar model of `pulls' and `push', the

`pulls' used by the immigration countries and the `push' used factors operating in the emigration

countries, in which the differentials between the two determine the decision of the individual

who migrates. The push factors are depressing characteristics in the country of the origin which

produce emigration. From the other point of view, pull factors are the attracting features in the

country of destination which induce immigration.(W, Adams, 1963).

Nevertheless, observes that pull-push approach is analytically weak, for it does not precisely take

into account the complex, comparative situations which are very crucial in the analysis of brain

migration.

Some of the important push and pull factors (as listed in Economics of Brain Migration' by B.N

.Ghosh and Ghosh, 1982), involved in brain migration are given below:

Push factors: Pull factors:

Under employment

Economic under development

Low wage/salary

political instability

Over production

Lack of research and other facilities;

Lack of freedom

Discrimination in appointment and promotion

Poor working facilities

Lack of scientific tradition and culture

Unsuitable institution

Desire for a better urban life

Desire for higher qualification and recognition

Better career expectation

Lack of satisfactory working conditions.

Better economic prospects

Higher salary and income

Better level of living and way of life;

Better research facilities

Modern educational system and better opportunity for

higher qualifications

Prestige of foreign training

Intellectual freedom

Better working condition and better employment

opportunities

Relative political stability

Presence of a rich, scientific and cultural tradition

Attraction of urban centres;

Availability of experience/supporting staff

Frequent chances of a lucky break in life

Technological gap

Allocation of substantial funds for research

BRAIN DRAIN IN INDIA

There are various causes for the brain drain in India. According to Push and Pull factors the

reasons of brain drain could divided in to two aspects: countries factors and individual‟s factors.

In terms of countries factors, the causes to be social environment (Lack of opportunities, Political

instability, Over production, Poor working facilities, etc.); in host countries: Better economic

prospects, Higher salary and income, Better level of living and way of life;, Better research

facilities, etc.)

In terms of individual reasons, there are Desire for a better urban life Desire for higher

qualification and recognition, Better career expectation Lack of satisfactory working conditions,

etc. Keeping all these in mind we can identify some causes for the brain drain in India.

Causes of the brain drain in India

1. Higher Education:

Higher education in India has recorded impressive growth since Independence. Before

Independence, access to higher education was very limited, less than a million students in 500

colleges and 20 universities were enrolment. Since independence, the growth has been very fast

; The number of Universities has increased 34 times from 20 in 1950 to 677 in 2014. The sector

boasts of 45 Central Universities of which 40 are under the purview of Ministry of Human

Resource Development, 318 State Universities, 185 State Private universities, 129 Deemed to be

Universities, 51 Institutions of National Importance (established under Acts of Parliament) under

MHRD (IITs - 16, NITs – 30 and IISERs – 5) and four Institutions (established under various

State legislations). The number of colleges has also registered manifold increase of 74 times with

just 500 in 1950 growing to 37,204, as on 31st March, 2013.

In a decade, India added nearly 20,000 colleges (increased from 12,806 in 2000-01 to 33,023 in

2010-11) which translate into a growth of more than 150%. Number of degree granting

universities from 256 increased to 564, primarily due to deemed-universities and private

universities.

According to report of World Bank nowadays India‟s higher education system is the third

largest in the world, next to the United States and China. Although India is seeing a large

percentage of its students traveling abroad to study. The Organisation for Economic Co-

operation and Development (OECD) in 2013 reported the largest numbers of international

students are from China, India and Korea.

Despite significant progress since independence, higher education in India is faced with four

broad challenges (British Council India, 2014):

The supply-demand gap: India has a low rate of enrolment in higher education, at only

18%, compared with 26% in China and 36% in Brazil. There is enormous unmet demand

for higher education. By 2020, the Indian government aims to achieve 30% gross

enrolment, which will mean providing 40 million university places, an increase of 14

million in six years.

