Canada’s International Competitiveness: Brain Drain Problem

Issue

Brain drain is an inevitable and serious problem (as seen by officials, employers, analysts, and so on) that will undermine Canada’s international competitiveness. In the 1990s, up to 2% of the Canadian population left the country each year to find employment elsewhere (mainly the USA), and researchers note that such figures may become a reality (Boudarbat and Connolly 8). It is believed that the existing educational and healthcare policies, a solid financial regulatory system, an increased focus on the development of the infrastructure have been successful, but the Canadian tax policies and the currency rate can contribute to the increase in the brain drain (Mintz par. 9).

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Background

  • Canada is the 5th country on the list of states losing their inventors with 6.4% of the world’s inventor emigration (Clarke par.4). Canada follows such countries as China, India, Germany, and the UK. More than 13 thousand inventors left Canada between 2006 and 2010.
  • In 2005, 12% of Ph.D. graduates lived and worked in the USA two years after graduation (Boudarbat and Connolly 9).
  • Almost 60% of Canadian emigrants are adults aged between 20 and 44 (Mintz par. 5).
  • Almost 60 % of Canadian emigrants are managers, business people, scientists (Mintz par. 5).
  • The Canadian government plans to address the problem of the brain drain through the extensive investment in innovation and infrastructure, improved immigration policies, and the attraction of foreign investors (Wells Justin Trudeau’s Summer Homework par. 11).
  • Some Canadian enterprises, non-governmental organizations, and (rather occasionally) the country’s federal government, come up with incentives (significant investments to attract top talent) that have resulted in reverse brain drain as US top talents have come to Canada to live and work in such areas as business, education, and science (Allen par. 11).
  • The major reasons for the brain drain are the Canadian currency rate and the country’s taxation (Yakabuski par. 3).
  • It is also believed that high-quality higher education (with rather high prices) is another reason contributing to the increase in the brain drain (Butler par. 8).

Economic Analysis

  • Almost two-thirds of the Canadian emigrants are skilled employees (often with higher education) engaged in areas contributing to the financial growth of the country who potentially create jobs (Mintz par. 5value).
  • When the Canadian dollar rose in value, the brain drain was minimal (Mintz par. 4).
  • High taxes contribute to the problem as people choose the USA where tax policies are more attractive (Yakabuski par. 5).
  • Some researchers see the brain drain as a positive trend that facilitates the development of human society as people share their knowledge and contribute to the development of the host countries (Pécoud 96). More so, many people turn back to their native countries, which has a positive impact on the development of their economies as the returners are equipped with valuable knowledge and experience.
  • Nonetheless, at the level of the country, brain drain is regarded as a negative and hazardous trend that hurts the development of the country. The brain drain is associated with a lack of innovation and new jobs in the country that loses high skilled workers (Pécoud 91).

A reform in the sphere of education, taxation, and immigration can address the issues mentioned above in several ways:

  • Highly skilled workers will be encouraged to remain in Canada if the currency rate increases.
  • Canadians will be satisfied with the educational services their children receive will be eager to remain in the country.
  • These workers will stay in Canada if taxes become lower since they will not need to earn more to cover their expenses.
  • Immigrants will satisfy the needs of the Canadian labor market, which will lead to economic growth, which, in turn, will decrease the rate of the brain drain.
  • Keeping the educational system at the same high level will provide the country with highly skilled workers who will contribute to the economic growth of the country.

Risk Analysis

  • If Canada fails to implement the change, the economy will stop developing or even start declining, which will contribute significantly to the brain drain.
  • The reduction of taxes is unlikely to be approved by the country’s federal and state governments as they need to fill in their tightened budgets.

Option Analysis

  • Immigration policies should be aligned with social development policies (“Is Migration Good for the Economy” 1). For instance, it has been found that a large portion of South African immigrants to Canada often move to the USA due to the inability to integrate into Canadian society (Cohen par. 6). Substantial investment in diaspora community development projects can be beneficial. More so, immigrants coming to Canada often create jobs and invest heavily in the development of the country’s economy, which is beneficial in the long run (Friesen par. 6).
  • It has been acknowledged that the development and alignment of brain drain policies with taxation, educational, and immigration policies have a positive effect on productive human capital and the overall development of Canada (Schiff 15).
  • Canada’s participation in an international study revealed certain gaps in the educational system. It is found that Canadian students show insufficient results when it comes to math and science (“Canada’s Students Slipping in Math and Science” par. 6). Therefore, it is important to focus on these areas as they are associated with innovation that is the core goal of the Canadian government (Wells par. 11).

Assessment of the Proposal

Strengths

  • The suggestions to increase investment in innovation and infrastructure are effective as these spheres are elements of a country’s international competitiveness (Brücker et al. 66). The focus on short-term gains associated with the low Canadian dollar would have rather an adverse effect on the economy potentially turning it into an industrial rather innovative state. This shift will be erroneous as the future is associated with information, innovation, and advanced technology rather than the production of some materials, resources, or consumer products.
  • The economic growth will contribute to the strengthening of the national currency which will encourage Canadians to remain in their home country rather than seek opportunities in a new land. The author draws people’s attention to this issue, which is an important step towards finding the best solution to the problem.
  • Keeping taxes at the same level, and lowering them down in some areas could also reduce the brain drain as people will not see better prospects in such countries as the USA and will stay in Canada where living standards are high.

