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How Does High-Skilled Emigration Affect Small Countries: Microeconomic Evidence from Tonga

John Gibson () and David McKenzie ()

Annals of Economics and Statistics, 2010, issue 97-98, 167-185

Abstract: Brain drain has long been one of the most common concerns developing countries have about migration, particularly for small countries where high-skilled emigration rates are highest. However, while economic theory suggests a number of possible benefits, in addition to costs, from skilled emigration, the evidence base on many of these is very limited and there are doubts about how the experiences of India and China apply to much smaller countries. This paper presents a survey methodology for measuring at the micro level direct evidence as to the channels through which high-skilled emigration affects the sending country, and demonstrates its feasibility for Tonga, which has one of the highest traditionally measured brain drain rates in the World. Our methodology consists of defining a well-identified target population whose emigration is of potential concern -the most academically talented individuals -and tracking them down wherever they are in the world for our survey. Doing this for Tonga we find very high levels of migration and return migration. There is strong evidence for positive impacts of migration on human capital formation, knowledge transfer, tourism, remittances, and repatriated savings.There is weak or no evidence for migration playing a significant role in trade, FDI, or through diaspora activities. On net we conclude the impact of highly skilled migration is therefore largely positive for Tonga, and that the methodology developed seems appropriate for looking more broadly at the impact of brain drain in small countries.

Date: 2010
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Handle: RePEc:adr:anecst:y:2010:i:97-98:p:167-185