The low quality of teaching and learning: The system is beset by issues of quality in

many of its institutions: a chronic shortage of faculty, poor quality teaching, out-dated

and rigid curricula and pedagogy, lack of accountability and quality assurance and

separation of research and teaching.

Constraints on research capacity and innovation: With a very low level of PhD

enrolment, India does not have enough high quality researchers; there are few

opportunities for interdisciplinary and multidisciplinary working, lack of early stage

research experience; a weak ecosystem for innovation, and low levels of industry

engagement.

Uneven growth and access to opportunity: Socially, India remains highly divided;

access to higher education is uneven with multidimensional inequalities in enrolment

across population groups and geographies.

2. Employment:

India has skilled and semi-skilled, employed and unemployed human resource, in 2012, there

were around 487 million workers, the second largest after China Of these over 94 percent work

in unincorporated, unorganised enterprises ranging from pushcart vendors to home-based

diamond and gem polishing operations. The organised sector includes workers employed by the

government, state-owned enterprises and private sector enterprises. In 2008, the organised sector

employed 27.5 million workers, of which 17.3 million worked for government or government

owned entities.

2.1. Migrant workers

The main two broad groups of migrant labourers one that migrates to temporarily work

overseas, and another that migrates domestically on a seasonal and work available basis. More

than 4 million migrant workers in the Middle East are Indian-origin labourers. These migrant

workers are attracted by better salaries (typically US$2 to 5 per hour), possibility of earning

overtime pay, and opportunity to remit funds to support their families in India.

The world map of Indian labour (above) shows that most Indian expatriate workers find jobs in

the Middle East. After Saudi Arabia, migrant workers choose United Arab Emirates, Oman,

Qatar, Kuwait, Malaysia, Bahrain and Jordan.

Saudi Arabia is the prime destination for Indian labourers working abroad, data from the

Ministry of Overseas Indian Affairs shows. Between 2008 and 2012, over 35 lakh Indian

labourers went to the Arab nation. On the other hand, Indians in the United Arab Emirates

(UAE) constitute the largest part of population of the country. Over a million Indian migrants

(mostly from the southern states Kerala and Tamil Nadu) are estimated to be living in the UAE

(2000), who form over 30% of the total population of the UAE.

Inefficient working situations and Low salaries and wages can be the first motive that causes the

movement to the countries with better living standards and facilities. There is huge difference in

terms of salary in all three groups of countries namely developed, developing and

underdeveloped. To demonstrate, skilled workers aim to get pleasing salaries in return for their

labour but the working conditions in their homeland don't fulfil their wishes.

Therefore, those workers prefer to move another country in order to have better living conditions

with high salaries. Employment is one of the strong reasons for brain drain in India.

Kerala brain drain

Betweem1972 to 1983 there was an explosion in the number of young, educated workers moving

from Kerala to the GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the

United Arab Emirates). This phenomena named “ The Gulf Boom”. . In 2008, the GCC states

contained a total Karalee population of more than 2.5 million, who annually sent home a sum of

around $ 6.81 billion (US), which is more than 15.13% of the total Remittance to India in 2008.

In 2013 the remittance was more the 60,000 crore rupees.

According to V.J. Kurien, Managing Director, Cochin International Airport Limited (CIAL), the

airport facility has grown by 23 per cent on an average every year since its start. CIAL has

grown from a 4 lakh company in 1998/1999 to 43 Lakh Company in 2010/2011. He noted that

the non-resident Indians from Kerala, who travels to the Middle East, have played an

instrumental role in the growth of Cochin International Airport.

Remittances are a key source of income for Kerala's economy. In 2003 for instance, remittances

were 1.74 times the revenue receipts of the state, 7 times the transfers to the state from the

Central Government, 1.8 times the annual expenditure of the Kerala Government, and 15 to 18

times the size of foreign exchange earned from the export of cashew and marine products.

Trends in Reverse Brain Drain

Reverse brain drain is sometimes related to the term „brain circulation‟, which is when migrants

return to their own country on a regular or occasional basis, sharing the benefits of the skills and

resources they have acquired while living and working abroad.

