Brain Drain

“Brain Drain” is a slang term describing a substantial emigration or migration of individuals, particularly a core portion of highly educated individuals such as; doctors, healthcare professionals, scientists, engineers or financial professionals.

A brain drain can result from turmoil within a nation, the existence of favorable professional opportunities in other countries, or from a desire to seek a higher standard of living.  The potential for a brain drain is sometimes put forward as an argument against excessively progressive income tax rates.

Worker migration is an issue that should be of considerable importance to investors.  In order for a nation to develop and maintain a leadership position in cutting-edge fields, it is essential to attract and retain the world’s best and brightest.  It is equally important to not only create jobs, but to attract and accept individuals who are interested in, and capable of, filling job opportunities as they develop.

In the interest of avoiding undue complexity, consider an economic model with only three primary economic factors – skilled labor, unskilled labor and capital.  Capital is very fluid and will seek to optimize returns.  People, to the extent possible, will tend to migrate toward the greatest opportunity for a successful and satisfying life for themselves and their families.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA