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Mobility of Skilled Labor in Transition Economies:
The Perspectives from Brain-Drain, Brain-Waste,
Brain-Circulation and Brain-Gain
NAKAMURO Makiko＊＊
OGAWA Keiichi＊

1. Introduction
The impact of labor migration in both sending and receiving countries has long
been researched. Classic literature has come to a consensus on receiving countries
having benefits; however, sending countries lose human capital, and thus havepotential negative effects of the skilled emigration（e.g., Bhagwati and Hamada, 1974）.
In general, this phenomenon is called brain-drain and policy circles, such as the United
Nations and the World Bank, have paid considerable attention to the development
impact of this brain-drain phenomenon. Development communities are also concernedthat highly educated emigrants cannot obtain qualified jobs in their destination
countries and would make little use of their skills and knowledge, what is called brain-

waste. However, recent research provides different perspectives from the brain-drain
or brain-waste standpoint, and focuses more on the potential benefits of migrants
return to their countries of origin and remittances received from migrant family
members abroad. These are called brain-circulation and brain-gain, respectively.
These four features of international labor mobility among highly educatedprofessionals have a high level of regional variations. This research focuses on Europe
and Central Asian countries. These countries have been in transition from centrally
planned to market oriented economies after the collapse of the former Soviet Union in
the 1990s, making significant changes in international labor mobility of highly educatedworkforce. However, so far, there is no study to provide a comprehensive survey ofinternational labor migration in this region. Therefore, the objective of this paper is to＊ Ph.D. Candidate, Columbia University.
＊＊Professor, Graduate School of International Cooperation Studies, Kobe University.

Journal of International Cooperation Studies, Vol.18, No.1（2010.6）

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review development impacts on international labor mobility with a special focus onbrain-drain, brain-waste, brain-circulation, and brain-gain in transition economies within
Europe and Central Asia.

2. Brain-Drain
Until recently, a great amount of literature on migration stresses the development
impact of educated emigrants in the sending country, what is called brain-drain. In
general, brain-drain is defined as the emigration of highly educated professionals,
normally due to political and economic instabilities, and the subsequent loss of skills
and knowledge faster than the replacement rates. It should be kept in our mind that,as a number of theoretical approaches summarized, the emigration of skilled labor has
a positive impact on the global income, especially of receiving countries. It is generally
agreed that international labor mobility of highly skilled and educated labor is
supposed to be positive because it improves economic efficiency at the global labormarkets.
However, brain-drain becomes more common amongst developing countries. The
effect on sending countries of this phenomenon is rather negative. Generally speaking,highly skilled migration from developing countries flows toward the Western andNorthern European countries, as well as toward Canada and the U.S. Adams（2003）
developed migration statistics and concluded that migration in developing countries
takes a large share of the highly educated population, as does international migration.
Beinea, Docquier and Rapoport（2006）took over his work to extend migration
statistics and found that annual emigration rates from the developing world amounts
to 6 percent for highly educated professionals on average, compared to less than 1
percent for less educated ones.
This pattern is more significant in transition countries. The majority of thesecountries consisted of the former socialist or communist countries, and then rapidly
moved on the path to democracy in the early 1990s due to the collapse of the former
Soviet Union. Before the transition, migration was very tightly controlled to keeppeople in the countries; however, recently the countries deregulated their crossboarder labor mobility. As a result, these countries have a large number of emigrants
who seek better job opportunities in developed countries. In fact, this region accounts

Mobility of Skilled Labor in Transition Economies:The Perspectives from Brain-Drain, Brain-Waste, Brain-Circulation and Brain-Gain73

