Impact of Brain Drain on Human Capital Assignment

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THE IMPACT OF BRAIN DRAIN ON HUMAN CAPITAL IN MALAYSIA1IntroductionBrain Drain also known as a Human capital flightis described as moving out ofhighly skilled orwell-educated individuals from home country.The term Brain Drain was initially used in theUnited Kingdom to elaborate the stream of engineers and Indian scientists. Although this termoriginally meant meaningful and technical workers are moving out of a nation, its meaning haswidened into "the flight of professional and educated people from one country, for the motive ofearning better and also to improve living conditions.Against this backdrop, brain drain—or the Human Capital Flight—poses a specific challenge. Ifit sustains to stay as an ‘exodus of talent’ as suggested by the above quote, the brain drain couldeasily hamper Malaysia’s journey towards high income as a skilled, entrepreneurial and creativelabor force helps to prosper a Nation and adds value to its growth.Magnitude of the Malaysian diasporaAs Malaysia is entering the league of high-income nations, it needs to attract, develop and retaintalent.In a recent New York Times interview, Danny Quah of London School of Economics hasquoted “Since people are leaving, growth prospects in the country are lowering, and thisferocious cycle continues to affect the economy for the last decade or longer” (Liew, T.Y. 2013).
THE IMPACT OF BRAIN DRAIN ON HUMAN CAPITAL IN MALAYSIA2Figure1: The Malaysian diaspora is spread out around the world, but concentrated inSingapore.In figure 1 an overview of the Malaysian diaspora is given. The table shows eight countries andstarting in 1980 the data is presented at decade intervals. The comprehensive numbers areexamined according to two types of country samples: To Compare the samples of Countries thatcontain data for 1980-2000 period, the balanced sample is used; to analyze the sample within ayear, i.e. all countries reporting data for that year, unbalanced sample is used. The unbalancedsample is for analysis within a year (including all countries reporting data for that year).
THE IMPACT OF BRAIN DRAIN ON HUMAN CAPITAL IN MALAYSIA3Figure2: The Brain Drain is spread around the world, but concentrated again in SingaporeIn Figure 2, it appears that the brain drain is not overwhelmingly large, especially whencompared to the overall size of the diaspora. Till 2000, there were some 184 thousand tertiary-educated individuals among the 25+ population that at some point left Malaysia. During the1990s, migration became more skill-intensive as the share of skilled migrants rose from 28.5percent in 1990 to 34.2 percent in 2000.Brain drain-analysis on the group of skilled and unskilled Malaysian-bornwomen, men and children living overseas.Skill intensity varies widely across destinations. Malaysian-born men migrants in Brunei andSingapore are generally low-skilled, with only about one-fifth of them being tertiary. Theresults for Brunei and Singapore can be contrasted with those for OECD countries, where theskill intensity of migration is higher and ranges to levels around 70 percent.For OECD countries there has been a decrease in the share of skilled labor, which means thatlow-skilled migrant people have risen more quickly. For Brunei and Singapore, the oppositeresults obtain, where migration is becoming more skill-selective.
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