From ‘Brain Drain’ to ‘Capital Gain’: Indian Skilled Migration to the UAE

Abstract

This study analyzes the magnitude of emigration of India’s high-skill population in the United Arab Emirates through the exploration of the determinants of emigrant mobility using both an empirical and qualitative approach. It also examines the historical patterns of migration to the GCC region with a focus on the socioeconomic impact of skilled immigration of Indian expatriates in the UAE economy. Furthermore, the chapter attempts to assess the role played by remittances, Foreign Direct Investment (FDI), and knowledge and technology transfers as key economic resources towards the development of the national economy and the potential reversal of the impact of ‘brain drain’. This requires an evaluation of the role played by key stakeholders in the facilitation of migration, providing an alternate outlook on the perceived ‘drain’ and inequality that surrounds the dialog on South-to-North migration. Lastly, the research contributes to the limited literature on transnational entrepreneurs and return and reverse migration, as the most understudied aspect of international migration, to illustrate how the migrant identity is constantly fluid and evolving and ultimately beneficial to both the host and home economy.

1 Introduction

India has been the source of the largest annual outflows to the GCC (Gulf Cooperation Council) countries. The increasing significance of GCC countries as a destination for migrant workers is illustrated by the change in total migrant stock in those countries, which grew from 8.9 million in 1990 to 22.3 million in 2013 (Sasikumar, 2015), accelerating the importance of the economic relations between India and the GCC to a measure that cannot be over-emphasized and continues to gain momentum over the years. Both the economic transformation and reform, and sociopolitical atmosphere across the Gulf is partially owed to its Indian immigrant population. Even though there is a relevant amount of literature available that examines the Indian low-skill, blue-collar labor migrants in the UAE, the international mobility of medium and highly skilled human capital and the resulting outcomes for the country of origin and country of destination have still not been appropriately explored.

This chapter attempts to shift the focus away from traditional analysis of labor mobility and poses an emphasis on the international transfer of human talent as a key for diplomacy, economic resources, and creative power in business, science, technology, arts, and culture. I am examining how the size and spread of the Indian community in the UAE endorses the rise of transnationalism, by which skilled emigrants participate in the full measure of economy and society in one country, while maintaining association with their country of origin, accelerating knowledge transfers and spurring creativity, innovation, and entrepreneurship. At the same time, the demand for directly productive talent in the workforce is interrelated with the demand for capital,¹ and with the UAE facing still low rates of local expertise and India developing high levels of under employment, a migration flow will inevitably form towards the country that offers superior economic opportunities (IT experts, real estate, banking sector, trade).

The migrant identity has evolved, mobilizing as transnational entrepreneurs or return migrants, who are uniquely positioned among the discourse of ‘brain drain’, ‘brain gain’ and ‘brain circulation’, and are increasingly influencing the policies and practices of both the Indian and UAE governments.

2 Revisiting the Brain Drain Debate in the Globalized World

Traditionally, the analysis of globalization has focused on trade and capital mobility.² However, a large part of the story of globalization is concerned with the international transfer of knowledge, ideas, and people (Solimano, 2008). Migration is defined as the mobilization of human capital, also known as the ‘talent’, as migrants enable the integration of multiple geographies, cultures, nationalities, ages, and work ethics (Rogers & Blonski, 2010) and increase economic, social, demographic, cultural, infrastructural, and political development³ (Kumar, 2014). Earlier associated with the exodus of low-skilled laborers, scholarship on migration is now also focusing on the movement of highly skilled individuals⁴; researchers, engineers, doctors, managers, and entrepreneurs, whose movement from one geographical or administrative boundary to another, undoubtedly effects both the place of destination and place of origin (Kumar, 2014), and has significantly impacted business relationships and the global economy.

The Indian Diaspora⁵ is represented by a diverse and heterogeneous group with an estimated stock of 30 million emigrants in 190 countries⁶ that shares Indian origin and intrinsic value. As one of the largest diasporas and supplier of human capital for advanced economies (along with China), the Indian diaspora is found significantly in the Gulf region.

The attention on the implications of the phenomenon of talent migration stems from interesting academic debate that began in the 1960’s among economists between the ‘nationalist’ and the ‘internationalist’ perspectives. Johnson’s ‘internationalist model’ (Johnson, 1968) takes a cosmopolitan liberal position shared by many educated international migrants (Lipsey, 1978), who see the international flow of human capital as a beneficial process. This model finds its roots in Immanuel Wallerstein’s world systems theory, which sees international migration as a natural consequence of capitalist market formation in the developing world. The internationalist view stresses that the mobility of talent is a result of superior economic opportunities found outside the home country that lead to direct benefits to the migrant and the world economy. This is due to the reallocation of resources from areas of low productivity to areas of high productivity, hence raising world income and global welfare (Solimano, 2008). Patinkin’s ‘nationalist’ model, in turn, questioned the significance of the concept of ‘world welfare’ and argued the importance of human capital for national economies. According to the author, a middle-income developing country concerned with brain drain does not share the notion of “free flow of resources” when the resources are their high-skilled members of the population (Grubel & Scott, 1977). The topic of brain drain in the 1960’s was strongly influenced by the impression of a one-way flow of human resources from periphery to core nations, indicating an asymmetric distribution of gains in the source country which initially made an educational investment⁷ in qualified human resources (Solimano, 2008). Patinkin rejected the viewpoint that “the ‘world’ should be considered as a single aggregate from the welfare viewpoint—and that the welfare of this unit is maximized by the free flow of resources between countries” (Patinkin, 1968). According to Johnson, for example, this reflected an illiberal nationalistic anarchism. Unlike Johnson, Patinkin was unsuccessful in envisioning the concept of brain circulation, a two-way or multi directional movement of talent and benefits, in response to new opportunities and possibilities brought in through globalization.

