SEMINAR REPORT ON BRAIN DRAIN

Submitted towards the partial fulfillment of the requirement for the degree of Master of Business Administration MBA Batch 2012-2014

Submitted To: Dr. Deeraj

Submitted By: Dhamanpreet Kaur M.B.A-1st, SEC-b Roll No. 120426080

SCHOOL OF MANAGEMENT STUDIES PUNJABI UNIVERSITY PATIALA

1

ACKNOWLEDGEMENT

This seminar report has been made possible through the direct and indirect Co-operation of various persons, who have inspired me at every step of my work. It is a matter of pride for me to acknowledge my profound gratitude to my respected guide who always facilitates me in gaining practical knowledge.

I am very much obliged and thankful to my esteemed Guide MR. Sahil Raj for his valuable Cooperation and Guidance.

Dhamanpreet kaur

PREFACE

The report provides an opportunity to a student to demonstrate application of his/her knowledge, skill and competencies required during the technical session. Report also helps the student to devote his/her skill to analyse the problem to suggest alternative solutions, to evaluate them and to provide feasible recommendations on the provided data.

The report is on the topic of BRAIN DRAIN . Although I have tried my level best to prepare this report an error free report every effort has been made to offer the most authenticate position with accuracy.

Introduction
"Brain drain" is when highly skilled workers leave a country, region or economic sector in order to take a job somewhere else. The workers that are referred to using the term "brain drain" are highly skilled and highly trained. These workers usually have a great deal of education (through trade schools and college/university) and are expecting to be paid a great deal of money for their skills (and they will, in turn pay a great deal of taxes).

History of Brain Drain

Europe witnessed Brain Drain after World War II, because Europe was completely shattered and it was a down and out Situation for various European countries. At that time countries like Australia, United States of America and Russia presented huge working opportunities for skilled people of Europe. As a result many European Engineers, Doctors, Skilled workers, scientists etc migrated to other countries. In fact present day Australia is in developed state only because of mass migration of skilled people from the entire world to the Australia. Europe applied many economic reforms after World War II and Monterey collaborations of European countries helped Europe to stand back and reduce the rate of Brain drain.

ADVANTAGES AND DIS ADVANTAGES

The migration of skilled individuals to other nations is referred as the brain drain or the human capital flight. This migration of talented individuals may be due to conflicts, lack of opportunity, or health hazards where they are living. In India, brain drain is more because educated individuals are emigrating for higher wages and better opportunities. It has been in our consciousness since 30 years and many bright youngsters have emigrated mainly to US from early 1960s onwards including a large fraction of the graduating class at IITs in India.

Advantages
The money the emigrants have sent back home has helped in alleviating poverty in their homes. It has resulted in less child labor, greater child schooling, more hours worked in self employment and a higher rate of people starting capital intensive enterprises. The money remittances have also reduced the level and severity of poverty. Moreover, the money migrants sent back are spent more in investments such as education, health and housing, rather than on food and other goods.

Disadvantages
Due to the influence of brain drain, the investment in higher education is lost as the highly educated person leaves India and becomes an asset to other country. Also, whatever social capital the individual has been a part of is reduced by his or her departure. With all the college graduates leaving their homelands, it raises the question as to whether their skills are being put to good use in the destination country. The chances of Brain Waste are possible. I n a similar way, there is a shortage of skilled and competent people in India. A tremendous increase in wages of high-skill labour can be seen now in India. The emigration has also created innumerous problems in the public sector. Human capital flight, more commonly referred to as "brain drain", is the large-scale emigration of a large group of individuals with technical skills or knowledge. The reasons usually include two aspects which respectively come from countries and individuals. In terms of countries, the reasons may be social environment (in source countries: lack of opportunities, political instability, economic depression, health risks, etc.; in host countries: rich opportunities, political stability and freedom, developed economy, better living conditions, etc.). In terms of individual reasons, there are families influence (overseas relatives), and personal preference: preference for exploring, ambition for an improved career, etc. Although the term originally referred to technology workers leaving a nation, the meaning has broadened into: "the departure of educated or professional people from one country, economic sector, or field for another.