for one-third of all developing country emigration, and emigrant stock within theregion is 47.6 million amounting to almost 10 percent of the total population（World
Bank, 2006）. Several countries in the region, including Russia, Ukraine, andKazakhstan, are the top sending and receiving countries of labor migrants worldwide（Walmsley, Ahmed, and Parsons, 2005）.
Obviously, this labor mobility causes brain-drain in these transition countries;
although there is large-scale emigration of highly educated workforce from thesecountries, there is little immigration of skilled workforce making its way back in.
Basically, the highly educated workforce prefers working in a country where theirrate of return to education would be highly rewarded in the labor market as a form of
payment. In other words, the larger and more competitive the markets are, thegreater the prospects for using knowledge and skills accumulated through education.
In this regard, these countries have failed to attract highly educated professionals withsuch knowledge and skills because the labor market structure remains complex andentrenched with the previous system that is slow to recognize new economic
environment. As a result, a lack of highly educated workforce may cause a constraint
to productivity growth and contribute a high-level of unemployment rates throughout
the region.
The underlying problems are not just human capital flights. Classic theoretical
literature emphasized that developing countries have forgone revenue from taxes
levied on emigrants residing in developed countries（Bhagwati and Hamada, 1982）. In
addition, more recent literature has argued that the training costs of highly educatedprofessional mostly funded by government expenditures on education flowed outside
the country（e.g., Stark and Levhari, 1998）. If highly educated emigrants never returnto the country of origin, in essence, labor-sending countries give publicly fundedassistance to labor-receiving countries. This trend may escalate the economic disparity
between the rich and the poor. From these points of view, international labor mobility
encourages both human and monetary capital flights from a less developed country toa more developed one in the short-run.
According to migration statistics developed by Beinea, Docquier and Rapoport（2006）, Europe and Central Asia only have almost 8 to 10 percent of emigrants whocompleted tertiary education, which is relatively smaller than other countries, such as

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Latin America and African countries（Figure 1）. However, Docquier and Bhargava（2006）newly created the data on physicians emigration rates from 1991 to 2004 andfound that transition economies within Europe and central Asia lose a greater numberof physicians relative to other regions（Figure 2）, indicating that the youngest andbest medical professionals have been the most likely to leave their home countries intransition. This trend has been exaggerated over time and might have significantly
diminished the quality of medical research that had flourished during the Cold War.
Emigration happens not only in medical research but also in other fields ofresearch, including the natural sciences. According to UNESCO（2005）, Russia has
experienced a severer brain-drain. From 1990 through 2002, Russia lost 1,072,500
qualified scientists with higher university degrees due to emigration. On a ranking ofcountries by the proportion of those employed in academic fields, Russia currently
ranks ninth in the world, although it had been top-notch before the Cold-War. Because
many young highly educated have emigrated, the number of academics in their mostproductive years has decreased dramatically. The average age of professors or
lecturers in Russian tertiary institutions is now approximately 60 years old, whereas it
used to be just 40 to 45.

40％（Stock of skilled OECD foreign-born adults as %of skilled natives）

35％
＋0

30％

＋12

＋18

＋22

25％
20％
15％
10％
5％
0％
East Asia
and Pacific

Europe andCentralAsia

Latin
AmericaandCarribianMiddle Eastand North
AfricaNorth
AmericaSouth Asia

SubSaharanAfricaFigure 1: Brain-drain: the emigration of tertiary-educated population
Note: 12+, 18+, and 22+ represents stock of skilled OECD foreign-born adults arrived in the destination
country after age 12, 18 and 22 as percent of skilled natives, respectively.
Source: Docquier and Marfouk（2006）

Mobility of Skilled Labor in Transition Economies:The Perspectives from Brain-Drain, Brain-Waste, Brain-Circulation and Brain-Gain

75（Number of physicians per 1,000 population）
3.500
3.000
1994
2.500

2004

2.000
1.500
1.000
0.500
0.000
East Asia
and Pacific

Europe andCentralAsia

Latin
AmericaandCarribianMiddle Eastand North
AfricaNorth
AmericaSouth Asia

SubSaharanAfricaFigure 2: Brain-drain on medical professionals
Source: Beine, Docquier and Rapoport（2006）

Another striking example is Albania. According to the estimates of Tomiuc（2001）, one-third of scientists have been currently seeking work outside the country
and almost 40% of lecturers and researchers in the field of natural sciences had left
this country during the 1990s. There are many examples of professional laborers in
Italy, Greece, Canada and Germany, and it is estimated that only 5% of these will
eventually return to Albania. Similarly, highly trained scientific specialists have been
attracted to work abroad in Romania. According to Tascu, Noftsinger, Bowers（2002）,
66 percent of students who acquired science university degrees in Romanian academic
institutions are likely to emigrate. Furthermore, between 1990 and 1992 around 40,000
Bulgarian scientists emigrated to the U.K., Germany, France and Ireland with theintention of settling permanently（Straubhaar, 2000）.

