Brain Drain and Gain: The Case of Taiwan

Taiwan, like many developing countries, has seen the increasingly competitive global market for high-skilled workers channel many of its best-educated people into jobs overseas. But unlike many countries that have suffered from "brain drain," Taiwan has seen many skilled emigrants return home to boost the country's economic development.

While much of this success can be attributed to circumstances well beyond the sphere of migration policy, such as strong economic growth and relative political stability, several Taiwanese policies can also claim a share of the credit. Crucial among these have been a focus on subsidizing basic, rather than advanced, education, along with an active effort to network with the Taiwanese diaspora and promote its return.

Whether or not migration has created "net gain" for Taiwan cannot be said. What is clear, however, is that the country's experience with skilled emigration has been far more positive than that of many other developing nations. As such, Taiwan's lessons for policy makers are worth closer examination.

Classic 'Brain Drain'

Taiwan once faced a classic case of "brain drain." Despite government restrictions, a total of over 100,000 Taiwanese left to study abroad in the latter half of the 20th century. During the 1970s and 1980s, an estimated 20 percent of Taiwanese college graduates went abroad for advanced study, and few of them returned. At the peak of the brain drain in 1979, only eight percent of students who studied abroad returned to Taiwan upon completing their studies.

This brain drain generated a great deal of political anxiety in Taiwan, but did not stop the country's economy from growing at a remarkable rate. Furthermore, the brain drain slowed and partially reversed in the 1980s and 1990s. The return rate for students has climbed to 33 percent in recent years. In total, 50,000 migrants returned from abroad between 1985 and 1990. These migrants came home with high levels of education, some of it subsidized by foreign governments and universities, and many also had significant business experience. The expertise they brought fueled a boom in the domestic high-tech sector. Taiwan remains a country of net emigration, but the brain drain is looking more and more like an economic gain.

Although a number of countries have seen slowdowns and reversals of low and/or high-skilled emigration, they have usually followed a radical change in the country's political situation or a marked turnaround in its economic outlook. In contrast, Taiwan's economy had been growing strongly and steadily for decades, and returns of migrants began to increase before the end of martial law and the beginning of democratic elections in the late 1980s. Gradually, Taiwan has evolved from a less-developed to developed country and, while still a nation of net emigration, now hosts a substantial number of guest workers and unauthorized immigrants. This makes its current immigration patterns similar to those of other developed countries.

Setting the Stage: Education Policy

Taiwan's relatively positive experience with high-skilled migration was built on education policies launched in the 1950s, when the country began to invest in public and private education at a rate that far outstripped most countries with similar resources. When considering international migration, the distribution of this investment has been as important as its size. Taiwan's public funding of education has traditionally favored basic education and vocational schools. Only recently, as Taiwan's economy has become more technically sophisticated, have colleges and universities received priority.

In 1961, primary and secondary schools received 80 percent of all public education funds. This focus continued as recently as 1990, when the majority of secondary-school students were in vocational programs. These decades of heavy government investment in basic education have created a heavily subsidized vocational program that channels young people into medium-skilled jobs in Taiwan's booming manufacturing industry. With relatively comfortable, rising wages and secure jobs, such workers have had few incentives to migrate.

However, this structure left students seeking further education with few options but to migrate. Advanced degrees have only recently become a major component of the Taiwanese educational system. In 1991, only 165 doctorate degrees were awarded in engineering, a strikingly low figure for a country where 29 percent of exports were in the high-tech sector and over 10,000 patents were being registered every year.

Students wishing to study abroad could do so only by paying out of pocket or obtaining scholarships from the destination country, and then only after completing two years of military service and passing a qualifying exam. As a result, Taiwanese migrants have usually been upper-class students who have exhausted educational opportunities in Taiwan. Had advanced education been widely available in Taiwan, many of these people most likely would have migrated anyway after completing their studies, since only during the past two decades has the Taiwanese economy offered competitive employment opportunities for the very well educated.

Tapping the Diaspora: The Government as Catalyst

The students who sought education and employment abroad have become Taiwan's interface with the global economy, managing and enhancing the solid manufacturing base promoted by the basic education policy. The involvement of this internationally acquired acumen—through both the physical return of migrants and their participation from overseas—has been promoted by the government itself through policies centered on the Taiwanese diaspora.

Taiwan's industrialization began with low-tech, labor-intensive export manufacturing. Capital and the majority of the technical expertise came from foreign investors. Gradually, as wages and skill levels rose, Taiwanese firms began using technology-intensive manufacturing processes and doing more design in Taiwan. As they did so, they used formal and informal connections to draw on the expertise and business connections of Taiwanese living overseas, and even to recruit them to work in Taiwan. Taiwan's export-oriented industrial sector made the skills of returned migrants easily transferable. These businessmen became heroes of Taiwanese industry and received the popular nickname of "astronauts" because so many "lived in the air" commuting to and from Silicon Valley. By 1987, 20 percent of the executives of large Taiwanese firms were former migrants. This reservoir of technical and managerial expertise—which owed its existence to migration—was an important factor in the Taiwanese economy's rapid development.

