Developing world can gain from brain drain

18 July 2012

The developing world can beat the brain drain that sees educated professionals leaving their home countries for greener pastures, says an expert from the ANU Crawford School of Public Policy.

Speaking at a public forum today, Professor Bruce Chapman, from the Crawford School and architect of Australia’s Higher Education Contribution Scheme (HECS), said that similar income contingent loans could be used to “tax the brain drain” and repay the developing world the cost of educating professionals who eventually leave home.

“The governments of many poor countries spend considerable resources educating young professionals, such as engineers, doctors and nurses. Many of these graduates emigrate and use their skills to the benefit of rich countries such as the United States, Canada and Britain. This is likely to involve a significant negative outcome for the developing world,” said Professor Chapman.

“In the 1970s renowned economist Professor Jagdish Bhagwati suggested an elegant solution to this problem: imposing a small additional tax on these graduates working in the developed world with the proceeds being sent back to the country where they received their education. However, at the time, Professor Bhagwati lamented the significant administrative difficulties involved in collection.

“Several decades later and with the advent of income contingent loan systems like HECS, the framework for such a ‘tax’, which is actually a debt, now exists. If put in place, this kind of system could help ensure that the developed world compensates the developing world as well as advancing the education opportunities for future generations in those countries.”

Professor Bhagwati joined Professor Chapman at today’s forum, which also featured Nobel Laureate and tax theorist Professor James Mirrlees. They discussed how such an arrangement may work and how it could be implemented.

The forum forms part of the week-long public policy futures and innovation event hosted by the ANU Crawford School of Public Policy, Policy public: ideas, insights and initiatives until 2020. The ANU Crawford School of Public Policy is the ANU ‘gateway’ to public policy, modelled on Harvard University’s Kennedy School of Government.


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