BRAIN DRAIN IN INDIA

Brain Drain means the migration of highly qualified experts like doctors, engineers, scientist and other trained persons from the under-developed countries to advancing countries. More or less, all the backward countries are suffering from this problem. India is also suffering from this brain drain seriously at the present moment. Thus brain drain is a direct loss, of trained experts in many fields, to the under-developed and poor countries. On the other hand, it is a net gain to the advanced countries. According to a UNO report, every year thousands of experts are migrating from backward countries to advanced countries like USA, UK, Canada, Germany etc. The under-developed countries are spending millions of rupees on the training of these experts. But the advanced countries are utilizing their services without spending a single penny on their training. Every year, thousands of highly talented doctors, engineers, scientists and other intellectuals leave India and migrate to foreign countries. They generally go to U.S.A, UK, Canada, West Germany, etc for monetary gains and facilities for higher research. US is the biggest gainer from the loss of India due to brain drain. Most of the students who go abroad for higher studies do not return to India. After seeing, the affluent life of foreign countries they lose all interest in their own country. Many Indians are teaching at various US Universities and other Institutions of higher learning. Some of them are placed on quite lucrative and high posts. There are so many causes of the brain drain in India. First of all, there is the unemployment problem. Even a talented person cannot get job. India is lacking in facilities for higher research work. The top appointments are quite few in India. Thus the talented experts like to seek new pastures abroad. There is another attraction of leading a higher standard of living in foreign countries, because the technical experts and intellectuals are given special facilities there. In foreign countries, there is the advantage that while learning a person can also earn his own living. The stipends in foreign countries are sufficient enough. A frugal Indian Student living there can also save something to send home.

There is no doubt that India is having vast natural and man power resources. If both these resources are put to the maximum utilization astounding advancement can be achieved in all fields. These technical and other talented reasons that we lose every year, can greatly help in the development of our natural resources. The government must take speedy steps to lure back home these talented sons of India who are living abroad. These experts can surely help in making India a great power in the world.

In this connection, even the people should also come forward and cooperate with the Government in solving this problem. The parents of the students should not encourage them to go abroad and settle there even if they are paid high salaries. The doctors, engineers and scientists owe a duty to their motherland. Our nation is spending huge amounts of money on their training. These people should not betray their own nation by
7

serving foreign nations. Today thousands of young Indian scientists and technicians are devoted the cause of rebuilding our nation. The country has already achieved the nuclear status as well as become a space power. There are enough opportunities for all the Indian scientists and engineers settled abroad, if they come back to India. They should play an important role in future progress of our country and share the honor of participating in this sacred task. There is no doubt that India is bound to become one of the most industrialized and scientifically advanced countries in the world. Let every Indian scientist, engineer and technician share the privilege of participating in the noble task of building nation. Thus they can earn the gratitude of their people.

Brain Drain in India Favorable or Unfavorable

A brain drain is a large emigration of individuals with the Knowledge or Technical skills, usually due to conflict, political instability, lack of opportunity, or health risks. A brain drain is generally regarded as an economic cost, because emigrants usually take with them the fraction of value of their teaching sponsored by government. Do you believe brain drain, regularly known as a main problem in our country is essentially a bad thing? I dont think so. In reality it is a big gift that capable minds are able to depart the country and track their goals and dreams elsewhere. At the first glimpse, it seems like a huge loss. A significant number of young people are parting the country. It looks like the state is losing a lot of knowledgeable and educated workforce. However, what will happen if they seal the borders and detain all this talent inside the nation? Would they be able to grow and be as creative as they would like to? Would they cause a technological revolution or will they join the queue of unemployed people as well as produce more problems for our already worried society? The biggest benefit of brain drain is that all those individual brains will get the opportunity to nurture in another atmosphere where they get more support as well as have more freedom to boom and this is why they leave. From a universal point of view, it will help talents develop and not be shattered. Here is a plain example, a very intelligent friend of mine got a medal in the International Physics Olympics as well as entered the university with no concourse. He graduated with most excellent marks, passed the Masters Entrance exam however was failed for some silly reason. For some time he unsuccessfully tried to get

around the difficulty, but at the end he gave up and determined to study his masters out of the country. Now he is a PhD as well as lives happily and works in the States. Would someone else in his condition have done something else? I think no. Furthermore, the knowledge that those young brilliant people gain overseas will be very helpful if they choose in a later phase to go back as well as settle down or engage in their country. The fact that young cultured people leave the country in the present situation is not only good for themselves however is also good for the world.
9

