Mobilizing Talent for Global Development Andrs Solimano Regional
Mobilizing Talent for Global Development Andrés Solimano Regional Advisor ECLAC, United Nations Red de Ciencia, Tecnología e Innovación Reunión Subregional del Cono Sur Santiago-Chile – November 16 th, 2007 1
Contents 1. The International Mobility of Talent: Main Issues 2. Classification of Talent. 3. The International Market for Talent 4. Two Topics in Talent Economics 5. Development Impact of Talent Mobility 6. Empirical Evidence 7. Policy Issues 2
1. - International Talent Mobility: Main Issues ü Talent is a key economic resource that creates new goods, knowledge, technologies, ideas and wealth. ü The international mobility of talent has increased with globalization and has an impact on growth and inequality. ü International markets for talent are more integrated than markets for unskilled labor. ü In the ’ 60 s and ’ 70 s a main concern was on “brain drain”. In the early 21 st Century we talk also about “Talent circulation” with potential win-win impact for origin and destination countries. 3
2. - Classification of Talent a) Directly productive talent, related to business sector: 1. Entrepreneurial 2. Managerial 3. Technical b) Scientific talent 1. Academics 2. Scientists 3. International students c) Talent related to health and cultural sectors 1. Medical doctors, nurses, etc. 2. Artists, musicians, writers 3. Media-related people 4
3. - The International Market for Talent ü Supply of talent (Ph. D’s, engineers, IT experts, medical doctors, students, etc. ). Talent comes from developing countries (Asia, Eastern Europe, Latin America, Africa) and developed countries. ü Demand for talent, talent from developed and developing countries (business, academic sector, government, others). ü Where do supply and demand meet? 5
3. - The International Market for Talent (cont. ) 3. a. - Pulling Factors in the “North” (Demand for talent) ü Shortage of skilled professionals in IT, health and other sectors in industrialized countries. ü Higher wages and attractive employment conditions. ü Favorable immigration policies for talent. ü Better possibilities of interaction with peers (scientists, artists, etc. ) 6
3. - The International Market for Talent (cont. ) 3. b. - Pushing Factors in the “South” (Supply of talent) ü Lower relative income and real wages. ü Lack of resources in universities and research centers (for academic talent). ü Lack of meritocratic careers in the public sector. ü Higher costs of doing business and barriers to entrepreneurship (for directly productive talent) ü Higher frequency of economic and financial crises, unstable political regimes. 7
3. - The International Market for Talent (cont. ) 3. c. - Talent chasing Capital, or Capital chasing Talent? ü South – North movements of Talent ü Talent from the south in search of employment and capital in the north ü North – South movements of Capital ü Capital from the north in search for lower cost talent in the south (movement of multinational firms) ü Examples: ü Bangalore (South) ü Silicon Valley (North) 8
4. - Two Topics in Talent Economics ü Rewards Structures for Talent: Problems ü Education and Talent 9
4. a. Rewards Structures for Talent: Problems for rewarding Talent ü Failures of Markets ü Complexity to identify talent ü Matching failures between Capital/Jobs and Talent availability ü Failures of Institutions ü Weak property rights ü Patent system ü Failures of the State ü The Clientelistic and Paternalistic dominated Organization versus the Meritocratic Organization 10
4. b. Rewards Structures for Talent (cont. ) ü The existence of increasing returns to ability (winners-take-all). ü Examples: sports, artists and famous writers (i. e. Roger Federer in tennis, J. K. Rowling with Harry Potter). ü Distortions: Incentives for rent-seeking, penalize innovation and entrepreneurship. 11
