Since just before the 1994 general elections from circa 1990 when Nelson Mandela was released from prison, South Africa has been experiencing the effects of a much reported brain-drain. Many theories exist regarding the reasons why the brain-drain started in the first place and many a book has been written on the subject. The most popular theory and explanation for the brain-drain is that initially many white South Africans both young and old, thought the future under the ANC government would be filled with uncertainty and therefore took a decision to make a run for “greener” pastures. More recently, the explanation for the brain-drain is the relatively high rate of crime in South Africa. No reliable statistics exist regarding how many people with critical skills are leaving or have left the country however, what is clear is that many of those who have left and are continuing to leave South Africa choose countries such as Australia, New Zealand, the UK and the United States as their new adopted homes. Which brings me to the next theory about brain-drains in general, not specific to South Africa. The Organization for Economic Co-operation and Development (OECD) reports that the brain-drain is characterised by the migration of new university graduates from poor countries to more affluent, first-world countries. By all accounts, South Africa remains a third-world country and effectively a poor country which in my view makes the OECD migration theory applicable as another explanation for South Africa’s brain-drain. Indeed, according to this migration theory, until South Africa becomes a sufficiently wealthy nation, offering high standard of living, the country should continue to lose some of its university graduates to richer countries.
The Israeli experience
Israel has universities which are regarded among the best in the world and these universities have produced some of the leading scientists in the world. To emphasize the point, Israel has consistently produced Nobel prize-winning scientists mainly in the field of economics. In their book, “Start-Up Nation: the story of Israel’s economic miracle” , D. Senor and S. Singer point out that while many of Israel’s top scientists and business people have left and are continuing to leave the country to apply their skills in other countries, mainly the USA and in Europe, thus draining Israel of valuable skills. However, D. Senor and S. Singer also point out that there is a large number of highly skilled Israelis making a return to their home country to apply the skills attained from their experience working for large companies and institutions in foreign countries. The reasons for their return according to Senor and Singer are many and of a combination a large pool of highly skilled people as well as an abundant availability of venture capital funds to help drive innovation and entrepreneurship is one compelling reason. Those returning find that they are able to tap into the talent which already exists in Israel, talent which is often better than that found in countries from which the expatriate are returning. By all accounts (GDP per capita as one measure) Israel is a first-world country and has been for a while now, and this makes it easier for those returning from their experiences in other first-world countries to Israel and makes the transition rather smooth. Senor and Singer also point out that the Israeli government has put in place incentives aimed at attracting the much needed skills back to Israel. These incentives range from tax breaks to very generous currency repatriation regimes, where those returning can either bring with them an unlimited amounts of money or send out an unlimited some of money. All these factors combined have resulted in what some call the “brain-circulation” phenomenon in Israel, where those who left return equipped with skills and contacts necessary to allow them to add more value to the overall economy of their home countty.
Lessons for SA
To be sure, if South Africa is to achieve the “brain circulation” effect, the country has to become generally more affluent in order to make it more attractive for those who have left to return to conditions to which they have become accustomed. Meaning that the high levels of crime must be brought under control, the threat of electricity blackouts and water shortages must be eliminated completely. Incentives similar to the ones put in place in Israel would also play a significant role in luring expatriates to return to SA. In my view, however, the incentives must work hand-in-hand with the general improvement of the standard of living as well as the availability of venture capital funding. Venture capital funds would help bring to life any good ideas of returning expatritates as well as South African entrpreneurs in general. Many may argue that South Africa already has a large amount of venture capital funding available (both government and private), perhaps what is needed are better methods of distributing those funds, especially government funds.
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