High-skilled Migration from India: An Analysis of Its Economic Implications

Abstract

The purpose of the paper is first to quantify the extent of high skilled migration from India and then to distil out two of its economic implications to her home economy. First the high skilled migration has resulted in larger amount of remittances: India is now the largest remittance receiving country in the world. Although during the period up to the mid 1990s, the source of this remittances were largely the result of low skilled migration to the middle east, since that period nearly half of the remittances are emanating from the US alone and it is not difficult to argue that this trend in the shift in source is very much tied to high skilled migration. The availability of these remittances has helped the country to reduce its deficits in the current account of its Balance of Payments even if these remittances have not always found expression in productive investments in the home economy. Further the increased consumption smoothening that these remittances have contributed to have had a positive effect in spurring and maintaining the high growth performance of her services sector. The second implication is that it has had a deleterious consequence on the supply of high skilled personnel especially for R&D: in fact India has one of the lowest densities of scientists and engineers engaged in R&D. Although there are quantitative evidences (based on an analysis of both input and output indicators of innovation) to show that India has become significantly more innovative in the period since 1991, her ability to sustain and improve this performance crucially depend on the availability of highly skilled manpower of certain acceptable quality. Although a small number of such manpower is turned out by the higher education system, they do not find an expression in the core human resource on science and technology and part of this “lack of expression” may be attributed to the increased high skilled migration.