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Remittances or technological diffusion: which drives domestic gains from brain drain?

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  • Thanh Le
  • Philip Bodman

Abstract

This article examines the impact of technological diffusion and international migrants' remittances on the economic development of less-developed countries. The hypothesis that skilled workers, living and working overseas, can effectively channel technological knowledge back to their home country, which in turn contributes to that country's economic growth, is tested utilizing data on the stock of high-skilled workers from 50 developing countries working in industrialized countries over the last two decades. Results obtained lend strong support to this hypothesis. In addition, the effect that remittances from workers in developed countries, which are used for investment purposes in developing countries, have on the rate of growth of those developing economies is investigated. Our empirical evidence indicates that this remittance channel exerts a significant, positive impact on growth, although quantitatively the contribution of such investment-oriented remittances in driving sustainable economic development appears to be somewhat smaller than that of more general technological diffusion.

Suggested Citation

  • Thanh Le & Philip Bodman, 2011. "Remittances or technological diffusion: which drives domestic gains from brain drain?," Applied Economics, Taylor & Francis Journals, vol. 43(18), pages 2277-2285.
    • Handle: RePEc:taf:applec:v:43:y:2011:i:18:p:2277-2285
    DOI: 10.1080/00036840903153838
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    Cited by:

    1. Shahbaz, Muhammad & Song, Malin & Ahmad, Shabbir & Vo, Xuan Vinh, 2022. "Does economic growth stimulate energy consumption? The role of human capital and R&D expenditures in China," Energy Economics, Elsevier, vol. 105(C).
    2. AM.Priyangani Adikari & Haiyun Liu & MMSA. Marasinghe, 2021. "Inward Foreign Direct Investment-Induced Technological Innovation in Sri Lanka? Empirical Evidence Using ARDL Approach," Sustainability, MDPI, vol. 13(13), pages 1-16, June.
    3. Yosra Saidi, 2024. "Remittances and growth in Africa: Does financial development and institutional quality matter?," Economics Bulletin, AccessEcon, vol. 44(1), pages 163-172.
    4. Gnangnon, Sèna Kimm, 2023. "Duration of membership in the world trade organization and investment-oriented remittances inflows," The Quarterly Review of Economics and Finance, Elsevier, vol. 88(C), pages 258-277.
    5. Sèna Kimm Gnangnon, 2022. "Aid for Trade is more effective when the trading environment is more predictable," Economic Affairs, Wiley Blackwell, vol. 42(3), pages 453-476, October.
    6. Sèna Kimm Gnangnon, 2024. "The effect of economic uncertainty on remittance flows from developed countries," Economic Affairs, Wiley Blackwell, vol. 44(2), pages 267-280, June.
    7. Hezron M. Osano & Pauline W. Koine, 2016. "Role of foreign direct investment on technology transfer and economic growth in Kenya: a case of the energy sector," Journal of Innovation and Entrepreneurship, Springer, vol. 5(1), pages 1-25, December.
    8. Gnangnon, Sèna Kimm, 2022. "Duration of WTO Membership and Investment-Oriented Remittances Flows," EconStor Preprints 251274, ZBW - Leibniz Information Centre for Economics.
    9. Philip Bodman & Thanh Le, 2013. "Assessing the roles that absorptive capacity and economic distance play in the foreign direct investment-productivity growth nexus," Applied Economics, Taylor & Francis Journals, vol. 45(8), pages 1027-1039, March.
    10. Sèna Kimm Gnangnon, 2023. "Effect of Aid-for-Trade Flows on Investment-Oriented Remittance Flows," JRFM, MDPI, vol. 16(2), pages 1-36, February.

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