ALKHOBAR, 6 December 2005 — The population of Saudi Arabia is over 23 million, including more than five million expatriates. For many expatriates, a job in the Kingdom is the first major step in a quest toward a better life. Some expatriates may spend their entire working lives in the Kingdom, but a portion of the most talented use their years of professional experience in Saudi Arabia as a springboard to make a permanent move to another, often Western, nation. There has been much controversy concerning the cost/benefit ratio of expatriate workers in the Kingdom, but a new World Bank research study sheds some light on the topic.
“International Migration, Remittances and the Brain Drain,” a study produced by the World Bank’s research department, includes a detailed analysis of household survey data in Mexico, Guatemala and the Philippines — all countries that produce millions of migrants — which concludes that families whose members include migrants living abroad have higher incomes than those with no migrants. Migrants’ remittances reduce poverty in developing countries, but massive emigration of highly-skilled citizens poses troubling dilemmas for many smaller low-income countries.
“The studies show that remittances reduce poverty and increase spending on education, health and investment,” said World Bank economist Maurice Schiff, who co-edited the book with Caglar Ozden, also an economist at the bank. “The findings are consistent in all three country studies in this volume and further studies are under way to see if they apply in other countries.”
Close to 200 million people are living in countries other than the ones in which they were born, and overseas remittances are estimated to reach about $225 billion in 2005, according to a forthcoming World Bank publication, Global Economic Prospects 2006. This makes remittances the biggest source of foreign exchange in many countries and has major implications for strategies to reduce poverty in developing nations.
A survey of Filipino households shows the remittances they receive mean less child labor, greater child schooling, more hours worked in self employment and a higher rate of people starting capital intensive enterprises.
It is no accident that the main sources of migrants to Europe are from Africa and the Middle East, while the dominant source regions for migrants to the United States are from Mexico, Central America and the Caribbean. Proximity to the destination country matters to potential migrants, the study finds, especially those who are poor and unskilled, as it costs less to migrate to a nearby country than to a distant one. In addition, a chapter by David McKenzie in the study emphasizes that the presence of migrant networks in the destination country encourages more migration, as they further reduce the cost of migrating, while also providing contacts needed to find jobs.
“As a larger share of the community migrates, migration costs fall and relatively poorer members are able to migrate, and to benefit from the larger network as well,” McKenzie concludes.
On a larger scale, migration dramatically increases global economic output by enabling workers to move to locations where they are more productive, and as a result, earn much higher wages than they would have in their developing home countries. A large portion of these economic gains accrues to the migrants and to their families back at home through the remittances they send. While the data and analysis on migrants’ remittances highlight migration’s positive impact on development, a more complex picture emerges when the study’s focus shifts to the educated migrants from developing countries, the so-called “brain drain.”
A chapter by Frederic Docquier and Abdeslam Marfouk unveils the most comprehensive database to date, based on census and survey data from OECD countries, tracing a massive exodus of professionals from some of the world’s most vulnerable low-income countries. Eight out of 10 Haitians and Jamaicans who have college degrees live outside their country. In Sierra Leone and Ghana, the same ratio is five out of 10. In Sub-Saharan Africa as a whole, although skilled workers account for just four percent of the region’s labor force, they account for 40 percent of its migrants. This is in sharp contrast to much bigger countries such as China and India, from which only three to five percent of graduates are abroad, as well as Brazil, Indonesia and the former Soviet Union, which also have low migration rates among the educated.
“On average for countries with more than 30 million people, the brain drain is less than five percent of all college educated people. The reason is that they have a large population of skilled people, so that even with a large share of skilled people in the migrant population, their share in the skilled population is nevertheless small,” asserts Schiff.
It has been said that the prospect of migration may actually increase the sending country’s level of education and welfare, by providing an incentive to people to seek more education in the hopes of boosting their employment options as migrants. This contention is challenged in the chapter by Schiff. “Our analysis shows only a small so-called ‘brain gain,’ or increase in the average level of education in the sending country, due to anticipated migration.” This result is reinforced by Ozden, whose chapter reveals that skilled migrants in the US often fail to obtain jobs that match their education levels. This indicates both differences in the quality of education and a “brain waste” due to difficulties faced by migrants in obtaining requisite licenses to practice in certain professions.
Overall, immigrants from Latin America and Eastern Europe with similar education levels are more likely to end up in unskilled jobs in the US than immigrants from Asia, the Middle East and Sub-Saharan Africa. Schiff says the data from the US show educated migrants from India and the United Kingdom are more likely to get jobs in the US equal to their skill level. One of the main reasons is language. Both tertiary educated people from India and the United Kingdom speak English, and of course that’s a big advantage when they come to the US.
Not all migrant brains are “wasted” however. A chapter by Gnanaraj Chellaraj, Keith Maskus and Aaditya Mattoo examines the contributions of skilled migrants and foreign students to the United States. It estimates that a 10 percent increase in the number of foreign graduate students raises patent applications in the US by 4.7 percent, university patent grants by 5.3 percent, and non-university patent grants by 6.7 percent. And contrary to popular perception, the United States is not the destination of choice for all well-educated professional migrants.
“Most of the college educated professionals from developing countries go to the United States, as well as the European Union, Australia and Canada. In fact Canada and Australia have the largest share of educated migrants out of the total number of migrants to those countries,” said Schiff.
With this report in mind, Saudi Arabia needs to take another look at its policies in regards to expatriates. While limiting the numbers of unskilled labor is to the advantage of the nation, the current residency laws in regards to professionals should be re-examined. Clearly, by not offering greater numbers of educated expatriates opportunities to achieve permanent residency, if not citizenship, Saudi Arabia loses the long term benefits that skilled expatriates could bring to a developing knowledge economy. The fact of the matter is that this nation willingly gives up its investment in the on-the-job-experience and skill enhancement of educated professionals under the tattered banner of “Saudization,” allowing more enlightened countries the opportunity to reap the rewards of these talented individuals and leaving the Kingdom ever poorer.
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