More recently, Beine et al., (2001), Kapur, McHale (2005), and Solimano (2008) have addressed the prospect of positive effects of migration on the source country. This new literature on modern brain drain theory challenges and distances itself from the old emphasis on the costs of high-skill emigration, highlighting beneficial aspects related to the ‘brain drain’, in terms of remittances, transfer of new technologies and ideas, and the resulting production of superior goods and services, benefitting both consumers and producers in the source country. Solimano (2008) argues that the emigration of talent reduces the supply of human capital in the source country. In the medium run, this may increase the development of education in the sending country as a prospect of higher salaries of educated migrants or as a “return of human capital and all complementary investment from rich to poor countries” (Kapur, McHale, 2005; Podemski, 2010). In the same vein, Chacko (2007) clarifies how skill outflow, although remaining a concern, is increasingly being regarded as a potential resource for the source country. If emigration follows a cycle and the migrant returns home, there can be a positive development effect for the home country. Brain circulation illustrates a new phenomenon in the perspective of “brain gain” where there is international brain exchange as migrants are considered as important transmitters of technology and tacit knowledge. The same individuals who left India in search for bigger and better opportunities are reversing and transforming brain drain into brain circulation as they return home to work, establish partnerships, or start new companies while maintaining business and professional ties with the United Arab Emirates. In this sense, the circular movement of highly skilled migrants is benefitting both sending and receiving countries (Riemsdijk & Wang, 2017).

However, a few empirical studies have shown that “(a) the brain gain is smaller than has been indicated in the new brain drain literature, (b) the brain gain implies a smaller capital gain, and (c) various negative effects on other sources, such as human capital, welfare, and growth” still remain to be properly assessed (Ozden & Schiff, 2006). The effects and consequences of brain gain and brain circulation are also presumably dependent on the patterns of migration and migration destinations (Podemski, 2010)⁸. For example, the level of brain gain from NRI (Non-Resident Indian) migrants in the United Kingdom maybe differ significantly in size than NRI migrants living in the United Arab Emirates. This information, however, still requires exhaustive and detailed studies.

3 The United Arab Emirates as a Migration Destination

Prior to the discovery of petroleum in 1958, the economy of the UAE relied primarily on simple economic activities, namely fishing, pearl diving, subsistence agriculture, and herding, that attracted various flows of migrants such as merchants from the Indian subcontinent, Baluchi families, and traders from Persia (Bel-Air, 2015).

Following the discovery of oil, in both Abu Dhabi and in Dubai in small amounts, the local workforce abandoned their traditional industries and migrated to the new oil-producing sectors, where income was lucrative and stable. Petroleum, as the major economic resource, had substantial impact on economic and social life in the Emirates, providing finance for large-scale development projects assumed immediately after Independence in 1971 (Sh’arawi, 2004). The ‘oil boom’ in 1973 spearheaded dramatic changes in the economic and demographic landscape of the Emirates. Where previously the UAE was underdeveloped with high rates of fertility, low rates of education, low degree of industrial and service employment, and scant infrastructure for transportation, communication, or productions (Birks & Sinclair, 1980), the enormous oil proceeds enabled the UAE to “bypass the traditional stages of capital accumulation experienced by developed countries and to jump directly to the stage of mass consumption” (Shihab, 2001). The UAE launched ambitious development projects in various sectors of the economy, including the expansion of infrastructure, education and healthcare facilities, the introduction of Free Zones,⁹ Internet and Media cities, and the establishment of tourism, business, and financial sectors. Such desired growth and its operation relied heavily on the import of foreign manpower, specifically highly skilled professionals in a wide range of specializations. In the early 1980s, there were about 3000 merchant families in Dubai. These existing merchant families were joined by ‘new’ migrants, who progressively appeared in three recorded waves of migration; mass immigration succeeding the ‘oil boom’ in 1973, mass immigration following low immigration policies and demand for skilled workers for development projects in 1990, and mass immigration on account of soaring prices of oil in 2000¹⁰ (Kumar, 2014).

The impact of the UAE’s expatriate population is vividly evident. The large-scale entry and surges of migrant inflow have characterized the country and its workforce, by numerically dominating at every occupational level and exponentially triggering a demographic imbalance. The fundamental structure of the UAE and its operations have been essentially directed by two unique characteristics embodied by the state; it is very rich in oil, and very small in indigenous population size. Coupled with the passionate will of its leaders in the use of oil revenues to construct an unparalleled state and economy, the two characteristics have toiled in attracting large sums of immigrants that has led to the present demographic imbalance, resulting in rendering the UAE as a ‘national-minority state’. The scarcity of qualified local manpower needed to establish the enormous nation-building infrastructural projects both after the state’s independence, and later to diversify the economy away from being oil-dependent, has led the UAE to heavily rely on the continuous migration of an expatriate workforce that soon outweighed the local population (Mansour, 2016). The ongoing process of mass infrastructural development, diversification of the economy from oil-dependent towards the tourism sector, and large-scale projects such as EXPO 2020 further promote the continued dependency on imported labor and expertise that has become a structural feature of the GCC economies, inevitably leading to an even higher population imbalance.

