Mobilizing Talent for Global Development

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Mobilizing Talent for Global Development
UNU-WIDER Public Lecture
Andrés Solimano Regional AdvisorECLAC, United
Nations Helsinki November 27th, 2007
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• Contents
• The International Mobility of Talent Main Issues
• Classification of Talent.
• The International Market for Talent
• Two Topics in Talent Economics
• Development Impact of Talent Mobility
• Empirical Evidence
• Policy Issues

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1.- International Talent Mobility Main Issues

• Talent is a key economic resource that creates
  new goods, knowledge, technologies, ideas and
  wealth.
• The international mobility of talent has
  increased with globalization and has an impact on
  growth and inequality.
• International markets for talent are more
  integrated than markets for unskilled labor.
• In the 60s and 70s a main concern was on brain
  drain. In the early 21st Century we talk also
  about Talent circulation with potential win-win
  impact for origin and destination countries.

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2.- Classification of Talent

• Directly productive talent, related to business
  sector
• Entrepreneurial
• Managerial
• Technical
• Scientific talent
• Academics
• Scientists
• International students
• Talent related to health and cultural sectors
• Medical doctors, nurses, etc.
• Artists, musicians, writers
• Media-related people

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3.- The International Market for Talent

• Supply of talent (Ph.Ds, engineers, IT experts,
  medical doctors, students, etc.). Talent comes
  from developing countries (Asia, Eastern Europe,
  Latin America, Africa) and developed countries.
• Demand for talent, from developed and developing
  countries (business, academic sector, government,
  others).
• Where do supply and demand meet?

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3.- The International Market for Talent (cont.)
3.a.- Pulling Factors in the North (Demand for
talent)

• Shortage of skilled professionals in IT, health
  and other sectors in industrialized countries.
• Higher wages and attractive employment
  conditions.
• Favorable immigration policies for talent.
• Better possibilities of interaction with peers
  (scientists, artists, etc.)

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3.- The International Market for Talent (cont.)
3.b.- Pushing Factors in the South (Supply of
talent)

• Lower relative income and real wages.
• Lack of resources in universities and research
  centers (for academic talent).
• Lack of meritocratic careers in the public
  sector.
• Higher costs of doing business and barriers to
  entrepreneurship (for directly productive talent)
• Higher frequency of economic and financial
  crises, unstable political regimes.

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3.- The International Market for Talent (cont.)
3.c.- Talent chasing Capital, or Capital chasing
Talent?

• South North movements of Talent
• Talent from the south in search of employment and
  capital in the north
• North South movements of Capital
• Capital from the north in search for lower cost
  talent in the south (movement of multinational
  firms)
• Examples
• Bangalore (South)
• Silicon Valley (North)

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4.- Two Topics in Talent Economics

• Rewards Structures for Talent Problems
• Education and Talent

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4.a. Rewards Structures for Talent
Problems for rewarding Talent

• Failures of Markets
• Complexity to identify talent
• Matching failures between Capital/Jobs and Talent
  availability
• Failures of Institutions
• Weak property rights
• Patent system
• Failures of the State
• The Clientelistic and Paternalistic dominated
  Organization versus the Meritocratic Organization

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4.b. Rewards Structures for Talent (cont.)

• The existence of increasing returns to ability
  (winners-take-all).
• Examples sports, artists and famous writers
  (i.e. Roger Federer in tennis, J.K. Rowling with
  Harry Potter).
• Distortions Incentives for rent-seeking,
  penalize innovation and entrepreneurship.

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4.c. Education and Talent Allocation
A complex relationship

• Human Capital Theory. Talent goes to careers with
  high rate of return.
• Education, as a signal of capacity and talent.
• Is it tertiary education always profitable?
• High opportunity costs of education for the
  highly gifted, entrepreneurially-oriented talent
  (Bill Gates left Harvard University to create
  Microsoft).
• Larry Page and Sergey Brin left Stanford
  University to create Google.

