Human capital flow project receives $220,000 Weatherhead prize:

The executive committee of the Weatherhead Center for International Affairs awarded $220,000 this past December to a research team comprising four University faculty members to commence a long-term research project on “International Human Capital Flows and their Effects on Developing Countries.” This decision marked the center’s fourth annual award of a Weatherhead Initiative grant, a program established in 1998 by a generous gift from Albert and Celia Weatherhead and the Weatherhead Foundation.

The interdisciplinary research project will analyze political economy factors that drive the immigration policies of rich countries in order to better understand the forces affecting the international demand for human capital. The research team will examine the impact of these policies on developing countries by studying the economic and political effects of skilled emigration on those countries. The team will also explore policy responses available to developing countries in the face of increasing global competition for skilled workers. The premise of this research proposal is that cross-border flows of human capital are likely to play an increasingly influential role in shaping the political and economic landscape over the next 50 years. This process will be driven by structural factors – both demographic and technological – in developing and developed countries. Moreover, international human capital flows – in particular flows from developing to developed countries – are determined to a considerable extent by rich-country immigration controls, not only by differences in economic opportunity.

The central elements of the project will draw on the contributions of the four members of the Harvard faculty. They include Mihir A. Desai, assistant professor of business administration in the finance and entrepreneurial management areas of Harvard Business School (HBS), a faculty associate of the Weatherhead Center, and a faculty research fellow at the National Bureau of Economic Research; Devesh Kapur, associate professor of government in the Department of Government and a faculty associate of the Weatherhead Center and the Center for International Development; Dani Rodrik, Rafiq Hariri Professor of International Political Economy at the Kennedy School of Government (KSG), and a faculty associate of the Weatherhead Center; and Mark R. Rosenzweig, professor of public policy at KSG. The project team also includes John McHale, associate professor of economics at Queen’s School of Business in Kingston, Ontario.

The potential impact of this multiyear research project is substantial. One reviewer observed that “the political economy of migration broadly speaking is a critical one. This proposal focuses on one important aspect of it, namely foreign migration of skilled labor, an important subtopic of the general one on labor migration.” This issue, referred to for many years as “brain drain,” has been largely ignored since the pioneering work of J. Bhagwati in the 1970s.

Although the flight of human capital appears particularly pronounced in countries suffering from civil conflict and economic stagnation where human capital is scarce, the phenomenon is much more encompassing. The research team contends that demographic changes and consequent fiscal stresses in industrialized countries will affect their immigration policies in three critical ways: They will allow a greater magnitude of immigration to ease the fiscal pressures of aging societies; they will become increasingly selective about the immigrants they seek to attract and admit; and they will increasingly encourage temporary immigration, especially where the temporary migrants do not establish any benefit entitlements.

The consequences of the potentially large cross-border flows of human capital on source countries have received scant attention from economists and political scientists. This Weatherhead Initiative is aimed at filling this void. For example, with regard to remittances and their effect on source countries, there is little systematic evidence about their economic and political consequences. There is a similar lacuna on the characteristics of observed emigrants given rich-country immigration policies. The research questions that the team will analyze include the impact of the loss of scarce talent – especially people who would have played key roles in institution building – on the well-being of “those left behind.” The research will also examine the fiscal impact of the lost portion of the skilled tax base; the effects of overseas networks as sources and facilitators of trade and investment, purveyors of remittances, as “brain banks” and as practitioners of long-distance nationalism” on the country of origin; and the consequences of the loss of a dynamic segment of an emerging middle class affect domestic politics.

In addition, to the promise of a major conference in 2004, Weatherhead Initiative directors synthesize the conclusions of their individual studies, elaborate on their implications both for scholarship and public policy, and disseminate the knowledge gained in a variety of ways. In the case of the International Human Capital Flows project, the research team will document recent trends in temporary and permanent preference visas for skilled workers to develop a database on developed country immigration policies. It will conduct surveys in India and Peru designed to address some of the key research questions on the impact of emigration on source countries. In addition, it will analyze an ongoing survey that interviews a random sample of 10,000 new U.S. immigrants and follows them for five years to obtain information on migration and remittance histories as well as on earnings of the immigrants in their home country prior to immigrating.

The Weatherhead Center sponsors and facilitates the execution of the Weatherhead Initiative in International Affairs to support large-scale innovative research on international economics, international relations, international security, comparative politics, political economy, and global studies. Previous Weatherhead Initiative grants have gone toward the study of military conflict as a public health problem, the role of identity – national, ethnic, religious, and otherwise – in international and domestic politics, and the role of religion in global politics.