Almost of the reverse brain drain happens are developing countries, or are countries that have

suffered a significant impact from the „brain drain‟ from developed countries. Governments have

attempted to reverse the flow of brain drain through implementing new contracts, scholarships,

government policies, and several other methods.

Three methods of implementing and enhancing reverse brain drain are through governments

retaining their students, encouraging students to pursue tertiary studies abroad and promoting

them to return, and engaging with the diasporas which will encourage expatriates to remit

savings, act as bridges for foreign investment and trade, and facilitate the transfer of skills and

knowledge.

China, India, Pakistan, South Korea, Taiwan, Mexico and etc. are the some of the countries

following the reverse brain drain polices. In summary different chosen policies are as follow:

The change on the central government policies, Freedom to immigrate and emigrate freely,

Political stability, Changes in the way of the government uses people, Conducive domestic

environment, Improve and strengthen the institutions of higher learning at home, Program for the

Support of Science and Research, Internationalize the domestic academic market. Etc

In addition, the social phenomenon could be the reason of the reverse brain drain to home

country. For instant, in wake of the September 11 attacks and the financial crisis of 2007–2010, a

large number of expatriates forming the Pakistani diaspora throughout North America, and even

Europe, began to return to Pakistan

India and Reverse Brain Drain

According to NASSCOM, McKinsey Report 2005 5, about 25,000 IT Professionals returned

to India between 2000 and 2004.

A Stud regarding to reverse brain drain (Sabharwal, Meghna .2013) found out that, 27%

returned due to immigration issues as their spouses could not get work there, 32% because of

cultural ties which did not fit in United States of America, 36% returned for family reasons (such

as aging, parents, family ties and raising children), 45% of the Survey respondents returned due

to career prospects, better job opportunities, flexibility in types of research, ease in availability of

funds and job security in India.

Reasons for Reverse Brain Drain in India

Through the 1960s to the 1990s, India suffered from a brain drain. People of Indian origin,

moved to other countries in search of better education and employment opportunities. However,

India has come a long way from being agricultural economies and are now being converted into

dynamic hubs of technology, characterized by the positive impact of brain circulation.

New economy policy: in 1991 establishing of new tax rules and legislations paved the

way for better environment. The subsequent of new rules affected on the growth of the

private sector in India, the highly skilled professionals feel that they would be fruitfully

rewarded for their talents and hard work in the Indian private sector.

Recession in the West: Many Indians lost their jobs in wake of Recession in the West in

between 2000 and 2004. The crisis forced several unemployed in the western countriesto

migrate to countries like India which are emerging in the international markets, with

India being looked as been very attractive in terms of job opportunities. The rapid

development of the IT Sector in India benefited the IT Professionals.

Cultural incentives: Besides the policies, there are also cultural incentives for the

intellectual elites to return home such as the attachment/importance given to cultural

affinity / cultural values, problems of aging parents, the desire to expose the children to

Indian culture and a hope for a more social life-style.

Other reason :

Security concerns in the post 9/11 period where Indians were discriminated

against because they were often mistaken for Arabs(Elizabeth Chacko. 2007)

Flawed and cumbersome immigration policy, non-granting of Visas to students

and work permits to the spouses only aggravated the problem.

Reverse Brain Drain in Kerala

The effort of the government is to retain the talent at home and promote the growth of the local

economy also Kerala government trying to keep its best and brightest at home is through the

establishment of business parks and knowledge cities. The aim to attract investment and generate

jobs in sectors such as engineering.

Using a public-private partnership model, the Kerala State Industrial Development Corporation

(KSIDC) is building a sprawling business zone in Cochin that includes electronic hardware

manufacturing facilities, jewellery production spaces and biotechnology labs.

