Chinese Migrants and their Impact on Homeland Development

• Author: Jingjing Yang,Jiangyong Lu,Yingqi Wei,Xiaohui Liu
• Published date: 01 November 2017
• Date: 01 November 2017
• DOI: http://doi.org/10.1111/twec.12475

Chinese Migrants and their Impact on

Homeland Development

Yingqi Wei

1,2

, Xiaohui Liu

3

, Jiangyong Lu

4

and Jingjing Yang

5

1

School of International Business, Southwestern University of Finance and Economics, Chengdu, China,

2

Leeds University Business School, University of Leeds, Leeds, UK,

3

School of Business and Economics,

Loughborough University, Leicestershire, UK,

4

Department of Strategic Management, Guanghua School

of Management, Peking University, Beijing, China and

5

School of Economics and Trade, Hunan

University, Changsha, China

1. INTRODUCTION

INTERNATIONAL labour flows are as much a part of the globalisation phenomenon as

international flows of capital, goods and services. Throughout history, waves of mass

migration have occurred such as the Chinese and Indian indentured workers of the nineteenth

and early twentieth centuries (Harzig and Hoerder, 2009). These movements have displaced

people in very large numbers. While the beginnings of international flows of skilled labour

can be traced to the decades of the 1960s and the 1970s of the twentieth century, recent data

suggest that the emigration of skilled labour from developing countries continues unabated.

OECD statistics

1

show that of 70 million Asian migrants in 2009, one-third had tertiary edu-

cation. This sizeable outflow of skilled labour from developing countries can be damaging

since development depends on human capital, and the loss of educated manpower should be a

matter of concern (Commander et al., 2008; Bhagwati and Hanson, 2009; Brinkerhoff, 2012).

Much of the debate is focused on whether migration of skilled labour is brain drain, or brain

circulation which leads to brain gain.

The nationalist model of brain drain views international flows of skilled labour as a zero

sum game –the receiving countries gain, whereas the sending countries lose. In contrast, the

cosmopolitan model enunciated by Johnson (1964), among others, argues that the outcome of

such flows is in the nature of a positive sum game. The brain circulation argument suggests

that migrants return to their home countries to productively invest capital and skills acquired

from their adopted countries. Recent developments seem to substantiate the brain circulation

argument; for example, the sizeable repatriation of funds by migrants to their countries of their

origin (Brinkerhoff, 2008), which in total exceeds the volume of foreign aid allocated to many

of these countries.

2

There is also evidence of migrants contributing to their countries of origin

through investments, trade, aid, the transmission of te chnology and know-how, financial develop-

ment and poverty reduction (e.g. Gillespie et al., 1 999; Saxenian, 2002, 2006; Acosta et al.,

2006; Cattaneo, 2009; Coughlin and Wall, 2011; Flisi and Murat, 2011; Javorcik et al., 2011; De

Simone and Manchin, 2012; Amendolagine et al., 2013; Brown et al., 2 013; Law et al., 2013).

Financial support from the Economic and Social Research Council (RES-238-25-0027) and the National

Natural Science Foundation of China (#71172020) is gratefully acknowledged.

‘We have only obtained restricted access to the dataset from the Administrative Committee of Zhong-

guancun Science Park in Beijing. This means that we did not have their permission to share the data.’

1

Database on immigrants in OECD countries.

2

World bank development indicators database.

©2017 The Authors. The World Economy published by John Wiley & Sons Ltd.

2354 This is an open access article under the terms of the Creative Commons Attribution License,

which permits use, distribution and reproduction in any medium, provided the original work is properly cited.

The World Economy (2017)

doi: 10.1111/twec.12475

The World Economy

Of particular significance in this context is the substantial volume of inward foreign direct

investment (FDI) in China undertaken by Chinese migrants/diaspora (Smart and Hsu, 2004).

Their investments have accounted for over 40 per cent of the total FDI for the past three dec-

ades (Wei and Wang, 2009). The sizeable Chinese diaspora not only provide capital, but also

much needed international networks, advanced technology and managerial knowledge. They

act as a bridge to integrate China into the world economy (Saxenian, 2002; Smart and Hsu,

2004). It is asserted that ‘China’s development might have been very different had there not

been 50 million people of Chinese origin living in the Asia-Pacific Rim , many of whom pooled

their capital, technology, and access to export markets with cheap Chinese labour to produce

China’s export boom’ (Ramamurti, 2004, p. 280). Despite such recognition of the contributions

made by the Chinese diaspora, there is a lack of systematic study that empirically assesses the

impact of foreign direct investment by ethnic Chinese (ECI) on indigenous Chinese firms.

Another dimension of Chinese migrants is returnees. Since the late 1970s, the Chinese gov-

ernment has sent a large number of students and scholars abroad expecting them to be able to

enhance China’s scientific and technological development when they return. More than

1.2 million have studied in developed countries and nearly 300,000 of them have recently

returned to China (Lin, 2010), a dramatic increase from less than 10,000 in 2000 (Zweig,

2006). This group of people, who are called returnees, represent a new form of migrants and

have profound implications for China’s economic development. However, very few studies

have examined the role of returnees in knowledge transfer and diffusion to indigenous firms.

There is little empirical evidence to show whether migrants, including returne es, generate dif-

ferent levels of spillovers or whether they have higher social returns (Wei and Balasubra-

manyam, 2006). Hence, there is a need to produce more concrete evidence to assess the

promise of brain gain.

We choose China as our research setting not only because of the level of investments by the

ethnic Chinese or diaspora (Table 1) but als o because of the sizeable number of Chinese

migrants in the world. China’s history includes waves of Chinese emigration. Wars, starvation,

political deprivation and the hope for economic gain have led many Chinese to emigrate to

countries such as the United States, Canada, Europe, Australia, South Africa, East and South-

East Asia, and many other places. It is estimated that today around 50 million Chinese are liv-

ing outside mainland China (Ramamurti, 2004). In 2000, Chinese migrants constituted the third

largest group of skilled migrants among developing countries, behind only the Philippines and

India (Docquier and Marfouk, 2004). OECD statistics

3

also show that among Chinese migrants

in the United States, Canada, the UK, Sweden, Turkey, Poland and Slovakia in 2009, 50 per

cent had tertiary education (Table 2). The return of skilled migrants represents an important

source of capital, advanced technology and new ideas and has profound implications for China

(Lin, 2010). Hence, it is important to empirically assess the role of ECI and returnees in the eco-

nomic and technological development of their home countries, such as China.

This paper aims to systematically examine the impact of Chinese migrants on indigenous

Chinese firms. Using a unique data set for firms in a high-tech cluster, the Zhongguancun

(ZGC) Science Park in China, we focus on testing the impact of ECI, or ethnic Chinese-

invested firms (ECIFs), and returnees on the productivity, exports and R&D of indigenous

firms in comparison with non-ethnic Chinese FDI (NECFI) or non-ethnic Chinese-invested

firms (NECIFs). More specifically, we empirically assess three questions:

3

Database on immigrants in OECD countries.

©2017 The Authors. The World Economy published by John Wiley & Sons Ltd.

CHINESE MIGRANTS AND HOMELAND DEVELOPMENT 2355