However on the other side, Brain drain is a severe loss due to the flow of the competent and effective sector of the country particularly oil producing states which are now in terrible need for trained and highly skilled employees. Brain drain influences all level of education in the world which suffers illiteracy estimation at 70 million people. The economy can also be affected due to expenditure on study whether state funded or privately. The migration even broadens the gap between the rich and poor countries. Brain drain is advantageous to the beneficiary countries as well as loss to countries of origin, because it deprives these countries from the innovations of their subjects. Such countries as a result have become culturally and technologically dependent on the West. An answer to this would be to encourage entrepreneurs to produce employment. The Government is supposed to give concessions in tax as well as decrease the hassles concerned in se setting up an industry. In this way we could make Indias workforce one of its major assets.

Brain drain: Boon for developed countries, but bane for India
Brain drain has become a major concern of the developing countries especially, India. The term, which was emerged in 1960s when the skilled workforce started emigrating from the poor countries to the rich countries in search of better job opportunities and living conditions, became a hot topic of discussion over the years. When the expatriates are going abroad in search of greener pastures, India has been losing its major skilled workforce that includes doctors, engineers, scientists and technicians. If we analyze the brain drain trends in India, we could find that there are many reasons why the country fails to hold back its talented youth.

10

Higher education scenario in India

In the recent years, the cut-offs for admissions became close to 100% in the best Indian universities. While the institutes are in the race of getting the best students in the country, the ambitious youth who fail to meet the irrational demands had to compromise on their dream of occupying a seat in any of the prestigious Indian universities. This leads them to explore the scope of higher education abroad. Most of the students who try their luck in higher studies abroad get into good universities as they have an edge over the students from other countries in terms of skills and knowledge. While this is the case of young students, the academically well qualified people prefer going abroad for higher research because they dont get the best chances, resources and facilities for research in India. A recent study conducted by Indian Institute of Management- Bangalore (IIM-B) shows that the students going for higher studies abroad has increased by 256% in the last 10 years. When 53,000 Indian students went abroad for higher studies in 2000, the figure shot up to 1.9 lakh in 2010. The US is the most sought after destination for the students, followed by the UK. There are many Indian students exploring study opportunities in countries in Australia, Germany and France.

11

EFFECTS OF BRAIN DRAIN ON ECONOMY

WHEN people in rich countries worry about migration, they tend to think of low-paid incomers who compete for jobs as construction workers, dishwashers or farmhands. When people in developing countries worry about migration, they are usually concerned at the prospect of their best and brightest decamping to Silicon Valley or to hospitals and universities in the developed world. These are the kind of workers that countries like Britain, Canada and Australia try to attract by using immigration rules that privilege college graduates. Lots of studies have found that well-educated people from developing countries are particularly likely to emigrate. By some estimates, two-thirds of highly educated Cape Verdeans live outside the country. A big survey of Indian households carried out in 2004 asked about family members who had moved abroad. It found that nearly 40% of emigrants had more than a high-school education, compared with around 3.3% of all Indians over the age of 25. This brain drain has long bothered policymakers in poor countries. They fear that it hurts their economies, depriving them of much-needed skilled workers who could have taught at their universities, worked in their hospitals and come up with clever new products for their factories to make. Many now take issue with this view. Several economists reckon that the brain-drain hypothesis fails to account for the effects of remittances, for the beneficial effects of returning migrants, and for the possibility that being able to migrate to greener pastures induces people to get more education. Some argue that once these factors are taken into account, an exodus of highly skilled people could turn out to be a net benefit to the countries they leave. Recent studies of migration from countries as far apart as Ghana, Fiji, India and Romania have found support for this brain gain idea.

The most obvious way in which migrants repay their homelands is through remittances. Workers from developing countries remitted a total of $325 billion in 2010, according to the World Bank. In Lebanon, Lesotho, Nepal, Tajikistan and a few other places, remittances are more than 20% of GDP. A skilled migrant may earn several multiples of what his income would have been had he stayed at home. A study of Romanian migrants to America found that the average emigrant earned almost $12,000 a year more in America than he would have done in his native land, a huge premium for someone from a country where income per person is around $7,500 (at market exchange rates). It is true that many skilled migrants have been educated and trained partly at the expense of their (often cashstrapped) governments. Some argue that poor countries should therefore rethink how much they spend on
12

