Financial Liberalization and the Brain Drain: A Panel Data Analysis

Abstract

This paper explores the impact of financial liberalization on the migration of high skilled labor from 46 countries to the OECD, taken at five year intervals over the period 1985-2000. Using an exploratory factor analysis, we are able to distinguish between two dimensions of financial liberalization, namely the robustness of the markets and their freedom from direct government control. We find that a standard deviation improvement in the robustness of the source country financial sector magnifies the extent of brain drain by a factor of about four percentage points on the average. However, a corresponding increase in the freedom of the source country financial sector from government control has a modest negative impact on the emigration of high skilled labor and the effect is not statistically significant. Further, the impact of improved financial sector robustness on selection is more pronounced for non-OECD economies than for OECD nations, which experience virtually no impact on skilled emigration.

Financial liberalization, remittances and economic growth in Nigeria (1990–2018)

“…In contrast, Beine et al (2012) find that remittances contribute Financial liberalization and remittances significantly to the promotion of financial liberalization policy in 66 developing countries from 1980-2005. On the other hand, Mitra et al (2011) observe a different contribution of financial liberalization to emigration in a sample of 46 countries. The authors report that financial liberalization increases immigration in non-OECD countries with no significant effect on OECD countries.…”