Calculating the Costs of Brain Drain

March 31, 2022

Calculating the Costs of Brain Drain

There are more people displaced by conflict and political turmoil today than at any time since World War II. Not only is the situation in Ukraine causing massive displacement of people, conflicts in the Middle East, ongoing crises in parts of Africa, and frequent violence in Latin America are some of the reasons forcing many people to leave their homes to ensure their safety.

The drama of these journeys captures most of the attention. We see innocent victims forced to flee their homes and risk their lives to reach safety. The future that awaits them is uncertain and the communities they are forced to flee to either struggle to absorb them or push them to move on. If we look beyond the human drama that captures headlines, however, these mass migrations cause some surprising secondary effects for the countries they leave and the ones they move on to.

What is brain drain?

The definition of brain drain is the migration of highly talented individuals from one country to another, for any reason. They may leave because they are offered better conditions someplace else, or because they are forced out due to war or political upheaval. Once they are settled and integrated into their host country, they often help expand the productive capacity of their new home. In some cases, their contribution is so valuable that they change the course of history.

One striking example

The term brain drain was first used to describe the movement of scientists and artists from Europe to the United Kingdom or the United States after World War II. More than thirty million people were killed in WWII and the war brought with it the largest movement of people in European history. Millions fled the fighting itself, the fear of ethnic or religious cleansing, or the fear of political persecution.

In 1933, the renowned physicist Albert Einstein renounced his German citizenship and relocated to the United States to escape Nazi Germany. He was 54 years old. Others like him such as Italy’s Enrico Fermi and Bruno Rossi, Switzerland’s Felix Bloch, and Germany’s Hans Bethe also left Europe in the follow up to and aftermath of the war. They would all become key to the development of nuclear capacity in the U.S.

Einstein himself did not work on the Manhattan Project, as did the others, but he was instrumental in convincing U.S. President Franklin Roosevelt in the late 1930s of the need to invest in the technology, which the Germans were already developing.

Many other important discoveries were made by scientists who had emigrated due to WWII. In fact, innovation in the U.S. greatly benefitted from their presence. The number of patents registered in the U.S. in the fields of expertise of these talented migrants increased 31 percent after 1933.

The positive effects of brain drain: brain gain

While some analysts claim that Germany suffers to this day from the innovation gap due to World War II’s human capital flight, it has since benefitted from the positive effects of brain drain. In 2015 and 2016, the country accepted an influx of Syrian refugees fleeing the civil war in their country. Once the housing and health needs were covered for the more than one million refugees who applied for asylum, the German government invested more than €90 billion to integrate them and provide training. The government, which must confront the problems of an aging population and a shortage of skilled workers that threatens economic growth, expected to recover its investment in the form of tax revenues from working Syrian immigrants by the end of 2021.

Ukraine: Counting the Losses

In the case of Ukraine, the ongoing conflict will leave lasting scars on the country in the form of damage to infrastructure and loss of human capital, but it will have lasting effects on other countries as well.

The World Bank estimates that remittances will increase eight percent to Ukraine in 2022, but remittances sent to several Central Asian countries from Russia will drop dramatically due to Russia’s exclusion from the SWIFT network. Armenia, Azerbaijan, Tajikistan, and Uzbekistan received over 50 percent of their remittance inflows from Russia last year. The Bank now estimates that remittances will drop by as much as 33% in Central Asian countries this year due to the international sanctions imposed on Russia and the ruble’s loss in value.

The almost four million refugees who were forced to flee Ukraine during the month of March means that surrounding countries are sure to experience an amount of brain gain as a result. Some countries are not only seeing an inflow of Ukrainians fleeing their country but of Russians as well.

The Russian brain drain

More than 25,000 Russians have arrived in Georgia since Russia’s invasion of Ukraine began. Similar stories are told coming out of Armenia, Turkey, and Central Asia and are an example of human capital flight. In many cases, these migrants are young, urban, tech, or creative professionals who can work remotely from almost anywhere in the world. Since Canada, the European Union, the United Kingdom, and the United States have closed their airspace to Russian flights, these educated professionals are heading to countries like Armenia and Turkey, and to Central Asia because they are against the war and fearful of what the future holds for them if they remain in Russia.

One tech entrepreneur, Lev Kalashnikov, told the BBC that he thinks Georgia will benefit from what he calls the biggest brain drain in Russia’s modern history. He tells of opening a chat group for ex-pats while waiting in a line in Georgia that quickly grew to 4,000 members.

Members discuss where to find housing, how to open bank accounts, and whether they can safely speak Russian in public.

Before the war broke out, there were about 3,000 to 4,000 Russians registered to work in Armenia. In the two weeks following the start of the conflict, about the same number arrived every day. Some have moved on to other countries but about 20,000 are reported to remain.

The mass migration taking place due to the conflict in Ukraine is sure to have dramatic and lasting consequences. Determining who stands to lose out the most from the resulting human capital flight is likely to take a long time.

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