Brain drain in globalization: A general equilibrium analysis from the sending countries’ perspective

Abstract

High-skilled emigration has been found to affect developing economies via different channels. With a calibrated general equilibrium framework, this paper finds that the short-run impact of brain drain on resident human capital is extremely crucial, as it does not only determine the number of high-skilled workers available to domestic production, but it affects the sending economy’s capacity to innovate/adopt modern technologies. The latter impact is particularly important in globalization, where capital investments are made in places with higher production efficiencies. Hence, despite the positive feedback effects, those countries facing prevalent high-skilled emigration are the most candid victims to brain drain.brain drain; capital flow; development; human capital