True nature of brain drain and brain gain: A MM-QR analysis on migration, remittances and FDI

Abstract

With ever-changing global dynamics, understanding which factors promote or hinder economic growth is crucial for any country. Although many studies have examined the variables migration, remittances, and FDI, fewer have examined their collective impact on economic growth in an income-level analysis. A noticeable limitation of the few existing studies in the area is the inability of the mean-based models to address the heterogeneity in real-life distributions. The main objective of the study was to bridge the knowledge gap and address the heterogeneity concerns in mean-based models using MM-QR, meanwhile providing quantile-based evidence for economic theories such as endogenous growth theory, structural transformation theory and most importantly, brain drain theory. The study used a panel dataset of 118 countries from 1995 to 2023, categorized into 4 income levels. Results of the study supported the brain drain theory, where migration negatively affected poorer economies and hinted at the possible existence of brain gain in HICs. Continuous non-linear behavior of FDI, remittances explained the existence of developmental asymmetries and supported endogenous growth theory and structural transformation theory and reveals development threshold effects. Finally, the study underlines the importance of placing tailored policies to absorb migration, remittances and FDIs for economic growth and provides policy recommendations accordingly.