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Human Capital-Arresting the Brain- Drain


Alireza shabanishojaei
Research scholar. Institute of Management in Kerala,
University of Kerala,
Kariyavattom Campus

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, (Volejnkov, 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 countrys 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 nations 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 countrys capacity to adopt new
technologies (Florian 2003).
Brain drain
The migration of talent across borders could be the simplest definition of Brain drain. Brain

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
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

Better economic prospects

Economic under development

Higher salary and income

Low wage/salary

Better level of living and way of life;

political instability

Better research facilities

Over production

Modern educational system and better opportunity for

Lack of research and other facilities;

Lack of freedom

Prestige of foreign training

Discrimination in appointment and promotion

Intellectual freedom

Poor working facilities

Better working condition and better employment

Lack of scientific tradition and culture

Unsuitable institution

Relative political stability

Desire for a better urban life

Presence of a rich, scientific and cultural tradition

Desire for higher qualification and recognition

Attraction of urban centres;

Better career expectation

Availability of experience/supporting staff

Lack of satisfactory working conditions.

Frequent chances of a lucky break in life

Technological gap

Allocation of substantial funds for research

higher qualifications



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 individuals 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

According to report of

World Bank

nowadays Indias 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

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
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 20072010, 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.
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.


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