Brain drain versus remittances

by Kevin Hope

“Eight out of ten Haitians and Jamaicans who have college degrees live outside their country and more than fifty percent of the university educated professionals from many countries in Central America and the Caribbean also live abroad.”

This is according to a recent World Bank publication entitled “International Migration, Remittances and the Brain Drain.”{{more}}

Maurice Schiff the co-editor of the report revealed that brain drain is massive within small developing countries and warrants some concern.

“Over 50 percent of college graduates leave countries in Central America and the Caribbean; in some of them, the figure is as high as 80 percent,” he said.

Whilst the consequences of the brain drain must be taken seriously, according to the report, some good does arise from this pattern. This good is defined in terms of the remittances to the home country.

The report clearly showed that the money sent back home helped to alleviate poverty. “Close to 200 million people are living outside of their home countries, with remittances estimated to reach about US$225 billion in 2005.”

In a Guatemala case study, remittances reduced the level and severity of poverty. The biggest impact was on the severity of poverty, with remittances making up more than half the income of the poorest ten percent of families. The money migrants sent back to Guatemala was spent more in investments – such as education, health and housing, rather than on food and other goods.

As a result, policymakers are faced with a balancing act, on one hand to stem the perceived brain drain while on the other, to encourage and direct the flow of remittances to their most productive use in order to stimulate development.