Journal of Economic Growth

, Volume 17, Issue 1, pp 1–26 | Cite as

Do brain drain and poverty result from coordination failures?



The bidirectional causal links between high-skilled emigration and poverty can give rise to multiple equilibria and coordination failures. Two countries sharing identical characteristics may end up in either a “low poverty-low brain drain” equilibrium or in a “high poverty-high brain drain” equilibrium. In this paper, we build a model which endogenizes high-skilled emigration and economic performances in order to derive the conditions under which multiplicity occurs. After identifying country-specific parameters, we find that in the majority of developing countries, the best equilibrium is selected and that the observed brain drain is inevitable. In 22 small developing countries however, the worse equilibrium prevails, implying that poverty and brain drain are increased by coordination failure. These countries require appropriate development policies, such as a temporary subsidization of the repatriation of their high-skilled expatriates. Our results are robust to the inclusion of a brain gain mechanism.


Brain drain Development Multiple equilibria Coordination failure 

JEL Classification

F22 O11 O15 C62 


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Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.IRES and COREUCLouvainLouvain-la-NeuveBelgium
  2. 2.National Fund for Scientific Research (Belgium) and IRESUCLouvainLouvain-la-NeuveBelgium

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