3. Brain-Waste
If a highly educated professional is able to obtain a qualified job at a destination
country, she would find a place to fully demonstrate his or her knowledge. She thenwould obtain enough payments to match her skills and knowledge, even though she

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would not be be appropriately rewarded at the labor market in her home country.
Such elimination of mismatches arising in the global labor market may introduce morecompetition, create new job opportunities, raise productivity, and improve economic
efficiency in a long-run, as argued by Straubhaar and Wolburg（1999）.
Unfortunately, brain-drain cannot eliminate global labor-mismatches between
developed and developing countries. In fact, highly educated migrants frequently takejobs with low skill requirements and thus create brain waste, indicating that they
make little use of this knowledge and skills in the destination countries.
Mattoo, Neagu, and Ozden（2005）estimated a multinomial logit-model to obtain
the probabilities that an educated emigrant enters a skilled job in U.S. These
probabilities vary across countries; for instance, a person from India has a highest
probability of obtaining a skilled job in U.S.（69 percent）, while a person from Albania
has a lowest probability（14 percent）on average. Among the lowest possibilities areseveral transition countries. As compared with average probabilities in East Asian
countries（46.9 percent）, these transition countries have achieved much lower
probabilities of obtaining a skilled job conditional on educational level（37.9 percent,see Figure 3）.
They also estimated the probabilities that an educated emigrant with a science
major becomes a scientist or a researcher because these human capitals are expected
to be the driving force producing new technologies and innovations. They confirmed
the same pattern with the previous result, but realized the regional variations acrosscountries of origin are larger. A migrant with a degree in science-related fields fromtransition countries performs much worse relative to peers from other countries. In
other words, emigrants who have identical educational backgrounds are perceived as
belonging simultaneously to both unskilled and highly skilled groups, and therefore,
any conclusions regarding brain waste will necessarily depend on the country ofreference.
They also tried to explain these regional variations by using cross-countries data.
Their result implies that a highly educated emigrant from a country where English isa first language and governmental expenditure on tertiary education is high relative topeer countries is more likely to obtain a skilled job at a destination country. In most oftransition countries, the native languages are Russian, Greek, and Turkish. In addition

Mobility of Skilled Labor in Transition Economies:The Perspectives from Brain-Drain, Brain-Waste, Brain-Circulation and Brain-Gain

80％

77

（%）
BA

MA

Europe andCentral Asia

Latin America
and Carribian

Professional

70％
60％
50％
40％
30％
20％
10％
0％
East Asia andPacific

Middle East andNorth Africa

South Asia

Sub-SaharanAfricaFigure 3: Probability of obtaining a skilled job conditional on educational level
Source: Mattoo, Neagu, and Özden（2005）

to that, these countries have seen a decline in government spending on tertiary
education for past decades, while government spending on education has increased inother regions as shown in Figure 4. Mansoor and Quillin（2006）also showed theresult of the surveys in Tajikistan and Kyrgyz Republic and clearly demonstrated thathighly skilled emigrants from those countries frequently worked in sectors requiring
low qualifications, including agriculture, transportation, and construction.
Therefore, migrant workers from transition countries will be disadvantaged toobtain qualified jobs due to language traditions and infrastructure limitations in theircountries of origin. More specifically, Hansen（2006）revealed that highly educatedmigrants particularly from the former Yugoslavia, countries of the Former Soviet
Union are affected by brain-waste.

