Wednesday, December 12, 2012

Promoting Brain Drain

Aiming to plug the brain drain is a silly policy goal. Regions, states, and countries should be trying to promote outmigration, not stifle it. Scotland learning this lesson from Lithuania:

We therefore need to get the balance right between exporting the expertise and skills abroad as an economic opportunity and retaining those which are in demand by our indigenous companies. This is the delicate juggling act which another small nation, also on the periphery of Europe, is currently facing. Lithuania is currently managing the difficult balance of encouraging talent to venture out of the country but also attracting in the skills they need for growth. Bearing in mind this small nation of only 3.2 million is barely two decades on from being a communist state, its growth levels are solid and easily outstrip the UK. In May the Bank of Lithuania revised upwards its economic projections, forecasting growth of three per cent in 2012 and 3.5 per cent in 2013.

The work we are doing within our Lithuania operation sums up the flow of people, contributing to the nation’s economic success. Not only are we helping to export some of their indigenous talent across the world, we are also working on attracting talent into the country. We are seeing a strong push now to bring Lithuanian-grown talent home, to utilise the skills they have learned from their International experiences and to play their part in helping to grow the economy of their homeland.

This is a model which Scotland could do well to follow. The double-pronged approach of exporting our skills where they are in demand and also luring back the much-needed Scottish talent that is currently in London or abroad will only benefit Scotland’s economy in the longer term.

The first step towards economic development is talent production for a global labor market. Addressing local business needs is best done through attraction (i.e. importing talent). A good example is Poland:

Foreign companies flock to invest. Its balance sheet is the envy of Europe. Top university programs crank out graduates whom everyone wants to hire.

Such is the current reputation of Poland, which has continued to grow during the global financial crisis as neighboring countries decline, lining itself up for a strong run to become the continent’s next economic powerhouse.

General Electric officials say they haven’t for a moment regretted basing one of their global design centers here, where Polish engineers helped create the new GEnx engine for Boeing’s 787 Dreamliner. 

Poland started producing the talent needed long before the likes of GE set up shop. College graduates ran off to Ireland and worked for companies such as Dell. A 2009 New York Times article I referenced:

In a symbolic shift, Dell moved operations to Lodz from Limerick in Ireland. Ireland has protested the 52.7 million euros in subsidies that Dell got from the Polish government, but Dell cited the skilled work force in Lodz and proximity to growing markets as the reasons for its move.

The Irish boom, now possibly the worst bust in Europe, attracted many Poles, who worked with Dell there and are now finding their way home.

“We even have some workers in Lodz who have come from our Limerick, Ireland, factory and who are very happy to have come back to help set up this one,” Mr. Dell said at the opening in January.

Tomasz Rybinski, 30, was among those Poles who left the country after it joined the European Union in 2004. He found work in then-booming Britain, where he spent three years mixing salads, moving boxes in a warehouse and then, finally, working in a factory that made industrial refrigerators.

Rumors this year that layoffs were in the works were enough to convince Mr. Rybinski that the new possibilities in his native Lodz trumped what had by then become a shattered British economy.

Emphasis added. Dell followed return migrants back to Poland. In terms of firm relocation decisions, talent production trumps talent attraction. Pittsburgh is much better off than Portland.

None of the above is possible without brain drain. Workforce development is parochial. Geographic mobility declines. The talent pool undergoes eutrophication. The economy becomes moribund.

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