Countries can benefit from their qualified human capital abroad in three ways: through remittances, investment flows or from the expertise and knowledge of skilled migrants that have returned home. These are normally the arguments used to show the positive role played by a country’s own qualified migrants abroad (and in the case of their more or less stable return home, referred to as the brain return or brain circulation). These factors, it is argued, counter-balance the potentially negative effects of brain drain. This is true mainly for those countries, with a small population or those with phases of political instability and/or with scarce career prospects, that have actually the highest rates of brain drain. In these cases, the beneficial effects of remittances, investments and sharing of knowledge from skilled migrants can be considerable and can help to counter the negative effects of brain drain and, in general, can support the economies of those countries.
Can the contribution of qualified migrants be considered significant, even in the case of a country such as India with more than one billion inhabitants and in the process of full economic expansion? That is to say, how much is the contribution of skilled migrants compared to the contribution of migrants in general? To what extent is their contribution correlated to the size of population and the economy?
Let’s start by saying that in India, remittances reached $55 billion in 2010 (World Bank 2011), making it the biggest receiver of remittances in the world. These payments are more than three per cent of national GDP. In absolute terms, as shown by Fig. 1, this is a growing trend that, since 2004, has contributed between $25 and 30 billion a year (Chishti 2007). Furthermore, remittances have helped India to reduce the deficit on its balance of payments (Mani 2009).
Aggregated data from the diaspora apart, it is also interesting to understand the contribution of qualified migrants (compared to unqualified migrants) to the economic development of their own countries, beginning with remittances, which are the most visible channel through which money is sent to families back home.
In a recent, interesting analysis (Bollard et al. 2011), carried out on a database of 33,000 immigrants in 11 OECD countries, it was verified that qualified migrants send more remittances per person, compared to less qualified migrants. The average sum of remittances sent by migrants with tertiary education (classification according to UNESCO’s ISCED, International Standard Classification of Education) is about $1,000 a year. This is of course intuitive: qualified migrants earn more than those who are less qualified.
More interesting, in the context of this article, is that the analysis reveals a strong negative correlation between income levels in the migrant’s country of origin and the probability that the migrant sends remittances (Fig. 2). That is to say, the lower the gross national income per capita of the country, the higher the probability that the country’s qualified migrants abroad will send remittances. In this sense, it’s not the size of a country’s population that makes the difference, but rather the low income level elicits a bigger quantity of remittances.
The sum of remittances, then, is significantly higher from qualified migrants from countries with high levels of brain drain. More precisely, between 68 and 93 % of qualified migrants from developing countries send about $5,000 in remittances a year (Gibson and McKenzie 2010). Higher brain drain, low income per capita and dimension of the diaspora thus explain India’s global primacy in terms of remittances.
Other studies (Kugler and Rapoport 2007; Javorcik et al. 2011) have shown a positive connection between the number of qualified migrants a country has in the US and the level of foreign direct investment (FDI) that the US puts into that country. As already shown, with about 40 % of the Indian diaspora based in the US, it is easy to see how this could influence the decisions of US investors.
The same cannot be said, however, of FDI from Indian brands abroad back into the homeland—investments from this quarter have not been as high as expected after the liberalisation of the 1990s. The Indian diaspora has invested modestly in the Indian economy (3 % of gross capital formation), particularly when this figure is compared with China’s FDI from the Chinese diaspora (10.1 % of GCF), (Roy and Banerjee 2007). Some analysts (Sinha Palit and Palit 2011), however, note possible interference based on a soft power strategy, practised by the Chinese diaspora in Southeast Asia.
With regards to the transfer of technology and the spread of knowledge in the territory, the emergence of India’s competitive IT sector is also noteworthy, and the primary role of India’s diaspora in this sector’s success, having capitalised on their positive experience in the US (Pandey et al. 2004). Highly-skilled Indian migrants have played a leading role in forging the development of the burgeoning Indian IT industry.
Other than the economic aspects, the Indian diaspora is also politically relevant on the international geopolitical stage. Khanna (2005) argues that the potent cocktail of culture and technology, possible thanks to globalisation, allows Indians across the world to be influential in a space that is both imaginary and real, but is in any case shared. The cosmopolitan Indian culture, which Khanna refers to as «Bollystan», is emerging organically as a new model of sovereignty that transcends geography. Also interesting is a comment from Khadria (2007), which reflects on the skilled component of the Indian diaspora and wonders whether India will know how to transform these geographically-spread skills into a «Great Off-White Hope» for the new century.
In short, the soft power of the «Indiaspora» (Khadria 2001) seems to be based mainly on Indian culture, so diverse and fascinating, on the political values of the biggest democracy in the world and, last but not least, on the technological competence of Indians. However, also the hard power should not be overlooked: India has a vast territory, the world’s second biggest population (which looks likely to become the biggest within a few decades), and the third biggest army in the world.
As has been rightly noted (Purushothaman 2010), this promising prospect could be thrown into doubt by some of India’s problems, including its low ranking in the Human Development Index (HDI), internal social and ethnic conflicts as well as potential external military conflicts.
In any case, there is no doubt that the Indian diaspora and especially its qualified part, represents for India a competitive advantage in the international arena. In this framework, which role the Indian politics plays?