This chapter outlines the economic and social implications of diaspora externalities and return migration, with a specific focus on origin country policies to enhance potential benefits. Examples of diaspora externalities include increased integration to the global economy through trade, finance and other economic linkages as well as knowledge and capital transfers. Providing an overview of the extensive literature on the presence and size of such spillover channels and benefits, the chapter presents a systematic analysis of the design and effectiveness of government policies to engage their diasporas, especially highly skilled members. The chapter reviews the most prominent examples of these programmes, especially the specific economic incentives they provide, filling a gap in the literature. Successful programmes are designed with clear and specific objectives, budgets and target groups: they aim to fill gaps in the labour market and attract beneficiaries who will remain in the country after the programme benefits expire. They have built-in evaluation mechanisms and minimum durations.
Zovanga L. Kone and Çağlar Özden
While total global migration has been relatively stable as a share of world population, we are witnessing a rapid increase in the number of high-skilled migrants. After identifying interesting patterns revealed by the existing data, the chapter focuses on the economic impact on the sending, mostly developing, countries. The initial focus of the literature was brain drain and the potential losses of tax revenue and productivity spillovers in origin countries. More recent contributions, however, identified several channels through which high-skilled emigration might bring benefits. Among these are the brain gain (endogenous increase in human capital investment) and brain circulation and network effects (knowledge diffusion and global economic integration).