Migration is a key factor influencing the economic growth of developing countries. Economic growth in the long run is the potential output that can be produced, and in the short-run, the real output produced in a period of time.
The key reason why emigration of skilled workers could be beneficial to developing countries is due to the remittance paid to homelands. Given that skilled workers are likely to earn more income abroad in global hubs such as the UK and USA this can benefit the while family living in e.g. Romania. This gives them a stable source of income from a well-paying job, which increases their marginal propensity to consume. As a result, there is an increase in aggregate demand, causing an increase in actual output and hence resulting in short-run economic growth. Indeed, workers from developing countries remitted a total of $325 billion in 2010. This can indirectly improve the economy’s balance of payments, as remittances are a key part of investment incomes, making emigration beneficial to achieving a government’s macro-objectives.
On the other hand, emigration can have detrimental effects. Once skilled workers move abroad, they are more likely to experience a greater quality of life. As such, it can influence them to remain abroad for a longer period of time as well as their families to move abroad. This is like to cause a permanent brain drain, where people move to more developed countries to take advantage of the increased job opportunities and economic welfare. As a result there is a decrease in full productive capacity, causing a decrease in the potential (trend) output of an economy, hence negative long run economic growth, which can substantially reduce the ability of developing countries to improve, and can hurt their economies as it deprives them of skilled workers.
However, emigration of skilled workers means that they have greater access to developing a transferable set of high quality skills. Given a large amount of emigration, it is highly likely that some proportion would choose to use their skills to benefit their home country. Migration can enable pairing of people’s skills and jobs. This access would not be found in the workers’ home country and would have limited their potential, considering they may earn several multiples of what they would have earned at home. As a result, negative long-run economic growth is unlikely to occur.
While skilled workers can gain an increased set of skills, it can have negative unintended consequences. It acts as a disincentive for developing countries to invest in education if they know that most people would emigrate anyway, since these governments are likely to be cash-strapped. For example, the Indian government is unsure whether to continue subsidizing its IIT, the elite engineering schools as most of its graduates end up abroad in Silicon Valley or Wall Street. As a result, it is possible that developing countries remain undeveloped through lack of education, which simply enhances emigration and damages the economy.
In conclusion, I believe emigration is a necessary aspect that developing countries should abide to. Given the globalisation that is now prevalent in the world, it imminent for developing countries to improve their connection abroad and increase foreign direct investment. Emigration has already helped Indian software companies break into the American market, and if this occurs on a global scale, it can boost long-run economic growth. Whether or not it is successful depends upon the incentive for skilled workers to constantly give remittance as well as use their skills in their home country, but ultimately, I believe that emigration offers a net gain for developing countries due to the investment prospects offered through it.
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