Weaknesses

  • The author claims that the Canadian educational system does not need any changes as it has been effective so far. At that, Canadian students lag behind other nations in such important areas as science and math (“Canada’s Students Slipping in Math and Science” par. 6). This can be regarded as a sign of starting problems in the system that should be addressed as the failure to raise a generation of innovators can threaten the development of the entire nation (Wells par. 17). More so, there is a lasting debate on the effectiveness of the approach used and the attempts to employ the so-called Finland’s paradigm, which is the focus on trust rather than accountability (Hancock par. 2).
  • The author suggests reducing taxes but does not provide a strategy to fill in federal and state budgets. Mintz mentions the problems the country is facing with its aging population and the need to address this issue (par. 18). Nonetheless, this suggestion is rather protectionist (serving the business world rather than communities) and seems irrelevant. The author also fails to mention that the high taxes were central to the development of such spheres as education, health care, and infrastructure. The author’s comparison of the Canadian and US taxation is rather limited.
  • The author fails to mention the impact immigration can have on the level of the brain drain as well as the overall development of a host country. At that, immigrants invest in the economy, create jobs, share innovative ideas, and see the existing issues in Canadian society from another perspective. Thus, the author’s suggestions lack the necessary depth and comprehensiveness.

Personal Recommendations

  • Canadian taxation policies need certain changes. The reduction will result in a deficit in budgets, so a more thoughtful approach is needed. It is possible to reduce taxes for graduates who choose to work at Canadian companies. Some recommend asking US multinationals for certain reimbursement, which could also be an option (Butler par. 10). However, it could be implemented at the organizational level rather than country-wide policies. In other words, such reimbursement could take a form of launching projects in Canada, setting subsidiaries in this country, and so on.
  • The educational system should also undergo some changes. The curriculum can be slightly changed, and it can be effective to start several projects encouraging students to choose such spheres as science, mathematics, and so on as their career paths. The debate concerning the choice between accountability and trust should also come to an end. It can be beneficial for the country to find the balance between these paradigms and provide more freedom to students but help them progress through regular assessment.
  • Immigration policies should also be improved to address the brain drain problem. The Canadian government is planning to increase the number of immigrants accepted (“Canada May Aggravate Asian Brain Drain” par. 4). This is a positive incentive as immigrants contribute significantly to the growth of the host country’s economy (Pécoud 96). At that, it is possible to change the way immigrants are accepted. The points system has proved to be effective, but it still has some shortcomings (Schiff 15). It is necessary to change the way the education of applicants is evaluated as the quality of education in different countries differs considerably. Therefore, it is important to provide some additional points to applicants who received education in countries where education quality is higher, while giving fewer points if the applicant’s education is not regarded as sufficient.

Works Cited

Allen, Kate. “How Canada Reversed the Brain Drain.” The Star. 2015. Web.

Boudarbat, Brahim, and Marie Connolly. Brain Drain: Why Do Some Post-Secondary Graduates Choose to Work in the United States. 2013. Web.

Brücker, Herbert, Simone Bertoli, Giovanni Facchini, Anna Maria Mayda, and Giovanni Peri. “Understanding Highly Skilled Migration in Developed Countries: The upcoming Battle for Brains.” Brain Drain and Brain Gain: The Global Competition to Attract High-Skilled Migrants. Ed. Tito Boeri. Oxford: OUP Oxford, 2012. 15-209. Print.

Butler, Collin. “Brain Drain: U.S. Firms Should Pay Canada for Top Talent, tech CEO Says.” CBC News. 2016. Web. .

“Canada May Aggravate Asian Brain Drain.” Asian Pacific Post. 2016. Web.

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“Canada’s Students Slipping in Math and Science, OECD Finds.” CBC News Canada. 2013. Web.

Clarke, Warren. Brain Drain? The Issue of Inventor Mobility in Canada. 2014. Web.

Cohen, Tobi. Mitigate ‘Brain Drain’ by Investing in Diaspora-Led Development Projects, Study Urges Canadian Government. 2013. Web.

Friesen, Joe. “Why Canada Needs a Flood of Immigrants.” The Globe and Mail. 2013. Web.

Hancock, LynNell. “Educating Americans for the 21st Century: Why Are Finland’s Schools Successful.” Smithsonian Magazine. 2011. Web.

Is Migration Good for the Economy. 2014. Web.

Mintz, Jack M. “Jack M. Mintz: Living with the Low Canadian Brain-Drain Dollar (Part 2).” Financial Post. 2016. Web.

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Pécoud, Antoine. Depoliticising Migration: Global Governance and International Migration Narratives. London: Springer, 2014. Print.

Schiff, Maurice. Brain Drain, Educational Quality and Immigration Policy: Impact on Productive Human Capital in Source and Host Countries, with Canada as a Case Study. 2014. Web.

Wells, Paul. “Adding up the Ways We’re Falling Behind in Education.” MACLEAN’S. 2013. Web.

—. “Justin Trudeau’s Summer Homework: Easing Canada’s Brain Drain: Paul Wells.” The Star. 2016. Web.

Yakabuski, Konrad. “If the Dollar Goes South, Brains Will Follow.” The Globe and Mail. 2016. Web.

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