Citizenship, Passports and the Brain Exchange Triangle

Recent evidence suggests that the traditional permanent bilateral flows of highly skilled immigrants are being replaced by a form of “brain circulation”. This paper offers a brain-exchange model in direct contrast to the standard neoclassical migration model limiting onward flows to disappointed immigrants. In this triangular model, movement occurs between three states: sending, entrepôt and final destination region. Individual agents in the entrepôt destination equip selected migrants from the sending region with subsidized human capital, which selectively encourages the most productive immigrants to return or move on to the rest of the world. A limited test of this model supports the major hypothesis of the model that the most productive move to an entrepôt destination (Canada) only to later selectively return home to their low tax environment (Hong Kong) to exploit the subsidized human capital they acquired in the entrepôt country (Canada).