BRAIN GAIN vs. BRAIN DRAIN: A CASE STUDY OF PAKISTAN Safwan A. Khan, Vaqar Ahmed

Migration and Development: Emerging Debates Balanced growth theory (Haas, 2012) ▫Migration  development of human capital ▫Reverse transfers of money, knowledge, best practices, technology etc. Asymmetric development theory (Haas, 2012) ▫Migration  underdevelopment of the sending country ▫Brain drain Migration and development: no relationship (Skeldon, 2012)

The Case of Pakistan Average growth in annual emigration flows ( ): 7%

Research Approach Data ▫Pakistan Economic Survey ▫World Development Indicators ▫Bureau of Emigration & Overseas Employment Theory triangulation ▫As on previous slide Methodological ▫Qualitative methods (Key informant interviews) ▫Quantitative methods (Time-series analysis)

Migration Patterns in Pakistan GDP growth and emigration (% change)

Pakistan: Consumption, savings, and remittance flows

Top emigrant destinations

Migration by labor type

Migration by province

The number of overseas Pakistanis (2010) Source: Bureau of Emigration and Overseas Employment (2010)

Time-series Analysis 3 SLS estimation (Foldvari et. al, 2012) Variables used ▫GDP per capita (lny) ▫Physical capital stock (lk) ▫Annual emigration numbers (ltm) ▫Literacy rate (lr) Period covered ▫

Model specification lny t = β 10 + β 11 lnk t + β 12 tm t + β 13 lr t + u 1,t lnk t = β 20 + β 21 lny t + β 22 tm t + β 23 lr t + u 2,t tm t = β 30 + β 31 lny t + β 32 lnk t + β 33 lr t + u 3,t lr t = β 40 + β 41 lny t + β 42 lnk t + β 43 tm t + u 4,t

Regression Results Effect on GDP per capita

Effect on capital stock Effect on migration numbers

Effect on literacy rate

Migration & Development: Cross- cutting Themes Overseas exposure and training: qualified diasporas Japan: Knowledge and technology transfers due to increased migration Globalized citizenry Lack of economic opportunities  migration away from the country Pakistani exports 20% higher owing to Pak diasporas

1970s and 1980s: Loss in production quality as qualified personnel moved abroad

The case of illegal migrants: over 33 million in EU Bilateral readmission policies being undertaken by EU to address illegal migration The EU model of increased labor mobility and increased economic activity Two-way migration for reverse transfers and development Malaysia: improved markets  lower migration Labor Mobility and Development

Cluster phenomenon: concentration in sectors of comparative advantages rather than subsidies Exchange programs can be more beneficial for brain gain EU reintegration support fund: to facilitate migrant settlement in home country; run by NGOs instead of the GoP

Remittances & Development Higher remittances  inflationary pressures  poverty Remittance flows only second to export earnings Remittance spending  consumption goods and investment goods Use of remittance flows: financing of CAD  less available for expenditure on social services

Positive effect of remittances (Ahmed et al., 2010) ▫GDP growth ▫Household expenditure ▫Real investment ▫Poverty ▫Income inequality But need to be aware of ‘Dutch Disease’

Conflict & Migration Push and pull effects of migration Karachi: conflict  push migration  flight of capital FATA: conflict  pull migration  source of livelihoods

Case Studies on Returning Migrants Faculty at various public and private educational institutions Shifa International Omar Saif (SMSall) Centaurus Rozee.pk

Future Outlook 2014 withdrawal of US troops from Afghanistan  influx of Afghan migrants Push migration likely over the next 5 years  flight of talent Competitive markets  opportunities for commercial investments by diasporas ▫China ▫India

Policy Implications Skills training for manpower export  high end skills Too narrow a focus on remittances alone  engaging Diaspora in knowledge, ideas and technology transfer Easier transition for returning migrants  conducive business environment Diasporas  opportunities for export markets Competitive markets where Diaspora can enter into Joint Ventures: ASEAN economies, China, India

Thank you