The departure of skilled workers in the developing world may, contrary to popular belief, do more good than harm. Photo:banoiff (flickr)

When educated professionals depart a developing nation, does greater wealth arrive? Some scholars in the international development community are saying farewell to the notion that the ‘brain drain’ hinders impoverished countries from expanding human capital and increasing the growth rate.

Exit brain drain. Enter brain gain.

The brain drain has long been perceived as a constraint on the progress of developing nations—much-needed doctors, professors, and scientists often abandon their homelands in exchange for better salaries and more comfortable lives in the developed world. However, research indicates that if countries can hit a sweet spot of sending around 20 percent of their talent to other countries, the residual impact of those individual losses will actually spur economic and educational growth at home.

But how? One way is through remittances, cash transfers from an individual in one country to another elsewhere. Take Ghana, for example. Some figures place remittance levels at $400 million per year, on par with the country's two biggest exports, cocoa and gold, which account for 25 percent of the foreign exchange earnings of the nation. To put this figure in perspective, in previous years Ghana has received around $650 million in foreign aid. Compared to other developing nations, that's low—in some, “remittances are more than double the amount of foreign aid,” as reported by Foreign Policy.

Furthermore, remittances can withstand the tests of natural disasters, and political and economic crises. Chances are an economic and political collapse in Egypt would deter foreign investment but encourage a migrant to increase his or her monetary givings to Egyptian relatives. Now those are derivatives Fannie and Freddie should have bet on.

Much of the new economic activity happening in African countries like Ghana are catalyzed by residents who have traveled or lived in developed countries. New York University professor William Easterly refers to this as “brain circulation,” that is, the movement of ideas and investments from educated professionals between their homes and the West.

Often, brain drainers will eventually return to their country of origin or maintain residency both abroad and at home. Not only do these individuals in turn support the economic development of their hometowns, but they also inspire members of the community to invest in education. According to Easterly, most students are motivated by the idea of living abroad, noting that “if this prospect is closed tightly, this may have an effect on the effort levels of students in the system, and therefore the quality of the graduates of the school system.”

Additionally, travel expands capital horizons. Robert Guest notes in Foreign Policy that “countries trade more with countries from which they have received immigrants.” A migrant living in the UK might inform his sister in Somalia that there is demand in his city for a specific talent she may have the skill sets to provide. Diaspora thus encourages a fluidity of ideas, innovations, and supplies and demands between often disconnected parts of the world.

Investing money abroad can be the best way to bring more of it home. Brainpower may work that way, too.

The African Growth and Opportunity Act has generated many jobs in the clothing manufacturing sector, especially for women. Photo: Jenny Bussey Vaughan/Mercy Corps

Most Americans may have never heard of the African Growth and Opportunity Act, but their closets probably contain at least one article of clothing imported as part of it.

The act — AGOA, by its acronym — was passed by Congress in 2000. It’s a free-trade deal between the U.S. and a number of Sub-Saharan African nations that eliminates quotas and duties for certain goods. It allows African products to compete with those from other regions on a more level playing field on the U.S. market. 87 percent of these imports consist of petroleum and minerals, according to a report by the Council on Foreign Relations. That’s not all, though, as Florizelle Lizer, the assistant U.S. trade representative for Africa explained to the U.S. Department of State’s Bureau of International Information Programs:

The main focus of our efforts and our capacity-building assistance related to AGOA has always been to promote new nontraditional and value-added exports from Africa like apparel, footwear, processed agricultural products and manufactured goods.

This is where you’ll find AGOA’s selling point for the average Joe or Joanna in one of its member states. It’s created tens of thousands of manufacturing jobs, and many of these new employees are women. Some of the largest gains are in clothing manufacturing. For a poor, landlocked country like Lesotho, clothing exports tripled and 50,000 new jobs appeared following its entrance into AGOA, according to a report by Lawrence Edwards and Robert Lawrence. It’s also helping to empower women by providing them access to a regular income, comments Zambia News Features.

There’s a catch, though: AGOA says the materials used to make products exported to the U.S. must be manufactured in the exporting country or, at the very least, in another AGOA state. But being able to manufacture fabrics on an industrial scale is a tall order for developing nations that don’t already have that kind of infrastructure. Luckily for them, another piece was added to AGOA a few years after it debuted. It’s called the Third Country Fabric Rule, and it allows African countries to import their fabric from other parts of the world, manufacture the finished product at home, and then export it to the U.S. under AGOA.

The Third Country Rule doesn’t quite sync up with AGOA, and must be renewed more frequently. AGOA itself isn’t up for revision until 2015, while the Third Country Rule is set to expire in 2012. In May, AllAfrica reported that the U.S. had said that "its market would no longer be accepting garments whose raw materials could have been sourced from outside the exporting country." Since then, a U.S. congressman submitted a bill to extend the Rule until 2015, though an article from Forbes argues that recent U.S. actions concerning AGOA constitute a kind of "benign neglect."

Not everyone is in favor of AGOA in its current state, though. Some call it a fig leaf for the oil industry or a cap on the growth of African manufacturing. U.S. Secretary of State, Hillary Clinton, is a supporter, but in a recent speech at the AGOA forum in Zambia she pointed out some of its shortcomings, according to Procurement News. She said African governments need to work on providing greater support to manufacturers — citing the example of an American business that chose to import from Vietnam instead of an AGOA because Vietnamese government subsidies meant that the factory there could churn out products more quickly. Clinton also criticized the fact that countries "export only a handful of the 6,500 products," eligible under AGOA, while "the most common export is still a barrel of oil." Others see the Third Country Rule as actually stunting the growth of local textile industries. It might be cheaper to import from Asia in the short run, but local businesses could suffer the long-term.

But in the minds of many, allowing the rule to lapse — or even threatening to let it do so — makes investors nervous and hurts countries’ long-term prospects. Here’s hoping congressional inaction concerning your clothing’s origin won’t cost an African woman the shirt off her back.

Margo Conner is a senior at Lewis & Clark College in Portland, Oregon, majoring in international affairs. Read her other contributions to Global Envision.

Mary O'Grady and OpinionJournal.com discuss the historical impact of trade barriers on Latin America and if the expansion of free trade will continue in Latin America under Barack Obama or John McCain.

Watch the video from The Wall Street Journal.

Steven E. Landsburg outlines a few simple ways to wrap your mind around the concept of free trade and outsourcing in the New York Times op-ed, What to Expect When You're Free Trading.

Even if you’ve just lost your job, there’s something fundamentally churlish about blaming the very phenomenon that’s elevated you above the subsistence level since the day you were born. If the world owes you compensation for enduring the downside of trade, what do you owe the world for enjoying the upside?

Internally torn about free trade vs. protectionism? Well worth the read.