4 Historical Patterns of Indian Migration to the GCC

The Indian diaspora and its nature of settlement can be defined through three subsets, namely the ‘Old Diaspora’,¹¹ the ‘New Diaspora’,¹² and the ‘Gulf Diaspora’. While intrinsically part of the ‘New Diaspora’ after the 1960s, the ‘Gulf Diaspora’ merits its own standing as it is the fastest growing segment of the Indian diaspora and constitutes the bulk of India’s migration. All three categories of the Indian diaspora are nonetheless bound with consistency in that they were, and continue to be, created by a labor migration—unskilled labor from the 1800’s, and highly skilled labor after 1960. At one time, the fastest growing segment of Indian diaspora, the Gulf Diaspora, has now stabilized at around 5 million (Rao, 2013).

During the nineteenth century, the Indian merchant communities in the Gulf flourished.¹³ Previously, the Indian merchant diaspora had set up their base in the Persian Gulf and Red Sea areas, succeeding the international trade and exchange of textiles and spices in lieu of dates, pearls, and semi-precious stones across the ancient Silk road. The wealthy colonies of Sindhi and Gujarati merchants, who enjoyed religious freedoms, not only played a dominant role in maritime trade and finance, serving as bankers, importers, exporters, agents for local merchants, and government contractors (Suter, 2005) but also impacted the Gulf countries in terms of initial modernization, cultural renaissance, reform movements, and aspects of sociocultural life (Jain, 2005).

Although these earlier patterns of emigration were the result of British colonialism in India, India’s tremendous post-independence labor migration imitated the same routes towards these upcoming high-wage economies. This new wave of mass labor migration was a result of two major developments. Firstly, the emergence of oil resources in the early 1950‒1960s, which in spite of the restrictive nationality clause, accelerated the reliance of GCC countries on imported manpower for various skilled, semi-skilled, and unskilled tasks (Jain, 2005). Since the 1960s, the dynamic of immigrant labor was amended to give preference to Asian over Arab workers. While prior, their linguistic and cultural compatibility¹⁴ with the local population made Arab labor more attractive to nationals than other immigrants (Kapiszewski, 2004), the fear of non-local Arabs spreading radical social and political ideas,¹⁵ cultivating undesirable loyalties, and attempted manipulation of the ‘Arab identity’ to justify regional distribution of the oil-generated revenues,¹⁶ prompted the Gulf authorities to look towards the East to diversify the source of imported labor. As a result, India became the preferred source of migrant labor. Indian migrants were cheaper to employ, smoother to expel, thought to be more efficient, obedient, and manageable, and unlike Arab immigrants did not make claims for the same benefits as the nationals nor bring their families to the Gulf in the hope of permanent settlement. There was little concern about the possible social consequences of the de-Arabization of the population as a result of Asian influence (Kapiszewski, 2004). Secondly, aside from the partiality towards Asian migrants, the rise of skilled labor migration accelerated further following the involvement of Asian governments in facilitating the recruitment and placement of their workers. The Emigration Act of 1983¹⁷ was introduced in addition to the ‘right to travel’ and issuance of passports¹⁸ by the Indian Supreme Court in 1966 (Naujoks, 2009), as a vital instrument in India’s path towards conducting foreign relations. This regulated the expanding emigration of Indian workers on a contractual basis, providing a constant supply of manpower to the Gulf states who, due to the shortage of skilled professionals in the local labor market, have implemented, and in cases exploited,¹⁹ the skills of India’s emigrant labor force for “turn-key” projects,²⁰ rapid national development, and unparalleled economic growth that the Gulf region is famously synonymous for.

The annual volume of Indian emigration to the GCC states has been rapidly accelerating, from 160,000 migrants in 1985 and an almost trifold figure of 420,000 in 1995 to 680,000 in 2006 and an astounding 820,000 in 2013.²¹ India is gradually inching towards losing one million of its citizens annually to the GCC alone. Yet, while the amount seems immense, the rate of Indian population alone increases by around 16.5 million per year,²² portraying the annual labor emigration from India in search of employment, higher standards of living and increase in knowledge concentration opportunities, to have no impact on the demographic landscape of India. The economic crisis in 2008, however, transformed the state-wise scenario, appointing Uttar Pradesh, the largest and arguably poorest state in India, the highest ranking in terms of outflow of labor migrants, from an annual migration of 19,288 in 2002, to surpassing Kerala with 226,798 migrant workers in 2014. The impact of the economic crisis resulted in the largest recorded decline in outward migration from India, plummeting from 849,000 emigrants in 2008, to 610,000 in 2009. The only other decline trend recorded has been between 1997 and 1999, where emigration levels slumped from 416,000 emigrants to 200,000,²³ as a result of a majority of GCC states adopting restrictive immigration policies in favor of localization—the GCC states were undertaking policies of Kuwaitization, Saudization, Emiratization, and Qatarization (Kumar, 2014).²⁴

The local population in the GCC has, over the years, been overshadowed by the expatriate population, as about 48% of the total population of 44.6 million of the six GCC countries consisted of non-nationals in 2010.²⁵ In terms of differences across the GCC countries, in 2010 the UAE had the largest percentage of expatriate population with 88.5% of non-nationals, followed closely by Qatar, Kuwait, and Bahrain, while Oman and Saudi Arabia has the lowest percentage of expatriates with 31.4 and 31%, respectively (Shah, 2013). Following the ‘jus sanguinis’ principle for citizenship, the GCC countries do not permit naturalization of their foreign labor. NRIs in the gulf region experience certain inequalities compared to their counterpart NRIs from other developed nations like the United Stated or Australia, that prohibit them from gaining a permeant status of citizenship or social security, purchasing property, and owning 100% of the rights to a company²⁶. This has represented the India-Gulf corridor as one of circular migration, where short-term stay and inevitability of returning home has become the hallmark of Indian migration to the region (Jain, 2010), resulting in keeping the demographic of the GCC states in a flux. Seeing as how the emigration flows have tripled over the past decade, the growing trend of emigration coupled with the objective conditions of development in the GCC countries spurred by sustained economic and social changes, rapid urbanization, better transportation and communication, and the strong Indo-Gulf migration networks, suggest that the next decade will most likely bring even more emigration from India into the GCC (Gurucharan, 2013)²⁷.

