Migration of knowledge workers
The International Migration of Knowledge Workers: When is Brain Drain Beneficial?
Peter J. Kuhn and Carol McAusland
“We consider the welfare effects of the emigration of workers who produce a public good (knowledge). We distinguish between the knowledge diversion and knowledge creation effects of such emigration, and show that the remaining residents of a country can gain from emigration, even when tastes for knowledge goods exhibit a kind of ‘home bias’. In contrast to existing models of beneficial brain drain (BBD), our results do not require agglomeration economies, education-related externalities, remittances, return migration, or an emigration ‘lottery’. Instead, they are driven purely by the public nature of knowledge goods, combined with differences in market size that induce greater knowledge creation by emigrants abroad than at home. BBD is even more likely in the presence of weak sending-country intellectual property rights (IPRs), or when source country IPR policy is endogenized”.
This paper has important insights into the emigration problem called “brain drain”. It shows that brain drain can be trasformed into beneficial brain drain (or what I called earlier brain gain) assuming emigrant knowledge workers produce public knowledge goods and intellectual property rights in sending country are weak. This definitely applies to China migration to US, but one should also look carefully at the recent migration of Poles to UK and Ireland, as I pointed in my recent post that migrating Poles qualifications are relatively high, especially when compared with their present jobs in UK. So one can safely assume (as did Financial Times in its recent article ) that soon Poles will move up the carrier ladder, and will start creating knowledge (business, academic etc.) at much faster pace than in Poland. Some data on Poles migration in UK can be found here .
PIMCO global outlook for 2007
Andrew Balls lays out PIMCO global macro view and investment implications, see qoute below:
“The prospect of lower U.S. interest rates provides cyclical support for PIMCO’s expectation of U.S. dollar depreciation over a secular horizon. The English-speaking countries provide sources of diversification from the U.S., given past correlation of central bank cycles. The Eurozone and Japan look better positioned to withstand weaker U.S. growth than five years ago, but are vulnerable if downside risks to U.S. growth materialize owing to the imbalance between investment and consumer spending …”.
ADB paper on rising Asia impact on commodities markets
Asia’s Imprint on Global Commodity Markets
Cyn_Young Park, Fan Zhai
One of the paper conclusions states that:
“The positive development in demand will affect generally all commodity groups going forward. By 2015, developing Asia’s commodity demand will reach 43% of world demand for agricultural commodities, 27% of world energy demand, and 50% of world demand for mineral ores. So far, the impact of rapid growth in the PRC and India has been most pronounced in the energy and metals sectors, reflecting the growing intensity of their use in the process of industrialization. Fast demand growth in the past several years has also created strains on current production capacity in the energy and metal sectors. Over the medium term as capacity constraints soften, both energy and metal prices are expected to drift lower from current highs. However, they are unlikely to revert to lower historical averages. Given the long-term nature of necessary investment and infrastructure let alone other noneconomic hurdles, crude oil prices will likely be sustained at much higher levels than the earlier average. Along with higher oil prices to exert upward pressures on production costs, other discernible structural factors, such as changes in market structure, regulatory environment, and financial deepening, will also help support metal prices at higher than historic averages. Agricultural food commodities have entertained comparatively less price booms in the past years. However, rapid income growth is expected to bring about changes in dietary patterns, and when coupled with dense population it will affect the demand for agricultural food commodities drastically in the years ahead…”.
This paper reminded me of recent article by Jeffrey Frankel on monetary policy and commodity prices. Author argues, that via various channels (such as inventory channel) too loose monetary policy may result in too high commodity prices. In other words, sharply rising commodity proces may be a signal that global monetary policy condition were relaxed too much. I agree when it comes to asset prices, but I am still struggling to understand what is the role of commodities markets in XXI century. Shall we redefine what we mean by supply shock? A much more research on this topic is needed.
RGE Monitor argues that oil assets diversification accelerates
Brad Setser from Roubini Global Economics argues in his recent post that oil funds are more likely to diversity away from dollar and away from fixed income towards equities (and private equity) than central banks, and that in many places it is happening already, although oil money demand for bonds remains very high.