Brain Drain and External Imbalances in Sub-Saharan Africa
Date
2021-10-04
Authors
Coulibaly, Dramane
Gnimassoun, Blaise
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research Consortium
Abstract
The persistent nature of external deficits in sub-Saharan Africa (SSA) is a
major concern. This paper examines the extent to which migration from SSA
to OECD countries affects the dynamics of external balances in SSA countries.
Based on panel regressions and gravity-based 2SLS estimation strategies on data
from 46 SSA countries over the period 1990-2014, we establish that emigration —
particularly of highly-skilled people — contributes to the persistence of external
deficits in SSA countries. While emigration globally has a negative impact on
the current account, only high-skilled emigration has a significant and robust
impact. These findings are corroborated by the fact that highly-skilled individuals
emigrate with their saving potential as suggested by t h e life-cycle theory. In
addition, while remittances to home countries can help to compensate this
negative effect of brain drain, our results show that highly-skilled emigrant’s
contribution to remittances is less important compared to that of low-skilled
emigrants. Therefore, policy makers in SSA countries should implement policies
to attract more remittances, particularly from highly-skilled emigrants, in order
to reduce their external imbalances or external financing needs.