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（%）

350
300

2000

2005

250
200
150
100
50
0
Sub-SaharanLatin North America South
Central Central Asia East Asia
Middle East
AfricaandAmerica and Westernandand North and EasternWest Asia
Pacific and Carribian Europe
EuropeAfricaFigure 4: Public expenditure per pupil in tertiary education as a % of GDP per capita
Source: UIS education data, UNESCO Institute for Statistics

4. Brain-Circulation
Many recent studies pointed out that a salary increase was the reason that best
explained their decisions to migrate（Koszalka and Sobieszczanski, 2003）. In otherwords, the more significant wage differentials between home and destination countries,
the more likely to continue emigration would be. On the other hands, it is well-known
that migrants from East Asian countries are more likely to return to their homecountries than ones from transition countries. Government officials in low-income
countries have been trying to make highly educated emigrants return to homecountries eventually.
On this point, an influential literature was released by Rosenzweig（2006）. His
claim was that the migrant s decision to return to the home country depends on skill
prices, which is the labor market rewards to skills. He estimated skill prices acrosscountries by using information on the wages of workers with the same skills across all
countries of the world. Two immigration surveys that he used provide the homecountry earnings for a sample of new U.S. legal immigrants admitted to legal
permanent residence.

Mobility of Skilled Labor in Transition Economies:The Perspectives from Brain-Drain, Brain-Waste, Brain-Circulation and Brain-Gain

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Table 1: Proportion of return migrants having completed higher education
Country

FemaleMale

Bosnia and Herzegovina

11.0

9.5

Bulgaria

31.5

25.0

Georgia

52.7

37.7

Kyrgyz Republic

30.3

20.0

Romania

11.5

12.8

Tajikistan

28.8

17.2

Source: Mansoor and Quillin（2006）

Rosenzweig called return migrants brain-circulation, indicating emigrants havecompleted higher education and would return to the countries of origin at some pointin their entire life. There is very little research conducted on brain-circulation intransition countries; however, Mansoor and Quillin（2006）estimated the proportion of
return migrants having completed a bachelor or master s degree（Table 1）.
According to these estimates, former Soviet Union countries and Bulgaria were alsocharacterized by high levels of return migrants with higher degrees, while Bosnia andHerzegovina and Romania were not. Perhaps cross-country differences could havebeen partially explained by the respective education systems and tertiary education
enrollment, but we still need further investigation.
Their estimates also reveal that the female return migrants were more frequently
highly qualified than males. Such a result could have been partially explained by thefact that work opportunities abroad were probably less numerous for lower-qualified
women. It is also possible that emigration strategies differed according to theeducation levels of the partners: in a couple with a woman whose qualifications arehigher than the man, the gain resulting from female emigration would tend to behigher than from male emigration.

5. Brain-Grain
In addition to brain-circulation as the potential benefit of emigration arising fromreturn migrants, brain-gain has also become an important aspect to be examined inrecent literature. This is referred to as the potentially positive impact of skilled

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emigration on the development of those left behind in the source countries. The braingain mechanism relies on an increase in migrant remittances received at the source
country from highly skilled emigrants, which can partially or wholly compensate forany losses from emigration. This has become more relevant as remittances havegrown in recent decades.
According to the Balance of Payment Statistics（BOP）released by theInternational Monetary Fund（IMF）in 2007, officially recorded remittances
worldwide totaled over US$336.9 billion, which has increased almost three times larger
than much as ten years ago（US$119.5 billion in 1997）. Furthermore, remittances havean important characteristic. They are less volatile than other types of private capital
flows, including foreign direct investments. Rather, remittances are often countercyclical and tend to increase in times of hardship in the recipient country. One
concrete example to illustrate this is the Asian currency crisis in 1997: private capital
flows toward developing countries have been shrinking during 1997-2001; however,remittances toward these countries have increased constantly since then.
Although remittances have increased in all regions, an increase in remittances ofEurope and Central Asia is particularly significant（Figure 5）. According to data, in
2007, remittances received by the region amounted to over US$50.4 billion, which isalmost 15 percent of the world total and five times larger than 10 years ago（US$9.5
billion in 1997）. On top of that, remittances received within these transition countries
exceed the volume of official development assistance（ODA）and foreign aid（US$5.8
billion in 2007, see Figure 5）while ODA and financial aids remain almost the sameamount as much as 10 years ago（US$6.7 billion in 1997）. Unlike the ODA, remittances
are a part of private inflows at market terms and are thus expected to achieve more
efficient resource allocations at receiving countries than ODA.
Remittances as a portion of gross domestic product（GDP）in many countries
within this region are large by world standards. For instance, surprisingly, migrants
funds represent over 40 percent of GDP in Tajikistan and over 30 percent in Moldova,
over 10 percent in Kyrgyz Republic, Bosnia and Herzegovina, and Serbia, while theworld average is only 0.7 percent（Figure 6）. This indicates that remittances from
migrant workers abroad make up an important part of household incomes at origin.
More than that, according to the survey conducted by Mansoor and Quillin（2006）,

