Is There a Net Gain or Brain Drain?

Joshi ¢ I have some very strong feelings on the subject of so-called brain drain. A government that believes that it controls the destiny of its people will fail and will be finally rejected by its people. When a government dictates who does what business, who gets what salary, who gets stock options, and who can go where, it has made the country non-competitive. Only the people in business and the entrepreneurs can establish the position of their nation in the world markets. Enlightened governments provide the policy framework and infrastructure to maximize the potential of their citizens .

In India, after independence in 1947, with its socioeconomic policies, the government strongly instilled the feelings of maibap , ( mai means mother, bap means father). Government became maibap and people looked at it as the provider and protector. This also related to the preceding British system where the king held the power and gave a little of it to the people. Contrast this with the U.S., where people held the power and gave some of it to the government.

So when there was talk of brain drain in India during the '70s and '80s, the government had the view of its people as national property. Their departure from India for pursuit of personal goals was described as brain drain.

On the other hand countries of Europe and Israel did not look at their people the same way. Free flow of people became an accepted part of these societies , as it was seen as a positive aspect of becoming competitive. Therefore, it seems to me that flow of people between free countries leads to economic ties, which can more than compensate for any net immigration . This is more so today where one can create economic value around the world without large investments.

Specifically speaking, the immigration from India to the U.S. has created hundreds of new companies, thousands of new jobs around the world and joint ventures in India. Furthermore, the immigrants are assisting the educational and training institutions there in significant ways. Much of this would not have happened if they had stayed behind, because the environment was not conducive for such economic activities.

Gilo ¢ In Israel, it's a bit different because of the political or the military situation of people who serve a month in the reserves every year. Also the population is small. People sometimes do not understand Israel and how it can keep up with the situation. There are other factors that prompt people to leave the country, not just economic or government restriction on business. In general, I think it's the same way. If you look at the overall, even I am looking at my own experience of coming here, without taking anything out from Israel, no wealth, nothing, and over the last 15 years , I employed thousands of people in Israel and gave them stock options. When I sold DSP to Intel, the Israeli government made a few $100 million in taxes, revenues collected from stock options.

You have cases of those who have been very successful, go back to Israel and become venture capitalists. So the venture capital community in Israel became sophisticated very quickly by having Israel move, develop and learn from the experience of the U.S. market. All those exchanges are very important.

People who live in Israel were very derogatory about those who left. In the last five to seven years it has changed. You needn't defend yourself about why you are not in Israel, I think because of globalization and the connections between professionals. For a long time, you had to say, right now I'm in Silicon Valley, but I'll come back to Israel. Now you can say wherever you are, you don't need to defend yourself. You don't need the but anymore.

Joshi ¢ The beauty in the knowledge economy is that even if you don't go back there, you may send a small division of the company to create jobs and markets. So, I am convinced that if the movement between people is between two democracies that also are free markets, then the broad question of brain drain should not arise.

To be sure though, brain drain is a real phenomenon and happens when people either leave for oppressive reasons or have no interest in the land of their origin, such as the Jews leaving the Soviet Union during the Communist regime .