5 Determinants of Talent Mobility

Indian immigrants in the UAE constitute two major class segments; skilled, semi-skilled, and unskilled workers; entrepreneurs and professionals with a relatively diverse profile. Unlike the employment demographic in other GCC states where Indian expatriates are massively clustered in semi-skilled and low-skilled occupations, the High Level Committee on the Indian Diaspora (2001) estimate that on average 24% of Indian workers are ‘white-collar’ workers in managerial positions and senior officials, with another 10% belonging to the professional category.²⁸ Known for their economic, professional, academic, scientific, and artistic successes, as well as for their generally peaceful integration, talented, multi-skilled, and cheaper to employ Indians have dominated UAE’s manpower pool in the health, education, management, information technology, media, development, banking and finance, oil, and architectural sectors, and have proven to be more adept at establishing social organization (Parekh et al., 2003).²⁹

The international mobility of human capital and the resulting outcomes for the country of origin and country of destination has shifted the focus of scholars and politicians away from traditional analysis of trade and capital mobility. There is a newfound emphasis on the international transfer of human talent, as a key economic resource and a source of creative power in business, science, technology, arts, and culture (Solimano, 2008). To answer the determinants and motivations behind Indian talent mobility towards the GCC, it is imperative to recognize first that no migration story is ever the same. The determinations vary between individuals and no longer conform to the theories of traditional international migration based solely on the wage deferential. In any case, it is possible to establish six broad rationales based on the interviews conducted with highly skilled NRI entrepreneurs residing in the UAE, to determine the shared characteristics and incentives towards their decision of emigration.

• 1. International differences in earning and development gaps. Talent is generally expected to flow from countries with lower levels of development to countries with a higher level of development. The development gap—difference in living standards and productive potential among countries—between India and the UAE is substantially large. Employment opportunities and lucrative salaries are among the most substantial reasons for India’s ‘brain drain’ as the natives believe the compensation awarded in India is not an equivalent return for their hard labor. The economic benefit of migrating to a high-income country like the UAE, due to petroleum reserves, is systematically larger, as demonstrated by development economist Clemens (2009) whose research on the economic benefits of migration found a substantial “place premium”³⁰ for Indian workers migrating to the UAE. The significant differences in income generating capacity across countries and sectors of economic activity is particularly relevant for talent engaged in directly productive activities such as entrepreneurs as they are generally profit driven.³¹

• 2. Non-pecuniary motivations. Migrants may choose to relocate due to personal preference for exploring, ambition for improved career opportunities, or experiencing superior standards of living that the UAE is renowned for. The search for attaining political stability and security is also an important component of international migration. For Indians, the social and economic environment in India is dismal and congested with economic volatility and depression, weak institutions, health risks, insufficient working conditions, and political instability. Of the five NRIs surveyed, 60% revealed their motivation for migrating to the UAE were non-pecuniary. Among the reasons that attracted them in the UAE initially, they cited the fact that the UAE was offering a milieu that could allow them to live an “Indian lifestyle”, with large areas (Bur Dubai, Mina Bazar, Satwa, Deira, Karama, etc.) populated mostly by Indians.³² It is quite common though for this hardcore middle class to move out to other areas (or sometimes to go back to India) once it reaches the middle-upper entrepreneurial status.

• 3. Demand for capital and talent. The demand for directly productive talent in the workforce is interrelated with the demand for capital, and with the UAE facing high rates of unemployment and India developing high levels of under employment, a migration flow will inevitably form towards the country that offers superior economic opportunities. India has a large reserve of English-speaking, highly skilled workers available to fill the supply gap in labor-deficient economies. In contrast, the UAE suffers from severe shortages of qualified local manpower, generating a demographic difference that provided Indians the opportunity to work in the GCC. However, only 20% of the entrepreneurs surveyed claimed “demand for capital and talent” to be their motivation towards emigration as the large-scale development projects established after the ‘oil boom’ in the UAE initially demanded a higher reliance on low-skilled ‘blue-collar’ workers, than entrepreneurs and ‘white-collar’ professionals.

• 4. Agglomeration and concentration effects. As a general trend, it has been noticed that talent is attracted by the availability of other talented individuals, since creative processes and research and development activities are rarely achieved in isolation. With the absence of an established research environment and availability of resources for knowledge concentration in India, highly skilled knowledge and technical talent face a lack of recognition, poor career prospects, inability to advance, modest salary, and the absence of a critical mass of professional peers. The internationalization of knowledge creation and the expansion of information, communication and technology centers in the UAE, such as the Dubai Internet City, Dubai Media City, Dubai Financial Center, Dubai Knowledge Village and Dubai Design District portray the UAE as a regional hub for research and development to the deprived and highly skilled talent in India. The lure of being in places where innovation and creativity takes place can be very important to technical talent in their decision to relocate.

