Thursday, April 22, 2010

Talent Migration Reset

While all the cool kids are touting agglomeration economies, I wonder how the talent landscape might change. For example, The Avenue points to service exports as an indicator of a fast recovery from the recent downturn. One of the projected winners is Des Moines, the subject of a post at New Geography that makes mention of the geographic arbitrage opportunity in Iowa. Inexpensive cost of living coupled with a relatively strong job market should make for a strong draw.

Des Moines might be the next boomtown. But what if a volcano erupts? Eyjafjallajokull revealed a weakness in the global supply chain. Natural disasters often have geopolitical implications. Weighing such risk is critical to globalization. An ash cloud of uncertainty can undermine trade and collapse economies.

As far as talent flows are concerned, rampant nativism is akin to an ash cloud of uncertainty. If I'm a company currently headquartered in Arizona, then I seriously think about moving out of state. The poisonous political backlash running amok there will kill immigration and inmigration.

For regional economies dependent on robust inmigration, these are scary times. Migrants are increasingly risk averse (good time to go home) and the current mood swing in most nations is decidedly protectionist. To pilfer the Richard Florida brand, now is a good time for a talent migration reset.

No country, region or city is taking full advantage of the global supply chain of talent. That is because when we think about human capital, we play an outdated zero-sum game. New York City's gain isn't necessarily Scranton's loss. Growthology does a good job of explaining the brain circulation model. I think brain circulation will be the dominant paradigm of urban economic geography as the world works through the great reset.

In Silicon Valley more than half of Chinese and Indian immigrant scientists and engineers report sharing information about technology or business opportunities with people in their home countries, according to AnnaLee Saxenian of the University of California, Berkeley. Some Americans fret that China and India are using American know-how to out-compete America. But knowledge flows both ways. As people in emerging markets innovate—which they are already doing at a prodigious clip—America will find it ever more useful to have so many citizens who can tap into the latest brainwaves from Mumbai and Shanghai. Immigrants can also help their American employers do business in their homelands. Firms that employ many ethnic Chinese scientists, for example, are more likely to invest in China and more likely to do so through a wholly owned subsidiary, rather than seeking the crutch of a joint venture, finds Mr Kerr. In other words, local knowledge reduces the cost of doing business.

Even if talented immigrants return and take jobs with them (as Vivek Wadhwa warns), other parts of the world await brain circulation opportunities. India and China have already benefited from the relationship. Next up, Africa:

As Africans in the Diaspora gain more confidence in their ability to make a difference in their home countries, international donors will begin to adjust their views. The momentum behind the Diaspora is likely to grow because of the inevitable growth in European and American demand for African talent. Critical labor shortages in Europe will drive African migration; in the U.S., where today more than 1 million black African-born people live, "chain" migration will propel more Africans to leave their homes for the U.S.

For most African countries, brain circulation is lacking. Even the exodus is underdeveloped. Most people are stuck in place. Any US region could take advantage of this opportunity. Think Schenectady and Ghana. I'm mainly interested in domestic migration. All the initiatives address brain drain. Okay, a few obsess talent attraction. But no region thinks about brain circulation.

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