higher education. Indians, for example, often debate whether their government should continue to subsidies the Indian Institutes of Technology (IITs), its elite engineering schools, when large numbers of IIT graduates end up in Silicon Valley or on Wall Street. But a new study of remittances sent home by Ghanaian migrants suggests that on average they transfer enough over their working lives to cover the amount spent on educating them several times over. The study finds that once remittances are taken into account, the cost of education would have to be 5.6 times the official figure to make it a losing proposition for Ghana. There are more subtle ways in which the departure of some skilled people may aid poorer countries. Some emigrants would have been jobless had they stayed. Studies have found that unemployment rates among young people with college degrees in countries like Morocco and Tunisia are several multiples of those among the poorly educated, perhaps because graduates are more demanding. Migration may lead to a

more productive pairing of people's skills and jobs. Some of the benefits of this improved match then flow back to the migrant's home country, most directly via remittances. The possibility of emigration may even have beneficial effects on those who choose to stay, by giving people in poor countries an incentive to invest in education. A study of Cape Verdeans finds that an increase of ten percentage points in young people's perceived probability of emigrating raises the probability of their completing secondary school by around eight points. Another study looks at Fiji. A series of coups beginning in 1987 was seen by Fijians of Indian origin as permanently harming their prospects in the country by limiting their share of government jobs and political power. This set off a wave of emigration. Yet young Indians in Fiji became more likely to go to university even as the outlook at home dimmed, in part because Australia, Canada and New Zealand, three of the top destinations for Fijians, put more emphasis on attracting skilled migrants. Since some of those who got more education ended up staying, the skill levels of the resident Fijian population soared.

13

Passport to riches
Migrants can also affect their home country directly. In a recent book about the Indian Diaspora, Devesh Kapur of the University of Pennsylvania argues that Indians in Silicon Valley helped shape the regulatory structure for India's home-grown venture-capital industry. He also argues that these people helped Indian software companies break into the American market by vouching for their quality. Finally, migrants may return home, often with skills that would have been hard to pick up had they never gone abroad. The study of Romanian migrants found that returnees earned an average of 12-14% more than similar people who had stayed at home. Letting educated people go where they want looks like the brainy option

14

PREVENTIONS
1. Providing ample opportunities of employment to the skilled workforce of nation, so that citizens of country can find good employment within the country only. 2. Just employment can never satisfy modern competent youth. They need smart earnings and respect in society. Government should set the norms in such a way that salaries of people are high enough so that they can match requirements of modern life style. 3. It has been observed that it is the worker class that represent maximum share in Brain drain. Workers prefer to work at place where they get high wages and superior working conditions. Developed countries satisfy both of these needs. Governments of developing nations should set minimum wages according to international standards only. 4. International communities of nations should try to install some diplomatic machinery that repels the unbalanced movement of workforce from one region of world to another region. 5. Educations system of a country should always have a match with employment policy of government. If no. of educated people is more than no. of jobs in public and private sector of country then it is natural that people will move out of country in search of work. 6. When some country indulges itself in a destructive activity like war, invasion etc then it creates internal instability and insecurity. People prefer to move out from such an insecure environment. This has been observed in various countries like Iran, Iraq and Afghanistan. 7. Governments of developing nations never conduct skill assessment of population. As a result, such nations never plan for the future of their workforce. This should be avoided and a proactive approach should be adopted to deal with Brain Drain.

15

REVERSE BRAIN DRAIN

Reverse brain drain, which refers to the migration issue, whereby human capita moves in reverse from a more developed country to a less developed country that is developing rapidly, which is commonly defined as brain drain. It is also termed as a logical outcome of a calculated strategy, where migrants accumulate savings, also known as remittances and develop skills overseas that can be used in their home country. Brain drain can occur when scientists, engineers, or other intellectual elites migrate to a more developed country to learn in its universities, perform research, or gain working experience in areas where education and employment opportunities are limited in their home country. These professionals then return to their home country after several years of experience to start a related business, teach in a university, or work for a multi-national in their home country. Their return is thus "Reverse Brain Drain". The occurrence of reverse brain drain mostly depends on the state of the countrys development, and also strategies and planning over a long period of time to reverse the migration. Countries that are attractive to returning intelligentsia will naturally develop migration policies to attract foreign academics and professionals. This would also require these countries to develop an environment which will provide rewarding opportunities for those who have attained the knowledge and skills from overseas. Brain drain used to be mostly a one-sided phenomenon. In the past, many of the immigrants from developing countries chose to work and live permanently in developed countries however, the recent economic growth that has been occurring back in their home countries - and the difficulty of attaining long-term work visas has caused many of the immigrants to return home