• 5. Linguistic compatibility, networks, and social cultural affinity. Although the traditional cultural obstacles for the mobility of talent across nations such as differences in language, cultural traits, and social behavior are less of an impediment to well-educated, highly skilled migrants, the existence of these attributes can undoubtedly assist in the facilitation of international migration. The mass immigration to the UAE is therefore seen as a calculated decision, owing to the preexisting migration patterns, family and community ties, and established diaspora networks, illustrated by the NRI entrepreneurs surveyed as 80% affirmed to migrate from India in lieu of existing networks and social and cultural affinities. The ease of adjustment, element of familiarity and social ties, also influences the migrants’ decision to relocate the family. As the migrant family relocates, they developed and maintain their own cultural networks, easing additional immigration from friends and community members from India.

• 6. Policy regimes and immigration policies. The mobility of migrants across nations is ultimately affected by economic and public policies. The broad policy regime in the home and host country is what determines the talent’s ability and decision to stay, leave, or return. Policy implications are both critical and dynamic, in that a change of policy can severely impact the regulation of entry and exit of foreigners and disrupt migration patterns. Until recently, the demand for talent in the UAE economy and liberalization of immigration and economic policies have been successful in attracting large sums of migrants from India, who face adverse political conditions such as bureaucracy and instability back home. The UAE’s tax-free³³ charm and free economic zones have allowed thousands of migrants and entrepreneurs to start their own international companies in a matter of days and lift their family in India out of poverty. Nonetheless, with increasing anxieties arising within the indigenous population around the over-dependence on and domination of Indian expatriates, these concerns may soon result in highly restrictive immigration laws and introduction of nationality quotas³⁴.

6 Evolving Migrant Identities

6.1 Transnational Entrepreneurs

The use of advanced information and communications technologies, as well as an initial capital of economic, cultural, and social resources (a capital of mobility), are what distinguish a diaspora community from a transnational skilled diaspora community that can gear development, maintain extensive professional relations, and successfully integrate their national economies into the global and political context (Mishra, 2016). Of the five NRI entrepreneurs surveyed, 60% mentioned ownership of a variety of assets in India and another 40% admitted to have previously contributed major donations in the private sector or towards NGOs in India, while 100% retained their loyalty to India, alongside to the cities of UAE that they have been able to prosper in, showcasing that the ties that migrants maintain with their home country can be displayed as outcomes of having both cultural and economic agencies. Given these ties to their country of origin, members of the Indian transnational diaspora have also been recorded to be more willing to engage in high-risk business activities or emerging markets, owing to their expanded knowledge of the local, political, economic, and cultural environment, their individual connections and linguistic abilities, and their use of global networks. These networks have created opportunities for investment, trade, and outsourcing; fostering strategic partnerships, leveraging access to relatively cheap labor and large talent pools; and utilizing sources of political and financial capital in facilitating the transfer of knowledge and technology, all without the requirement of physical temporary or permanent relocation.³⁵

The role of the “highly skilled diaspora” in developing knowledge-based sectors in India has now become well known. The growing attention towards NRI entrepreneurs in India, combined with the international success of Indian firms like Infosys and Satyam, is not only creating role models for young Indian entrepreneurs, but the NRIs are also, in turn, helping invest in promising start-ups in India (Saxenian 2001). As these members of the Indian diaspora prospered overseas as entrepreneurs, venture capitalists, and top executives, they also played an active role in promoting and supporting the growth of India’s IT industry. Spearheading skill enrichment mentorship programs for Indian programmers (schools and universities with specific programs to form the next generation of IT expatriates), this highly skilled transnational population became pioneers of development; creating employment, stimulating innovation and knowledge transfer, and generating social capital across borders.

Transnational diaspora entrepreneurs and their networks have become important contours of the ‘new, post-national cartography’ of the global world. Yet, there is no empirical evidence on the size and mobility of these entrepreneurs. Transnational entrepreneurs succeed by identifying and exploiting opportunities and mediating through a complex array of production, circulation, and consumption activities that significantly contribute towards the integration of national economies into the global political context (Mishra, 2016). Nevertheless, the role of governments and multilateral institutions are of equal importance in facilitating these transitional exchanges. Taking full cognizance of this changing context, nation states are making significant efforts to redefine their approach towards traditional ‘national’ economic development processes and attract their diaspora. Transnational entrepreneurial networks promise to be a potent driver of economic development and can be massively capitalized by the Indian government establishing domains that support their diaspora entrepreneurs in the UAE and beyond.

6.2 Return Migrants

Human capital mobility has always been characterized through a South-to-North movement, but an emerging trend is operating in reverse, from high-income countries to middle-low income countries, reversing the ‘brain drain’ and its detrimental impacts. “Reverse Brain Drain” is a phenomenon that for the Indian subcontinent represents a giant inflow to the country of origin of both financial capital through accumulated overseas savings, and of human capital through the newly acquired skills and knowledge from working abroad (Wahba, 2004). It is important to note that while return migration as a general inward movement has been previously recorded, the return migration of highly skilled talent is severely under examined in the literature available, and its potential relatively untapped. Return migrants have become an increasingly important component of India’s social and economic development, as the actual physical return of skilled emigrants enables the utilization of skills and expertise at a scale incomparable to other channels of knowledge transfer.

