Working Paper: NBER ID: w14592
Authors: Ajay Agrawal; Devesh Kapur; John McHale
Abstract: The development prospects of a poor country depend in part on its capacity for innovation. The productivity of its innovators depends in turn on their access to technological knowledge. The emigration of highly skilled individuals weakens local knowledge networks (brain drain), but may also help remaining innovators access valuable knowledge accumulated abroad (brain bank). We develop a model in which the size of the optimal innovator diaspora depends on the competing strengths of co-location and diaspora effects for accessing knowledge. Then, using patent citation data associated with inventions from India, we estimate the key co-location and diaspora parameters; the net effect of innovator emigration is to harm domestic knowledge access, on average. However, knowledge access conferred by the diaspora is particularly valuable in the production of India's most important inventions as measured by citations received. Thus, our findings imply that the optimal emigration level may depend, at least partly, on the relative value resulting from the most cited compared to average inventions.
Keywords: Skilled Emigration; Innovation; Knowledge Access; Patent Citations; Diaspora Effects
JEL Codes: O30; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| skilled emigration (F22) | local knowledge networks (D85) |
| diaspora connections (Y80) | knowledge access for innovators (O36) |
| local knowledge networks (D85) | domestic knowledge access (C81) |
| diaspora connections (Y80) | important inventions in India (O36) |
| skilled emigration (F22) | knowledge access from abroad (O36) |
| optimal level of emigration (F22) | balance between brain drain and brain bank (F22) |
| diaspora connections (Y80) | innovation (O35) |
| colocation effect (R32) | knowledge flow production function (D24) |
| diaspora effect (F22) | knowledge flow production function (D24) |