The "Brain Drain" problem: The case of India

The brain drain problem: The case of India

by

Sebastian Meyer

Semester 2, 2003/2004

Table of Contents

1. Introduction 1

1.1. Explanation of the term Brain Drain 1
1.2. History of Brain Drain 1

2. Brain Drain Reasons and Consequences 2

2.1. Reasons for Brain Drain in India 2
2.2. Consequences for India 3

3. Effects of the brain drain on welfare and growth 3

4. Measures to improve the situation 5

5. Conclusions and prospects for the future 6

Bibliography 7

1. Introduction

The objective of the present assignment is to identify and evaluate the circumstances, which lead to a ‘Brain Drain’ and to illustrate measures to improve the situation for the country concerned. In order to describe the structure of this work more vividly the author decided to illustrate the brain drain problem with regard to India. Furthermore, a forecast concerning India’s future will be made at the end.

1.1. Explanation of the term Brain Drain

‘Brain Drain’ is an expression that was popularized in the 1960s with the loss of skilled labour power from a number of poorer countries, including India, to richer countries (Pearce 1994 p. 43). Of particular interest are those emigrants with scarce professional skills, like doctors, engineers and especially information technology specialists (ITS). Moreover, it has to be mentioned that the education of emigrating specialists had been carried out at extensive expense of their home country’s government (www.queensu.ca). The loss of skilled experts is also a loss of a country’s human capital, which is significant in bringing its own economy to prosperity.

1.2. History of Brain Drain

After World War II, more precisely from the early 1960s onwards Indian specialists routinely left India for the economic opportunities and better living conditions to western civilized countries, in particular to the UK and the US (www.sims.berkeley.edu). During the 1970s and 1980s, entire graduating classes from elite Institutes of Technology emigrated to achieve professional and economic success in a foreign country. Today, the US economy is outsourcing parts of its high tech to India in order to reduce costs (New York Times 03.02.04). Later in this assignment, we will take a closer look at today’s and future development of the brain drain.

2. Brain Drain Reasons and Consequences

2.1. Reasons for Brain Drain in India

In his book ‘On Brain Drain, Brain Gain and Brain Exchange within Europe’, the author Martin Wolburg provides some reasons for the existence of brain drain. First, we can mention incomplete information. Incomplete information means that people could not distinguish between two possibilities due to insufficient information about working and living conditions. Obviously, this does not play a significant role as a result of the high differences India and e.g. the US have. As a second possible reason we can cite unemployment. Unemployment led individuals do not receive income from work and if a person does not have the possibility to work their human capital depreciates (Wolburg 2001 p. 38). Unemployment is more likely to be seen as a reason for India’s brain drain. In literature, there is a distinction between the so-called push and pull factors. Push factors can be identified as political instability, unemployment and uncompetitive remuneration. Concerning India, we can mention that there is today more political stability but with increasing unemployment 8.8% compared to 7.3% in 1999-2000 (www.in.rediff.com and www.theodora.com). Besides those push factors pull factors also exist which lead individuals to move to a foreign country. Pull factors are identified as higher standards of living and working, family reunions and better prospects for children (www.reservebank.gov) Consequently, these factors are the main reason for India’s brain drain. Another factor that facilitates the Indians to go to the US is that most Indians are able to speak English (www.sims.berkeley.edu).

2.2. Consequences for India

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