Contrary to the traditional dialog on ‘brain drain’ and outward migration, it has been documented that a significant amount of Indians do indeed return back. Low-income nations that were once primarily migrant-sending states are now experiencing a boom³⁶ that is beginning to increase their attractiveness towards the highly skilled migrants and beckoning the diaspora home (Rajan et al., 2013). A survey conducted by the Center for Development Studies (CDS) on 1106 voluntary high-skilled professional return migrants in India illustrated that during the period of 2006 -2011, 17% of return migrants had returned from the UAE, whose occupational profile ranged from Management Executives and IT Specialists, to doctors, teachers, and lawyers. The study revealed and categorized nine motivations towards the return of the professional migrant back to their motherland³⁷: aging parents, kinship ties and the desire to contribute to the family in the town of origin (21%); expired contract or visa (19%); global recession, loss of job, or fall in salary (16%); plans to set up their own venture in India or take over family business (11%); better employment and investment opportunities for highly skilled professionals (9%); non-pecuniary motivations such as harassment and job security (9%); family problems such as health emergencies and divorce (8%); dissatisfaction, alienation, and monotonous working environment in the host country (4%); and marriage and family planning (3%) (Rajan et al., 2013).³⁸ The study indicates a significant return migration that corresponds directly to ‘pull factors’ in the flourishing economic environment in India, with prospects of new opportunities, a booming IT industry, and encouraging investment incentives. The return flow of migration is additionally fueled by an adverse and unstable economic and political climate in the country of destination, with ‘push factors’ such as the soaring cost of living, increasing income inequality, promotion of Emiratization laws, and introduction of Value Added Tax (VAT) relegating the UAE as rather lackluster. The inability to attain permeant residency or citizenship status has characteristically represented the India-Gulf migration corridor as one of short-term stay and inevitability of returning home, with the OECD estimating that 20 to 50% of Indian immigrants return home within five years of their arrival in the Gulf region (Rajan et al., 2013)³⁹. However, scholars maintain that the return of the migrant is not the end of the road. Chair Professor of the MOIA Research Unit on International Migration, Dr S. Irudaya Rajan, after examining Gulf migration patterns of Keralites over the years, had announced the return of 40,000 migrants after the Financial Crisis of 2008, but furthermore reported that “in a year’s time, they all went back” (Anima, 2016). A similar study in the third largest state of India, Bihar, recognized that of the Indian diaspora from the Gulf states, 25% were once migrants, 42% were twice migrants, 21% were thrice migrants, and 12% had migrated to the GCC region four times or more (Jain, 2010). The earlier survey conducted by Center for Development Studies (2006–2011) mentioned that the returnees had not initially planned on migrating back and that their return was spontaneous and voluntary (Rajan, Kurusu & Panicker, 2013). These findings portray the return migration from the Gulf region to be far from permanent and have little to do with migration policies or diaspora programs. In contrast to the migration patterns of transitional entrepreneurs, return migration correlates more with individual, non-pecuniary motivations to travel and explore opportunities, even in a possible third destination country if India nor the UAE provide the high-skilled mobile talent enough incentive to immigrate.

Although there has been a recorded, albeit not at a large-scale, return migration to India, equally imperative is the analysis of those entrepreneurs who are recalcitrant to the idea of returning. Among the UAE entrepreneurs surveyed, the reluctance to emigrate and return to India could be combined within three categories. The first are prevailing pessimistic mentalities shared by Indians abroad who view India as unsanitary, poverty ridden, dangerous, and lacking in good health care or educational facilities. This sentiment is commonly shared among second-generation entrepreneurs who have developed connections to the host country that are greater than their link to India. The second is the lack of development and scarcity of resources and opportunities available in India, which can be seen as both a cause and consequence of ‘brain drain’. The entrepreneurs surveyed cited a lack of updated infrastructure, inferior working conditions and standard of living, and lower salaries for the same employment position in India. The third and most detrimental factor behind the NRI’s reluctance to return is the lack of political, economic, and social transparency, making it an unfavorable environment for establishing businesses. Unsurprisingly, the rationale behind the reluctance of return to India is in many ways directly proportional to the determinants of the initial emigration towards the UAE. It has been observed that the incentives for migrants to return to developing countries have been insufficient to override the limitations at home—both real and perceived—and the attraction of opportunities found abroad (Dodani & LaPorte, 2005).

7 Capital Gain: Remittances and Foreign Direct Investment

An important aspect of Indian entrepreneurial migration to the Gulf has been its lions share in the transfer of remittances.⁴⁰ The NRI remittances and investments play a profound role as an important and stable source of external finance in India’s economic development program. Transfer of remittances to India accounts for 15% of the total global remittances to low- and middle-income countries⁴¹ that stands at an estimated $466 billion (Nayak, 2017). Yet, India’s dominant position in remittance receipts is relatively recent, rising steadily in the last 25 years and rather dramatically in the last 10⁴², with the Reserve Bank of India (RBI) reporting $46.4 billion in remittances in 2008, $13.5 billion in 2000–2001, and a modest $2.1 billion for the period of 1990–1991.⁴³

It is important to note, however, the available figures for international remittances and NRDs (Non-Resident Deposits) solely account for remittances transferred through formal channels⁴⁴. Accordingly, the actual volume of remittances remain ambiguous and impossible to quantify due to the prominence of parallel informal channels. These ‘invisible’ channels evade official statistics and involve various operations such as money and material goods bought into the country by the migrant himself, money sent through a third person, and informal money transfer through the hawala system. Hawala or Hundi are informal community-based arrangements for remittance transfers, used predominantly in the Middle East and South Asia, that include ease of operation, lower transaction costs, faster transaction time, and potential anonymity, which explains their popularity.⁴⁵

