Investigating the Effect of Migration on Human Capital Accumulation and Economic Growth in Developing Countries (1975-2000)

Migration of highly talented people (brain drain) has increased sharply in recent decades. In the past, it was supposed that brain drain just had negative effects on the origin countries. But, it is confirmed now that migration might have positive effects on those countries, too.We examine the effects of the brain drain on the formation of human capital and economic growth of the origin countries (developing countries) during 1975 to 2000 by using panel data method. Our results show that the prospect of migration has a positive and significant effect on the formation of human capital via the incentive mechanism. On the other hand, the direct effect of migration of highly educated people on human capital accumulation of the country of origin is negative. Our findings imply that those opposite effects cancel out each other. Therefore, the net effect of migration on human capital accumulation is zero. Also, we examine the effect of brain drain on economic growth in the country of origin. Our findings indicate that migration of skilled or highly educated people has a negative and significant effect on the economic growth of those countries. So, our results do not imply a brain gain for sending countries.