4. c. Education and Talent Allocation A complex relationship… ü Human Capital Theory Talent goes to careers with high rate of return. ü Education, Education as a signal of capacity and talent. ü Is it tertiary education always profitable? ü High opportunity costs of education for the highly gifted, entrepreneurially-oriented talent (Bill Gates left Harvard University to create Microsoft). ü Larry Page and Sergey Brin left Stanford University to create Google. 12
5. - Development Impact of Talent Mobility ü Impact on Economic Growth and Welfare ü Impact on Inequality and Income Distribution 13
5. - Development Impact of Talent Mobility (cont. ) 5. a. - Talent, Economic Growth and Welfare. Talents Innovation Productivity Investment Economic Growth Talents Social Services (Health) Culture Ideas Welfare 14
5. - Development Impact of Talent Mobility (cont. ) 5. b. - Talent, Inequality and Income Distribution “Winners-take-all” Markets Obstacles to develop Talent for low-income individuals High rewards to Talent Top Incomes Modest Rewards Inequality 15
6. Empirical Evidence 16
Table 1. New Knowledge is Concentrated in the “North” Source: Own elaboration based on data from The World Bank’s WDI (2007). 17
Table 2. Prizes to Talent: Nobel Laureates in Science and Economics are Very Concentrated in High-Income Economies (1980 – 2007) 18
Table 3. Prizes to Talent: Nobel Prizes in Literature is more uniformly distributed across nations (1980 – 2007) 19
Table 4. Technical Talent: Patent Applications (by Country and Regions, year 2002) 20
Table 5. Where is the Talent? (I) The Global Talent Index (GTI) 2007 21
Table 6. Where is the Talent? (II) Global Creativity Index, year 2005 22
Table 7. Migration of Qualified Human Resources* from the Americas to OECD Countries (2000) Region Americas North America Caribbean Central America South America Share in the OECD stock (%) Total Skilled 26. 3 2. 8 5. 1 13. 7 4. 7 22. 6 4. 6 5. 7 6. 6 5. 6 Average Rate of Emigration (as a % of the labor force**) Total 3. 3 0. 8 15. 3 11. 9 1. 6 Skilled 3. 3 0. 9 42. 8 16. 9 5. 1 Share of Skilled Workers (%) Among Residents Emigrants 29. 6 29. 7 51. 3 57. 9 9. 3 38. 6 11. 1 16. 6 12. 3 41. 2 * People with 13 years or more of education (tertiary education) ** People equal or greater than 25 years old. Source: F. Docquier y A. Marfouk, “International Migration by Educational Attainment, 1990 -2000”, International Migration, Remittances and Brain Drain, C. Ozden y M. Schiff (eds. ), Washington, D. C. , World 23 Bank, Palgrave Mc Millan, 2006
Table 8. H-1 B Visas to High Skills Immigrants Granted by the United States by Region (2002) Visas H-1 B Granted Origin region Total Percentage South America Asia Africa Europe Others 12 732 127 625 5 994 30 840 20 346 6. 4 64. 6 3. 0 15. 6 10. 3 All countries 197 537 100. 0 Visas related to areas of information technology and computer science Total Percentage of Percentage into Total the information Visas H-1 B technology sector 1 500 11. 8 2. 0 62 121 48. 7 82. 7 1 308 21. 8 1. 7 5 901 19. 1 7. 9 4 284 21. 1 5. 7 75 114 100. 0 Source: R. Barrere, L. Luchilo y J. Raffo, “Highly skilled labour and international mobility in South America”, STI Working Paper, N° 2004/10, París, OCDE, Decembre, 2004 24
Figure 1. Estimated value of offshore services offers in the World (billions of dollars, 2003) Source: Mc. Kinsey&Company (2005), The Emerging Global Labor Market: Part III – How Supply and Demand for Offshore Talent Meet, June. 25
7. - Policy Issues ü How to promote circulation of talent toward developing countries and transition economies to counteract “brain drain”. ü Review rewards structure in the public and private sectors and identify obstacles to retaining and developing talent in developing countries and transition economies. ü Policies oriented to increase connectiveness, compensation, retention. Critical areas: the Health sector and Science and Technology. ü Mobilization of Diaspora for national development. 26
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