Skilled Migration Benefits the Country of Origin
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Skilled Migration Benefits the Country of Origin

WHAT LESSONS DOES THE CASE OF INDIAN HUMAN CAPITAL OUTFLOW TO THE UNITED STATES HOLD FOR ITALY?

by Stefano Breschi, Dept. of Management and Technology, Bocconi
Translated by Alex Foti


India is one of the biggest sources of international migration today, with over 15 million Indians residing abroad. Indians leaving their country after graduating in science, technology and engineering are an interesting case. In fact, they represent a driving force of the US innovation environment, contributing to around 6% of all innovations patented in the US and 15% of startups founded in Silicon Valley. Considering other countries which are the next exporters of skilled human capital, among which one should include Italy, the question arises of whether India is benefiting from this diaspora of minds. For a long time, the emigration of young graduates was perceived as a negative phenomenon, the so-called brain drain. Only recently a more positive vision has emerged, according to which intellectual migration can be a vehicle for the transfer of knowledge, technologies and skills back to the country of origin. In this sense, one of the most important channels is certainly the return of skilled personnel to their country of origin. The issue is so important that even the Indian Prime Minister, Narendra Modi, on a recent trip to the United States, spoke of Silicon Valley as a repository of Indian brainpower, waiting for the right time to return to the motherland.

Despite the importance of the problem, however, very little is known about the extent of the phenomenon, since official statistics do not record migrants returning to their countries of origin. For this reason, in a recent study, we considered the population of inventors of the 179 largest IT companies listed in the US for the 1975-2016 period, and analyzed the curricula of 5,500 Indian inventors. For each individual, we coded three sets of variables concerning, respectively: educational attainment (Bachelor, Master, PhD) and place (India, United States) and year of graduation; career (name and place of employer and period of employment); and the age of the inventor. Finally, based on this information, every Indian inventor in a given year was classified based on three possible conditions: non-migrant, migrant to the United States, returning migrant to India.

The most intense Indian migratory outflow to the US took place in the 1990s and 2000s. Moreover, about three quarters of the individuals examined had expatriated to study abroad, i.e. the year of entry into the United States coincides with the beginning of a Master or PhD program, while just over a quarter of Indian inventors migrated through the labor market. The data show that return rates differ significantly depending on the reasons behind the choice to move abroad: while one third of migrants in the United States for employment reasons returned to India by 2016, the same occurred for only 22% of migrants for study reasons. In both cases, however, the phenomenon appears to be far from negligible.

A more sophisticated econometric analysis reveals a further difference between the two types of migrants. The likelihood of returning to India decreases as a function of time spent in the United States for people that left India to seek employment, a result that suggests the increasing difficulty of transferring the skills acquired abroad back the country of origin as time passes, while the opposite occurs for migrants who left the country to pursue their studies.

Returning to the initial question, if the migration of qualified human capital to the United States constitutes a net economic loss for a country like India, the answer, although cautious and based on still exploratory analysis, seems to be negative. A non-negligible proportion of migrants returns to their country and, more importantly, the knowledge and skills acquired in the United States have value in India’s labor market. The potential for knowledge, innovation, and business relations that these people bring with them is significant. This lesson should be kept in mind by a country like Italy, which in 2016 alone lost 114,000 people – an estimated 30% of whom were university graduates – thus entering the unenviable club of the 10 OECD countries having the highest emigration rate.

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