An inward-looking, innovation-averse Europe is hardly an attractive place for those visionary minds that are eager to disrupt and refashion the socio-economic system for good. Foreign talents – not surprisingly – stay away from it. But also Europe’s best and brightest, from both the “core” countries and the “periphery”, are increasingly fleeing the old continent in search of more rewarding professional opportunities abroad. At a time of growing demand for sophisticated skills, reversing the brain drain should become a priority of European policymakers.
Over the last five years, Europe has witnessed an exodus of highly qualified professionals from Spain, Portugal, Greece, Italy and Ireland – the countries hardest hit by the crisis. Around one tenth of the Greek academic community now works abroad. Several thousand Portuguese and Spanish skilled workers have moved to their countries’ former colonies in South America or Africa to take advantage of linguistic affinities, whereas many Irish have relocated to either the United States or Australia. And in Italy the crisis has exacerbated a flight of talents that started a decade ago.
But Europe’s gloomy economic conditions are only part of the problem. Stifling regulations, technological inertia and political cronyism have fueled the flight of talent, even before the outbreak of the crisis. According to the OECD, between1996 and 2011 researchers moving from Europe to North America and Australia significantly outnumbered the academics and scientists moving in the opposite direction. This is to say nothing about the many ambitious entrepreneurs who have been riding the wave of the Digital Revolution by relocating to the Silicon Valley.
With no exaggeration, this is the brain drain of la “crème de le crème”. Over time, the “quality” of the emigrants – expressed in terms of educational and professional backgrounds – has dramatically increased. In the US, for instance, European expatriates earn a sizable wage premium over their American counterparts, a signal of exceptionally high qualifications. In addition, and zooming in at the level of specific disciplines, studies focused on the best physicists in the world show that those who migrated from Europe to North America are some of the most widely cited scientists in their fields. Even the UK has lost its previous ability to attract Science Nobel laureates, turning into a net supplier of them to other countries.
Unfortunately, these outflows of human capital lead to little brain circulation. In theory, when runaways return home, they foster the transfer of new technologies, adapt successful business models to the domestic conditions of their motherland, or encourage fruitful intellectual exchanges with their international network. But Europe’s emigrants rarely come back, or they do so toward the end of their careers when they are less likely to positively influence the system. This is especially true in Southern Europe where return migration rates are below 20%.
The costs of these outflows of talents are well known. They deplete the stock of human capital, reduce the overall potential of the economy, and undermine the innovation process. Let alone the fiscal losses for governments that subsidize or fully fund the education system. Each skilled worker who leaves Europe represents a failed investment. In Italy, for instance, if one takes into account the whole educational path, the government bears an approximate cost of €500,000 for each graduate student who moves abroad.
To stanch the hemorrhage of brains, the EU has revised its immigration policies targeting high-skilled immigrants with the launch of the Blue Card Program in 2011. The hope is to attract20 million highly skilled workers – in particular engineers, corporate strategists, and biotech professionals – by 2030. However, the results have been quite discouraging so far. In 2012 and 2013, the EU ultimately granted fewer than 20,000 visas.
European policymakers should rather invest their political capital in designing policies to re-attract their fellow expatriates. With far-right, anti-immigration parties on the rise everywhere in Europe, return migration is politically more appealing than attracting foreign talent, but also economically more efficient. Thanks to the strong emotional attachment to their land of birth or upbringing, returnees are more dedicated and committed to improving the wellbeing of their original communities.
As a first step, emigrants should be offered tax exemptions, ad-hoc job market tracks, special access to credit to create or run a business, and political representation. Remigration policies should be targeted at specific age groups and skillsets. Engineers, scientists, and digital entrepreneurs – below the age of forty – are the most likely to start new businesses, push outward the technological frontier of the country, and boost growth.
Nevertheless, fiscal or financial benefits will not be enough. In 2001, for instance, the Italian government offered tax credits to Italians working abroad. By 2007, only 300 highly qualified Italians returned home, out of roughly 40,000 to 50,000 skilled emigrants. In 2000, Great Britain launched a similar program with rather disappointing results. Considering the caliber of the brains that leave Europe, attractive financial packages are not enough to persuade emigrants to come back.
For this reason, European policymakers should remove regulatory barriers to innovation, internationalize universities (to change their rather insular ways), and build public-private partnerships to create attractive working environments. In general, Europe’s conservative attitude toward innovators, risk-takers, and disruptors should profoundly change. Once national governments and European institutions create an environment characterized by fair competition and simple rules, entrepreneurs will do the rest, spurring innovation and revolutionizing the economy.
Finally, Europe should engage its diaspora more intensively. If, for any reason, migrated talents are unwilling to come back, the adoption of formal or informal institutions to facilitate the interaction between diaspora groups and their motherland can create positive spillovers for the sending country. The diaspora can act as a conduit for flows of knowledge and information back to the home country. In this sense, both Israel and India provide interesting examples.
Europe is miserably losing the global competition for talents. But its runaways, if properly motivated, can help preserve its now crumbling preeminence on the global stage.