Another Form of Reverse Brain Drain

Recently there is a different type of reverse brain drain developing. This form of reverse brain drain differs from the way it is commonly viewed. It is explained by Salman Khurshid , the Minister of State for Corporate and Minority Affairs in India. He states that "Many second-generation Indians are coming back to the country. Therefore, reverse brain drain is no longer limited to the commonly perceived migration from a developed to a developing country by a first generation individual. Many of the worlds top multinational companies are beginning to send their top Indian minds to head their companies in India and have the idea of reverse brain drain which is, "So when we lose some, we win many back,"

16

Example of Methods and Policies to Enhance Reverse Brain Drain

The countries where reverse brain drain occurs are developing countries, or are countries who have suffered a significant impact from the brain drain from developed countries. Governments have attempted to reverse the flow of brain drain through implementing new contracts, scholarships, government policies, and several other methods. Three methods of implementing and enhancing reverse brain drain are through governments retaining their students, encouraging students to pursue tertiary studies abroad and promoting them to return, and engaging with the diasporas which will encourage expatriates to remit savings, act as bridges for foreign investment and trade, and facilitate the transfer of skills and knowledge. There are several countries that are prime examples of these three methods - and several other methods - which are India is one of the first countries where the phenomenon of reverse brain drain occurred. Previously, India was well known for being the country where numerous information technology students left for America for a better education and greater employment opportunities. The turning point was during the dot-com bubble. During this period many information technology experts were forced to return to India due to the slump and the loss of jobs in the United States. Previously, the Indian Government was unhappy of the occurrence of brain drain. Tens of thousands of migrants who had initially come to the U.S. for graduate engineering education, accepted jobs in Silicon Valley rather than return to their home countries, where professional opportunities were limited. Besides the dot-com bubble crisis, the economic and employment opportunities that existed back home; interested many Indian entrepreneurs to improve the economic development in the home country, which increased the number of returning intelligentsias to India. In addition, other reasons for the returning migration of the Indian high skill workers was due to their desires to return to their roots, a more family oriented lifestyle, and also security concerns in the post 9/11 period where Asian Indians were discriminated against because they were often mistaken for Arabs. The problem of a reverse brain drain is exacerbated by anxiety in developed countries. This is of particular concern in the United States of America, where not enough undergraduate students are seeking advanced degrees at the doctorate level. This leads to several consequences. Initially, it increases the widespread replacement of native-born with foreign born professionals and academics in the areas of greatest intellectual and economic interest to the developed country. This is a problem since foreign-born professional and academics from developing countries, such as China or India, are increasingly motivated to return to their home countries due to rapid economic growth, increasing living standards, and increasing opportunities in their home country. The reverse migration of the foreign-born professionals and academics leaves developed countries with a lack of intellectual capital. This may lead to economic drawbacks in developed countries and diminishing opportunities for native-born professionals. Statistics show that more than 52% of Silicon Valleys startups during the recent tech boom
17

were started by foreign-born entrepreneurs. In addition, the "foreign-national researchers have contributed to more than 25% of our global patents foreign-born workers comprise almost a quarter of all the U.S. science and engineering workforce and 47% of science and engineering workers who have PhDs. Furthermore, 54% of engineering doctorates went to foreign students, who returned to their home country after graduation, which disheartens the executives of research and development in the developed countries.

18

CONCLUSION
In assessing the usefulness of the brain drain it is important to understand that for some of the worlds developing countries the gains from migration accrue neither from migrant remittances nor do they return home with amplified skills acquired abroad. They are instead from the increase in promotion of education of highly skilled labour in developing countries as well as investment in infrastructure. Nonetheless the existence of vast remittance economy worldwide worth $510 billion in 2007 to a degree question whether Stark's claim are entirely accurate as this process is seemingly occurring at an alarming rate generating uneven levels of development globally.

19

Bibliography
Employment Information: Indian Labour Statistics 1994. Chandigarh: Labour Bureau, Ministry of Labour, 1996. Article from business today News from times of India World Bank. World Development Report, 2000/01. Washington, DC: World Bank, 2000 United Nations Population Division. Populations Database. New York: UN 2002

20