Brain Drain and Productivity Growth: Evidence From South Africa, 1947–2019

ABSTRACT This paper provides empirical evidence of how high‐level human capital outflow could affect TFP‐based economic development and vice versa. The concern of potential endogeneity between brain drain and economic development is addressed directly. First, structural break tests are employed to identify co‐breaks between brain drain and growth. Results confirm that the association is plausibly bidirectional. Accordingly, a multiequation estimation methodology is employed to parameterize the association. Results suggest a negative impact of brain drain on productivity growth and that productivity growth lowers brain drain in South Africa. A set of robustness tests supports using a simultaneous equation estimation methodology for the emigration‐productivity growth association.