The Investigation and Computation of Brain Drain Effect on Economic Growth of Iran through Direct and Indirect Channels

Traditional literatures of brain drain stress its negative impact on the welfare and growth of sending economies, while new literatures introduce the possibility of brain gain through several channels (human capital, foreign direct investment (FDI), trade linkages and remittances). Thus, in this research we investigated the Brain Drain effect on economic growth of Iran, through studying direct and indirect channels of Brain Drain on economic growth, by using the system of simultaneous equations and Brain Drain data to G7 countries during 1339-1386. The estimation results with 3SLS method, say that: The coefficient of Brain Drain rate in human capital, labor force remittances and trade equations is positive, and in foreign direct investment and economic growth equations is negative. Human capital, physical capital stock, openness, FDI, the cross section effect between remittances and dummy variable of Islamic Revolution and oil exports have positive and significant effect on economic growth of Iran. Totally, the total (net) Brain Drain effect on economic growth of Iran is negative. This result can arise from wrong economic policies, for example; determination of grammatical rate of exchange, wage and interest. This operative due to relativerefraction of factors price and push effect in Iran. Also, according to computations of this paper average of the net loss of per human capital migrant on Iran's GDP is about 4 million dollars.