Why Southeast Asia shouldn’t worry about “brain drain”

Here’s why the perception that skilled migration damages the source country is wrong.

The brain drain is a myth that reduces skilled migration to a zero-sum game in which one country “gains” brain-power which is “drained” out of another. Southeast Asian countries—both sending and receiving—should dismiss this outdated notion and instead view skill mobility as a catalyst for economic growth. By putting in place suitable policies, countries in the Asia and Pacific region will be able to maximize the gains from its young, dynamic, and skilled labor force.

The perception that skilled migration damages the source country is wrong for three reasons.

First, the supply of skilled workers is not fixed; workers respond to labor market opportunities by accumulating more and different skills, and the possibility to migrate is itself a powerful incentive for individuals to invest in human capital.

Second, not everyone who acquires new skills with the intent to migrate will be successful. Third, those who emigrate are not “lost:” when they return, they bring home new ideas, skills and financial assets. Even when they do not return, they form diaspora networks that open doors to global labor markets, trade, and business opportunities.

In 1993, the British government shifted towards a more selective education-based policy for recruiting Nepali nationals to work in the British Army. Because this is a lucrative foreign employment opportunity for Nepali men, more and more of them responded to the policy change by completing secondary education. However, the number of new recruits per year did not change: the result was an increase in the human capital stock, reflected in improvements in job quality and wages.

In the period 2000-2007, the US dramatically expanded the availability of visas for migrant nurses and their families. Consequently, the number of nursing graduates in the Philippines—the largest exporter of nurses in the world—grew from 9,000 to 70,000, and not all of them could migrate to the United States, resulting in a net increase in the supply of nurses in the Philippines.

Research shows that skilled immigrants boost the economies of their host countries by expanding the workforce, filling shortages in specific industries or occupations, contributing to new inventions, and starting new businesses. But it is important to also acknowledge that they affect the opportunities of their native counterparts. What this effect will be depends on the degree of substitutability between the two groups.

For example, math-analytical skills are more easily transferred across countries than managerial and communication skills, which are more culture- and country-specific. It is no coincidence, then, that immigrants tend to be concentrated in occupations intensive in math-analytical skills. Native workers will respond by moving towards skills that complement those supplied by immigrants, such as managerial and communication skills, in which they have a comparative advantage. This move will enhance the complementarities and reduce competition between immigrants and natives.

The mid-1990s internet boom led to a surge in demand for computer scientists in the US. As in the previous examples, the prospect of migration increased the computer science workforce in India and raised India’s overall IT output by 5%. In the US, on the other hand, workers left the sector, reducing the native computer science workforce by 9%. Consumers in both countries benefited from larger overall IT output, leading to lower prices for IT products. The combined income of both countries rose by 0.36% because of this flow of IT professionals from India to the US. The computer science workers who couldn’t migrate to the US joined the rapidly growing IT sector in India, and by the early 2000s those who had migrated had returned with newly acquired skills and connections. This brought the US-led boom to India, and by the mid-2000s India had surpassed the US in software exports.

There is no reason why this recipe for success cannot be replicated in the ASEAN Economic Community (AEC), if it takes full advantage of skills mobility. Currently, the ASEAN region relies on Mutual Recognition Agreements (MRAs) that cover eight regulated professions (accounting, architecture, dentistry, engineering, medicine, nursing, surveying, and tourism). But the definition of “skilled worker” is in constant evolution. It is no longer closely associated with the regulated professions, and it increasingly involves vocational occupations. An effective framework for skills mobility must be flexible enough to quickly respond to labor market needs.

For any skills mobility framework to work, ASEAN countries must eliminate the many technical and political barriers—both national and regional—that interfere with the ability of skilled workers to move within the region and do the jobs they are trained to do. Those barriers include burdensome legal requirements on employers, stringent standards for the transferability of education and training credentials, the lack of portability of social security benefits, and restrictive immigration rules. The development of common regional standards regulating the various industries would also eliminate technical barriers to skill mobility.

Currently, citizens of ASEAN member states do not enjoy priority status when applying for work visas in other ASEAN countries, and they may well find it easier to emigrate to OECD or Gulf countries. The implementation of a preferential work-based immigration system for ASEAN citizens would help retain more talent, create better employer-employee matches, and boost productivity within the region.

Barriers hampering skills portability in ASEAN are as outdated as the notion of a brain drain. Once they’re dismantled, the huge potential of the region’s talented young workers will be unleashed—with life-changing benefits lasting for generations.

This blog post is based on research from the publication, Skilled Labor Mobility and Migration: Challenges and Opportunities for the ASEAN Economic Community.