CONCLUSION

Stopping Brain Drain very important to developing country. Every year educated and high

skilled people migrate from developing country to either developed country or Gulf country. The

reasons of brain drain could divide in to two aspects: Push and Pull factors. Push factors consist

of “ Under employment, Economic under development, Low wage/salary, political instability,

etc. on the other hand Pull factors including : Better economic prospects, Higher salary and

income, Better level of living and way of life, Better research facilities, Modern educational

system and better opportunity for higher qualifications , etc.

Nowadays the status of Higher Education and employment are improved In India but still so

many Indian people emigrate to abroad. Indian government in terms of Reverse Brain Drain,

established of new polices as well as “new tax rules and legislations paved “.moreover the

cultural incentives, social phenomena and economy phenomena (Recession in the West) effected

on the retention of Indian immigrants.

References

B.N. Ghosh & Roma Ghosh (1982), "Economics of Brain Migration". Deep & Deep

Publications.

Barro, r. J. (1991). "Economic growth in a cross section of countries". Quarterly journal

of economics, 407-43

Becker, g. S.( 1993). "Human capital – a theoretical and empirical analysis, with special

reference to education". 3rd edition. Chicago. The university of chicago press, ltd.

Biju govind(Tuesday, august 192008), "GCC residency cap may force lakhs to return";

The Hindu

Boldizzoni (2008). "Means and ends: the idea of capital in the west; 1500-1970, New

York: palgrave macmillan.

Bontis, n., dragonetti, n. C., jacobsen, k., roos, g.(1999): "the knowledge toolbox: a

review of tools available to measure and manage intangible resources". European

management journal, 17 (4), pp. 391 -402

Cervantes, mario; guellec, dominique (January 2002). "The brain drain: old myths, new

realities". Oecd observer. Retrieved 2011-02-28.

chandra korgaokar and geir myrstad (1997). "Protecting children in the world of work

(see article on child labour in the diamond industry)". International labour organization.

Pp. 51–5

Elizabeth chacko. (2007). " From brain drain to brain gain: reverse migration to

Bangalore and Hyderabad", India‟s globalizing high tech cities. Geojournal, 68(2-3),

131-140. P. 135

Collins English dictionary - complete & unabridged 10th edition. Retrieved (November

13, 2014), "Human capital" (n.d.). from dictionary.com

website:http://dictionary.reference.com/browse/human capital

Meyer, Jean-Baptiste & Brown, Mercy. (1999). "Scientific diasporas: A new approach to

the brain drain". World Conference on Science: UNESCO - ICSU.

Sabharwal, meghna (2013): “a study should i stay, should i leave, reverse migration of

Indian born scientists and engineers, times of India,

Sara hamdan (4 January 2012). "a call for private investment in gulf health care". New

york times. Retrieved 8 july 2013. "the council, an economic and political union of arab

countries, is made up of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United

Arab Emirates."

Schulz, t. W.(1981): "investing in people. The economics of population quality".

Berkeley. University of california press.

Volejníková, j.( 2005) " moderní kompendium ekonomických teorií od antických

zdrojů až po3. " Tisíciletí. Praha. Profess consulting, 378 p. Isbn 80-7259-020-0

Walter adams(1968). " The brain drain " the mac millan, new york.

Zachariah, K. C. & Rajan, S. Irudaya (2008), Kerala Migration Survey 2007 ,

Department of Non-resident Keralite Affairs, Government of Kerala, p. 48.

"Economic survey 2010-2011". The government of India. 2012.

Https://www.cia.gov/library/publications/the-world-factbook/geos/in.html

"India country summary of higher education". World Bank.

"India". (2012)Cia, united states.

Global commission on international migration. (2005). "migration in an interconnected

world: new directions for action.

Gulf dream(1990).: for Indians the golden beaches still gleam, Malayalam manorama

yearbook;

Http://mhrd.gov.in/statist

India 2009: a reference annual (53rd edition), 237

Planning commission of india (2007). "labour laws and other labour regulations". The

government of India.

The report Dubai 2007. Oxford business group

Understanding India - the future of higher education and opportunities for international

cooperation( 2014)British council India