Mobility of Skilled Labor in Transition Economies:The Perspectives from Brain-Drain, Brain-Waste, Brain-Circulation and Brain-Gain

60

81（US$billion）◆

Remittances received■

ODA and fpreign aid

50.4

50

◆

40
◆

◆

30

◆

20
◆

9.5

■

10

■
■

■

■
◆

◆

◆

◆

◆
◆
■

◆

◆
■

◆
■

■

■
■

■

■
■

0

◆

◆

■

■

1980

◆
◆
■

1982

◆
■

◆
■

1984

◆
■

◆
■

1986

◆
■

◆
■

1988

■
◆

◆

◆

■

■

■

6.7

◆

5.8

■

1990

1992

1994

1996

1998

2000

2002

2004

2006

Figure 5: Remittances versus ODA in transition countries
Note: Remittances are defined as the sum of workers
Balance of Payment Statistics.
Source: World Development Indicators, World Bank

remittances and compensation of employee inhighly educated people send more money than those with lower qualifications in
Eastern Europe and Russia. According to this report, approximately 20% ofremittances in this region corresponded to an investment in material capital and 14%
to investment in human capital.
Of course, the expansionary effect of remittances on development will be greater
when they are spent on human capital investments, if we subscribe to an endogenous
growth theory. Rapoport and Docquier（2005）presented the simple model whereremittances encourage investments in human capital and may therefore modify thelong-run steady-state of the source economy, but there are a few studies investigating
the relationship between remittances and human capital accumulation through theformal schooling in transition countries. Nakamuro（forthcoming）and Ogawa andNakamuro（forthcoming）find that in Albania, a child from the average household
who receives remittances from a migrant family member abroad is approximately 4%
to 27% more likely to attend school than children from a household that does notreceive remittances, after controlling for other variables. Similarly, in Tajikistan, a

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child residing in a household that receives remittance transfers from abroad is 2% to
16% more likely to attend school than his or her counterpart. Consequently,
remittances become significant, leading to accumulate the human capital ensuring
economic development in these countries in transition.

（Remittances received as a percentage of GDP）
Tajikistan
Moldova
KyrgyzRepublic
Bosnia and Herzegovina
SerbiaAlbania
Armenia
Georgia
Bulgaria
Romania
Azerbaijan
Lithuania
Macedonia
UkraineCroatia
PolandLatviaBelarus
World
RussiaKazakhstan
Turkey
0

5

10

15

20

25

30

35

Figure 6: Remittances as a portion of GDP in transition countries
Source: Mansoor and Quillin（2006）

40

45

50

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83

6. Conclusion
This paper reviews the development impact of international labor mobility,
especially of highly educated migrants, amomg transition countries within Europe andCentral Asia. The paper first introduces the concepts of brain-drain and brain-waste,indicating that highly educated workers from developing countries were unable to findjobs when they emigrated to developed countries where there was significant skilledlabor. Some countries are successful in making migrants return to their countries oforigin. As a result, potential benefits were gained through the returnees full use of
networking skills and experiences that they acquired in high-income countries. Thisphenomenon is favorable for the country of origin as brain-circulation. Furthermore,
remittances from a highly educated labor force who emigrated - what is called braingain - have a positive impact on development through accumulation of human capitalin transition economies.

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