The Taiwanese government was quick to recognize the potential of migrants as a resource. Officials used migrant expertise in formulating government policy. The government established the National Youth Council in the early 1970s to connect Taiwanese businesses with skilled migrants. The council tracks migrants in a database, advertises jobs overseas, and provides travel subsidies and temporary job placement to potential returnees. The National Science Council and Ministry of Education have also recruited thousands of migrants as professors and visiting lecturers for the country's growing universities.

The Taiwanese government's most celebrated achievement in migration, however, has been the Hinschu Science-based Industrial Park. Although it was not exclusively aimed at migrants, inspiration for the park came from overseas: one goal was to replicate the dense concentration of creative expertise found in Silicon Valley and elsewhere. The park was started in 1980 when the government provided financial incentives and planned infrastructure for companies relocating to or forming in the area. Subsidized Western-style housing and commercial services were provided to attract Taiwanese living overseas. The government sponsored international conferences on science and technology to give workers in the park more access to the international scientific community.

The park successfully attracted both high-tech companies and returning migrants. Companies in the park employed 102,000 people and generated $28 billion in sales in 2000. Although only 4,108 returned migrants worked in the park that year, 113 of the park's 289 companies were started by U.S.-educated Taiwanese, and 478 of the returnees hold Ph.D.'s, indicating that the returned migrants are better educated than the average worker in the park and wield influence disproportionate to their numbers. Overseas connections are still valued; 70 of the companies also have offices in Silicon Valley and many rotate their personnel between offices. The park is the center of Taiwan's rapidly expanding research and development sector and a major contributor to the country's strong economic growth.

Lessons from Taiwan

It is impossible to know with certainty what role migration has played in Taiwan's development and how public policy affected it. However, relative to many other countries' experiences with high-skilled migration, Taiwan clearly has received greater benefits and paid lesser costs. If Taiwan holds lessons for other countries dealing with "brain drain" and seeking to promote return migration, they are:

Subsidize education only up to the level actually demanded by the national economy. In contrast to many developing countries, the Taiwanese government did not significantly subsidize advanced education, only to watch their expensively trained graduates leave for jobs abroad with great private rewards. Instead, it focused on providing strong universal basic education and vocational programs as demanded by the domestic labor market. Logic suggests that this policy reduced migration by subsidizing the kinds of education that would lead directly to attractive employment in Taiwan itself, as opposed to subsidizing advanced degree-holders who would be forced to seek jobs abroad. Moreover, this interaction with international migration is only one of many good reasons for developing countries to prioritize strong basic education.

Migration can provide a "brain reserve." The late development of Taiwanese universities could have caused a shortage of experts as Taiwanese industry rapidly increased in sophistication. Instead, Taiwanese living overseas provided advice from afar and returned to meet the growing demand. Thus, Taiwanese industry received critical expertise, at the moment it was most needed, from people whose advanced education had not been subsidized by Taiwanese taxpayers.

Support diaspora networking and recruitment. Taiwan began to benefit from its emigrants even before developing to the point where it could attract their return. Taiwanese migrants provided knowledge, business connections, and expertise to both the government and private sector through informal and formal networks. This was particularly powerful in an economy highly oriented toward trade and foreign investment. When Taiwan's economy reached the point where it could employ its high-skilled emigrants, those networks made the return of migrants faster and easier.

Build a critical mass of returnees. Creative, highly skilled people work and live best when surrounded with similar people. The problem is that highly educated migrants are reluctant to return to places where such people are lacking, so no one person is willing to move first. Taiwan's solution to this coordination failure was to subsidize the formation of a community of well-educated people at the Hinschu Science-based Industrial Park. The result was a critical mass of creative, Western-educated people that attracted more returnees. However, it is critical to note that this measure succeeded only because there was already a positive political and economic outlook and real demand for the returnees' skills.

Clearly, the realities of particular countries can make them particularly well or ill-suited to apply the lessons of the Taiwanese experience. Countries suffering from severe political or economic instability, for example, have little hope of attracting the immediate return of high-skilled emigrants. They can, however, improve their future migration outcomes with well-guided education policies and by actively networking with their nationals abroad. Taiwan's example shows that a diverse range of public policies can shape a country's experience with migration.

Sources:

Chow, Peter. (2001) Social Expenditures in Taiwan. Washington: World Bank.

Luo, Yu-Ling and Wei-Jen Wang. (2002) "High-skill migration and Chinese Taipei's industrial development." In: OECD, International Mobility of the Highly Skilled. Paris, OECD.

Ranis, Gustav. ed. (1992) Taiwan: From Developing to Mature Economy. Boulder, Colo. Westview.

Wu, Kin Bing. (1993) "Science and Technology Education in Taiwan." World Bank Education and Social Policy Discussion Series Paper no. 13.