Almost 60% of remittances received by India are derived solely from the oil-exporting GCC countries, showcased by a pattern of rapid increase in NRDs beginning mid-1970 (Naufel, 2010), following the ‘oil boom’ that directly corresponds to the influx in labor migration to these high-wage economies. Regarding the origin of remittances, the UAE ranks above the rest, singularly remitting over $21.5 billion during the first half of 2017 according to the UAE Central Bank (Abbas, 2017). The UAE-India remittance aisle is the fourth largest⁴⁶ in the world, asserting the UAE as India’s largest trading partner and investor. Notably, the progressively increasing levels of remittances from foreign workers in the UAE is principally in view of two elements unique to the GCC. Firstly, the UAE-India money transfer prevails as the cheapest in terms of the costs, with some expatriates even enjoying “zero per cent fees” and most UAE exchange houses charging a fixed fee of AED 15 (approx. $4.1) (Maceda, 2017). The second motivation for the record high-remittance transfers from the UAE is the growing entrepreneurial market. Microeconomic evidence based on surveys of immigrants in several  destination countries conducted by Bollard, McKenzie, Morten, and Rapoport expresses a correlation between skill and remittance amount, suggesting that more educated individuals remit more, with tertiary-educated migrants from poorer countries being more likely to remit than those from richer developing countries (Bollard et al., 2011).

Evaluation of the impact of remittances on inequality in India is heavily subjected to its utilization patterns. Remittances carry important economic and social significance as these amounts maintain family ties, help reduce poverty, increase smaller business investments, contribute to higher expenditure on health and education, and escalate human and financial capital in India (Mishra, 2016). Surveys conducted to track the micro aspects of remittances by the Reserve Bank of India in 2006 and 2009 reported that frequent remittances of a lesser monetary amount indicate that the remittance is used mostly for family consumption. However, less frequent and high monetary size of remittances may be directed towards investment purposes rather than for family maintenance needs. It is important however to remember that more than 60% of personal consumption and spending are taxable, thus still providing fiscal benefits to the government of India (Gibson, 2010).

In terms of frequency and size, the RBI survey further indicated that 65 percent of remittances were received every three months or less, while 42 percent were received once a month, with 58 percent of recorded remittances to be of amount INR 50,000 (approx.$770) or above. These findings, along with the examination of remittances transfer patterns over the years, projected that while size of remittances had generally increased, the frequency of remittances had fallen. Where once remittances were criticized for generating extra consumption spending and not being utilized for long-term investments, these trends suggest that over the years, a higher proportion of remittances are being directed towards investment purposes. Remittances potentially enable migrants and their family members to invest in agriculture and other private enterprises, giving them a chance to invest in India’s economic activities and gain access to wealth (Haas, 2005).

Remittance flows to India over the years have remained stable and resilient, a feature that was best portrayed during the global financial crisis of 2007 where remittance inflows remained consistent: additionally, it showcased the NRI diaspora in the Gulf to be especially resilient in the face of adverse economic climates. This is due in part of the employment demographic in the region, and the UAE in specific, which portrays a large percentage of highly skilled and professional migrants who are mainly engaged in more secure sectors, compared to the construction and real estate sectors that were specially hit hard (Afram, 2012). For this reason, the Indian diaspora in the Gulf region is commonly and aptly referred to as “The Dollar Reliable Diaspora” since without the possibility of acquiring permeant residency or citizenship in the UAE, Indians migrants repatriate the majority of their earnings and savings to India under compulsion (Singh, 2009).

After remittances, a primary financial channel through which high-skill expatriates can provide tremendous benefit to the socioeconomic landscape in India is through their involvement in Foreign Direct Investment (FDI) and trade (Gibson, 2010). Inspired by the role of the Chinese diaspora in the development of its source economy and the policymaker’s ability to capitalize on their foreign migrant labor, the government of India insistently set forth policy schemes to better engage their diaspora. Although the Indian migrant’s share in the total FDI has yet to be as significant compared to China, India’s technology-oriented diaspora nevertheless credits large sums of FDI in the country’s emerging technology hubs in Bangalore and Hyderabad (Devan & Tewari, 2001) with prominent investments in the medical sector (Mahroum et al., 2006). The marked increase in FDI flows occurred with the commencement of economic liberalization in India in 1991, expanding the role of foreign investment. Yet, the initial years of liberalization maintained low FDI, particularly from the Indian expatriates, due to an unfavorable regulatory regime and the hostility portrayed by the indigenous capitalist class in India. Change has nevertheless come swiftly in India with the likes of some of the leading expatriate business magnates, Lakshmi Mittal, U.K. based chairman and CEO of steel producing giant ArcelorMittal, and Anil Agarwal, U.K-based founder and chairman of mining and manufacturing Vedanta Group and Resources that have proposed to initiate massive FDI into the Indian economy primarily in sectors related to mining and metal (Mishra, 2016).

Through remittances and FDI, the Indian diaspora can actively participate in the regional development of India, as long as the government can establish appropriate measures to facilitate these investment flows. Being that the raison d’être for the government’s engagement with the Indian diaspora has been to secure economic contributions for the development of India, major interventions in the economic sector became a necessary tool to overcome the underlying negative disposition of diasporic Indians towards the economy and its legislators. Already pursuing a policy of incentives and liberal norms conducive for the diaspora such as higher interest rates on monetary deposits, to ensure the expatriates of the well protection of their financial transfers and enforce the ambitious schemes of diasporic economic involvement envisioned by the government, several facilitating and coordinating agencies were urgently required. The most essential of these was the establishment of the Overseas Indian Facilitation Center (OIFC) in 2007, whose objectives were: to secure Indian diaspora investments; facilitate business partnerships; and provide advisory services to investors about opportunities and trends in the Indian economy. With the recognition of the expatriate labour force as a vital segment of the Indian diaspora, the government of India now focuses on strategies to both maintain and increase the outflows of human capital to the GCC countries and secure the welfare of workers in the host counties. This is ensured through a system of policy interventions and bilateral cooperation with the destination countries.

