Argument: Encourages a brain drain

Any change from aid to remittances is going to create a brain drain because it will encourage working abroad. If developed countries governments are going to provide tax breaks or top up money for remittances then it becomes more attractive to work abroad and send back remittances because they can earn and send back more.

The brain drain is the migration of skilled workers from developing countries to more developed countries. This happens because the more skilled the worker the more in demand their skills are and the more likely they are to know about and have the ability to move to work elsewhere. This is a concerns developing countries because it means their investment in the future; through education often benefits developed countries rather than themselves. Africa for example lost 60,000 professionals between 1985 and 1990. [1] In total Africa has lost a third of its human capital. This loss of human capital will mean that the countries affected do not have the capacity to take advantage of the increase in remittances by building new businesses.

[1] Oyelere, Ruth Uwaifo, ‘Brain Drain, Waste or Gain? What We Know About The Kenyan Case’, Journal of Global Initiatives, Vol.2 No.2, 2007, pp.113-129, pp.113-114

Candidate 1: "While developed countries may be making it more financially attractive to come to them to work and send back remittances in practice they are unlikely to actually allow more immigrants into their countries.

Secondly the brain drain is not all negative for the countries concerned; migrants may return home with new skills, and considerably more money to invest and create new businesses. It is also likely that many of those who go abroad would not have found jobs at home, particularly if highly skilled as the developing country has few jobs available for people with their skills, so would have been a drain rather than a benefit to the economy no matter their skill level. It should also be remembered that the costs of educating these skilled workers will be paid all the faster due to increases in remittances – a study of Ghanaian migrants found that the cost of education of emigrants was paid 5.6 times over by remittances. [1]

[1] Economics focus, ‘Drain or gain’, The Economist, 26 May 2011"
Candidate 2: "Of course not all aid is ending, it will simply fall to aid agencies and charities to provide for the very poorest rather than governments. These aid agencies will no longer need to help out those who are getting remittances so will have more to spend on the poorest. There may even be an increase in individual donations in rich countries to provide aid when individuals realise their tax dollars are no longer being spend on aid so they may feel the responsibility to do something themselves, something that giving through the government shields us from."
Candidate 3: "This is to ignore the influence of remittances on the market. Of course ODA may build a school, but it is just as likely to make something that the donor country believes the recipient needs when it does not in fact need that investment. Money being sent home and then invested in an individual’s information will help signal to the market that there is greater need for educational facilities and so someone will build a school when there is enough demand."

While developed countries may be making it more financially attractive to come to them to work and send back remittances in practice they are unlikely to actually allow more immigrants into their countries.

Secondly the brain drain is not all negative for the countries concerned; migrants may return home with new skills, and considerably more money to invest and create new businesses. It is also likely that many of those who go abroad would not have found jobs at home, particularly if highly skilled as the developing country has few jobs available for people with their skills, so would have been a drain rather than a benefit to the economy no matter their skill level. It should also be remembered that the costs of educating these skilled workers will be paid all the faster due to increases in remittances – a study of Ghanaian migrants found that the cost of education of emigrants was paid 5.6 times over by remittances. [1]

[1] Economics focus, ‘Drain or gain’, The Economist, 26 May 2011
