1 Mobilizing Talent for - PowerPoint Presentation

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Mobilizing Talent for Global Development

Andrés Solimano

Regional Advisor

ECLAC, United Nations

Red de Ciencia, Tecnología e Innovación

Reunión Subregional del Cono Sur

Santiago-Chile – November 16th, 2007

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ContentsThe International Mobility of Talent: Main IssuesClassification 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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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 21

st

Century we talk also about “Talent circulation” with potential win-win impact for origin and destination countries.

1.- International Talent Mobility: Main Issues

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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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Supply of talent (Ph.D’s, 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?

3.- The International Market for Talent

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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.)

3.- The International Market for Talent (cont.)

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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.

3.- The International Market for Talent (cont.)

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South – North movements of TalentTalent from the south in search of employment and capital in the northNorth – South movements of CapitalCapital from the north in search for lower cost talent in the south (movement of multinational firms)

Examples:

Bangalore (South)

Silicon Valley (North)

3.- The International Market for Talent (cont.)

3.c.- Talent chasing Capital, or Capital chasing Talent?

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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

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.

A complex relationship…

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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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Talents

Social Services (Health)

Culture

Ideas

Welfare

Talents

Innovation

Productivity

Investment

Economic Growth

5.a.- Talent, Economic Growth and Welfare.

5.- Development Impact of Talent Mobility (cont.)

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Obstacles to develop Talent for low-income individuals

Modest Rewards

Inequality

High rewards to Talent

“

Winners-take-all

” Markets

Top Incomes

5.b.- Talent, Inequality and Income Distribution

5.- Development Impact of Talent Mobility (cont.)

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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 Bank’s WDI (2007).

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Table 2. Prizes to Talent: Nobel Laureates in Science and Economics are Very Concentratedin 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)

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

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

Residents

Among

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.

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Table 8. H-1B Visas to High Skills Immigrants Granted by the United States by Region(2002)

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

Visas H-1B Granted

Visas related to areas of information technology

and computer science

Origin region

Total

Percentage

Total

Percentage of

Total

Visas H

-

1B

Percentage into

the information

technology sector

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

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Figure 1. Estimated value of offshore services offers in the World(billions of dollars, 2003)

Source

: McKinsey&Company (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.