8 Conclusion

Earlier associated with the exodus of low-skilled labor, contemporary patterns of Indian migration towards the GCC region depict the mobility of high-skilled professionals and entrepreneurs. The spur of mass emigration inflows to the UAE was examined as the outcome of the existing pre-oil boom merchant ties with the region, and the post-oil-boom demand for high-skill labor. The influx of Indian expatriates permanently altered the size and complexion of both the immigration flow and demographic landscape of the UAE, generating a population imbalance and rendering the Emirati population a minority.

The discussion of talent mobility is incomplete without the exploration of its potentially positive impact towards the source country. The examination of remittances and FDI sent to India from the UA, clearly indicates members of the Indian diaspora to be funding national development, albeit, at a modest scale, as the majority of remittances are directed towards family consumption. Nevertheless, the developmental abilities of the diaspora are increasingly being recognized by the Indian government and their contributions are being facilitated through the establishment of diaspora engagement mechanisms. The gradual introduction of engagement policies, ranging from the very symbolic to concrete, can be seen as attempts by the Indian government to capitalize on its diaspora, and reverse the impact of ‘brain drain’.

Since the 1980s, there has been increasing attention paid to the idea that international migrants can maintain economic, social, cultural, and political links with their countries or societies of origin, even as they become incorporated in their host country (Patterson, 2006; Schiller et al., 1995). Brain circulation illustrates a new phenomenon in the perspective of “brain gain” where there is international brain exchange as migrants are considered as important transmitters of technology and knowledge (Davenport, 2004). The same individuals who left India in search for bigger and better opportunities are reversing and transforming brain drain into brain circulation as they return home to work, establish partnerships, or start new companies while maintaining business and professional ties with the United Arab Emirates. In this sense, the circular movement of highly skilled migrants is benefitting both sending and receiving countries (Riemsdijk & Wang, 2017).

One of the most important features of international migration is the ‘human capital’. However, this involves an analytical simplification that masks the reality in which there are different types of talent, each with their individual motivations to move and varied development impact. When assessing the socioeconomic impacts of human capital flight, the exploration of directly productive talent is crucial as these migrants are directly engaged in activities which lead to the actual production of goods and services. This includes the mobility of entrepreneurs—‘agents of resource mobilization, investment, and innovation’⁴⁷ —who are relatively neglected in the discussion of talent mobility (Solimano, 2008). Jain lists three categories of Indian entrepreneurs in the U.A.E: (i) independent entrepreneurs who operate mostly in Free Trade Zones, (ii) partner entrepreneurs (with local traders) who generally cannot be harassed or removed from the company, and (iii) sponsored entrepreneurs (Jain, 2005).

Innovation and entrepreneurship are often linked to long-run economic growth, as migration may preselect entrepreneurial individuals who contribute to new business formation, or ‘stars’ who generate new ideas (Honig, 2020). According to Fairlie’s (2008) study on the contribution of immigrant business owners towards the U.S. economy, immigrants are nearly 30% more likely to start a business than non-immigrants in developed countries, with higher incomes and employment than native-owned businesses. The late twentieth century and early twenty-first century has also seen entrepreneurial immigrants from India providing an important human resource in the creation of high-tech industries. Saxenian’s (2001) explains how transnational entrepreneurs are creating new opportunities for peripheral economies around the world and reversing the brain drain. She further discloses how these immigrants play a central role in both their destination and source countries:

By becoming transnational entrepreneurs, these immigrants can provide the critical contacts, information, and cultural know-how that link dynamic – but distant – regions in the global economy. They can create social networks that enable even the smallest producers to locate and maintain mutually beneficial collaborations across great distances and facilitate access to foreign sources of capital, technical skills, and markets (Saxenian, 2001).

Saxenian (2001) and Chacko (2007) both reveal how some entrepreneurs serve also as philanthropists, providing an anchor for second- and third-generation Indian migrants abroad while helping improve the social and economic infrastructure of their home country. Having said that, India still lacks a critical mass of transnational entrepreneurs compared to Taiwan and China, in building long-term relationships between India and the recipient country.

Furthermore, theories on innovation and entrepreneurial orientation (Miller & Friesen, 1982; Smart & Conant, 1994) give insight on why certain talent mobility may be more successful in foreign countries than others. Entrepreneurs have the ability to identify new market opportunities, contribute to business formation, and reverse the effect of brain drain. Yet, it can be noticed that literature on entrepreneurship and economic growth focuses mostly on the U.S. Not only is there lack of literature on Indian entrepreneurs in Gulf countries, but there is also an absence of examination of innate traits and competencies that contribute to one’s entrepreneurial orientation, that develop as by-products of the migrant’s upbringing, social interaction, economic environment, and psychological state (Ananthram, 2008).

International migration is an interdisciplinary phenomenon. The analysis of literature indicates that a full understanding on the subject of migration cannot be reached by the use of a single discipline’s tool. Rather, a multi-disciplinary approach must be undertaken to unravel the complexity of the issue of migration, which is riddled with conflicting global economic rationale and the motivations and capabilities of the individual migrant. Within the investigation of theories on the emergence of international migration and brain drain, perpetuation of migration, entrepreneurial innovation and brain circulation, and reverse migration, the gap in existing literature for the exploration of socioeconomic impact of India’s brain drain and reverse brain drain can be easily distinguished. The scarcity of empirical studies on Indian expatriates in the Gulf establishes a need for further research that aims to showcase those specific migratory movements as an interaction of macro and micro structures, as well as an intrinsic part of a broader process of globalization and development.