Brain drain or brain bank? The impact of skilled emigration on poor-country innovation

The development prospects of a poor country or region depend in part on its capacity for innovation In turn the productivity of its innovators whom are often concentrated around urban centers depends on their access to technological knowledge The emigration of highly skilled individuals weakens local knowledge networks (brain drain) but may also help remaining innovators access valuable knowledge accumulated abroad (brain bank) We develop a model in which the size of the optimal innovator Diaspora depends on the competing strengths of co-location and Diaspora effects for accessing knowledge Then using patent citation data associated with inventions from India we estimate the key co-location and Diaspora parameters The net effect of Innovator emigration is to harm domestic knowledge access on average However knowledge access conferred by the Diaspora is particularly valuable in the production of India s most important inventions as measured by citations received Thus our findings imply that the optimal emigration level may depend at least partly on the relative value resulting from the most cited compared to average inventions (C) 2010 Elsevier Inc All rights reserved