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5.- Development Impact of Talent Mobility

• Impact on Economic Growth and Welfare
• Impact on Inequality and Income Distribution

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5.- Development Impact of Talent Mobility (cont.)
5.a.- Talent, Economic Growth and Welfare.
InnovationProductivityInvestment
Economic Growth
Talents
Social Services (Health)CultureIdeas
Welfare
Talents
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5.- Development Impact of Talent Mobility (cont.)
5.b.- Talent, Inequality and Income Distribution
High rewards to Talent
Winners-take-all Markets
Top Incomes
Obstacles to develop Talent for low-income
individuals
Inequality
Modest Rewards
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6. Empirical Evidence
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Table 1. New Knowledge is Concentrated in the
North

Source Own elaboration based on data from The
World Banks WDI (2007).
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Table 2. Prizes to Talent Nobel Laureates in
Science and Economics are Very Concentrated in
High-Income Economies (1980 2007)
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Table 3. Prizes to Talent Nobel Prizes in
Literature is more uniformly distributed across
nations (1980 2007)

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Table 4. Technical Talent Patent Applications
(by Country and Regions, year 2002)

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Table 5. Where is the Talent? (I) The Global
Talent Index (GTI) 2007

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Table 6. Where is the Talent? (II) Global
Creativity Index, year 2005

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Table 7. Migration of Qualified Human Resources
fromthe Americas to OECD Countries (2000)
Region

Share in the OECD stock ()
Average Rate of Emigration (as a of the labor
force)

Share of Skilled

Workers

()



Total

Skilled
Total

Skilled
Among
Among
Residents

Emigrants

Americas

26.3

22.6

3.3

3.3

29.6

29.7

North America

2.8

4.6

0.8

0.9

51.3

57.9

Caribbean

5.
1

5.7

15.3

42.8

9.3

38.6

Central America

13.7

6.6

11.9

16.9

11.1

16.6

South America

4.7

5.6

1.6

5.1

12.3

41.2


People with 13 years or more of education
(tertiary education) People equal or greater
than 25 years old.
Source F. Docquier y A. Marfouk, International
Migration by Educational Attainment, 1990-2000,
International Migration, Remittances and Brain
Drain, C. Ozden y M. Schiff (eds.), Washington,
D.C., World Bank, Palgrave Mc Millan, 2006
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Table 8. H-1B Visas to High Skills Immigrants
Granted by the United States by Region(2002)
Visas related to areas of information
technologyand computer science


Visas H-1B Granted

Origin region
Total
Percentage

Total
Percentage of
Percentage intothe informationtechnology sector
Total

Visas H
-
1B


South America

12 732

6.4

1 500

11.8

2.0

Asia

127 625

64.6

62 121

48.7

82.7

Africa

5 994

3.0

1 308

21.8

1.7

Europe
30 84
0

15.6

5 901

19.1

7.9

Others

20 346

10.3

4 284

21.1

5.7

All countries

197 537

100.0
75 114



100.0


Source R. Barrere, L. Luchilo y J. Raffo,
Highly skilled labour and international mobility
in South America, STI Working Paper, N 2004/10,
París, OCDE, Decembre, 2004
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Figure 1. Estimated value of offshore services
offers in the World(billions of dollars, 2003)
Source McKinseyCompany (2005), The Emerging
Global Labor Market Part III How Supply and
Demand for Offshore Talent Meet, June.
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7.- Policy Issues

• How to promote circulation of talent toward
  developing countries and transition economies to
  counteract brain drain.
• Review rewards structure in the public and
  private sectors and identify obstacles to
  retaining and developing talent in developing
  countries and transition economies.
• Policies oriented to increase connectiveness,
  compensation, retention. Critical areas the
  Health sector and Science and Technology.
• Mobilization of Diaspora for national
  development.

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Mobilizing Talent for Global Development
UNU-WIDER Public Lecture
Andrés Solimano Regional AdvisorECLAC, United
Nations Helsinki November 27th, 2007