Remittances or technological diffusion: which drives domestic gains from brain drain?

Thanh Le, Philip Bodman

    Research output: Contribution to journalArticlepeer-review

    10 Citations (Scopus)

    Abstract

    This article examines the impact of technological diffusion and international migrants' remittances on the economic development of lessdeveloped countries. The hypothesis that skilled workers, living and working overseas, can effectively channel technological knowledge back to their home country, which in turn contributes to that country's economic growth, is tested utilizing data on the stock of high-skilled workers from 50 developing countries working in industrialized countries over the last two decades. Results obtained lend strong support to this hypothesis. In addition, the effect that remittances from workers in developed countries, which are used for investment purposes in developing countries, have on the rate of growth of those developing economies is investigated. Our empirical evidence indicates that this remittance channel exerts a significant, positive impact on growth, although quantitatively the contribution of such investment-oriented remittances in driving sustainable economic development appears to be somewhat smaller than that of more general technological diffusion.

    Original languageEnglish
    Pages (from-to)2277-2285
    Number of pages9
    JournalApplied Economics
    Volume43
    Issue number18
    DOIs
    Publication statusPublished - Jul 2011

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