.

Spain, in the first decade of the new millennium, was the land of opportunity for many Latin Americans. At one point during the early 2000s, Spain was considered one of the top ten largest economies of the world, thus it became a logical and hopeful alternative for Spanish-speaking workers throughout the Americas. Droves of people immigrated from Ecuador, Colombia, and Venezuela. For many, the dream did become a reality, and Spain was basking in its novel place of economic stability and might. But the construction boom in Spain popped in 2008 to 2009, bringing Spanish banks to their knees and spurring a deep recession that is to this date still dragging the Spanish economy to subzero growth.

Since 2008, 3.8 million Spanish jobs have been lost, rendering a Spanish economy with an unemployment rate of 26 percent. To give this high unemployment some context, during the U.S. Great Depression in the 1930s, unemployment peaked at approximately 25 percent, which was considered an economic calamity. To make matters even bleaker for Spanish workers, the International Monetary Fund published a report forecasting that it is very possible that Spain will be combating high unemployment of 25 percent until 2018. And if that was not enough bad news, 56 percent of Spain’s youth is unemployed, with an estimated total of 1 million university graduates without jobs.

Spain by no means has exclusivity on being saddled with high unemployment and meager economic growth; Greece, Ireland, and Portugal are on the same boat. In the periphery, France and Italy are not too far behind dealing with high unemployment, especially amongst young adults. But despite the obvious issue that jobs must be created to reduce the unemployment number, often a separate but related matter of equal importance goes unnoticed or perhaps discounted: the flight of human capital, or as many experts have coined it, brain drain.

The theory behind brain drain is that a country loses its talent pool to other countries due to lack of opportunity and economic and political instability, or in much worse cases, political oppression. Consequently, countries will struggle to recover from the economic crisis due to the qualified talent pool fleeing the country.

In Spain the flight of talent has begun in earnest, kindling a debate whether this is simply good or bad for Spain in the short and long term.

Germany is the main recipient in Europe of qualified Spanish labor migration. And it makes sense: Germany is the strongest and largest economy in the union compared to the other EU members, and it has been no secret that Germany has been tackling qualified labor shortages for quite some time. However, most surprising are the new lands of opportunity receiving qualified Spanish labor, namely Chile, Colombia, Brazil, and Mexico.

In Europe, it is forecasted that the EU will contract by 0.2 percent; while in Latin American economies the forecast is further growth, expected at around 3.6 percent. Spaniards have taken notice; between 2007 and 2012, the number of Spaniards immigrating to Brazil rose 227 percent; Chile, 144 percent; Mexico, 129 percent; and Ecuador, 467 percent. It must be noted that the majority of Spaniards relocating to Ecuador are Ecuadorian citizens returning to their home country but became naturalized as Spaniards while working and living in Spain.

In the last two years, behind the backdrop of Mexico’s recent emergence, Spaniards have been flocking to the country due to the ease of getting a working visa. Currently, there are 4,500 Spanish companies in Mexico, and in 2012, Mexico’s immigration office reported that 7,630 work permits were granted to Spaniards—not accounting the unknown Spanish tourists who outstay their visitor visa in pursuit of employment. Mexico, like many countries in Latin America, has suddenly and surprisingly become both a launching pad and a landing pad for working immigrants of all skills levels.

Countries in Latin and North America and Europe are attracting much-needed Spanish doctors, nurses, engineers, architects, marketing, and IT professionals. Yet, there are struggles. For instance, too much red tape in Latin America makes it difficult for aspiring Spanish workers wanting to enter the job market. A lost opportunity for Latin America, but (on a side note), an opportunity for another country such as the U.S., if immigration were to ease towards foreign skilled labor.

An interesting positive effect from Spaniards finding employment in foreign countries is remittances. Remittances are a valuable stream of monetary inflows towards GDP in developing countries; now it is equally important for the fourth largest economy of the EU, Spain. In Spain, remittances between 2007 and 2011 rose by 7.5 percent, or $7.4 billion. According to The Economist, remittances from Brazil to Portugal are greater than Portugal to Brazil; in addition, Spaniards in Argentina wire an approximate $1 billion per year to Spain. What is astonishing is that Argentina is considered one of the most worrisome economies and governments in the Americas, yet by only viewing remittances, it does more for Spain than vice versa.

Spanish emigration has certain benefits for Spain. First, it relieves pressure on the Spanish government in creating jobs for the unemployed. Second, less Spaniards will depend on the welfare state for benefits. Third, through remittances, Spain is gaining market share of much needed foreign money. The million-dollar question remains: What will happen when Spain recovers? Will the talent pool that left Spain return?

Migration patterns have been radically altered in the last ten years—sounds cliché and lazy—but the world is definitely changing. No longer can they been seen as developed and developing: emerging markets are hotspots for growth and employment, and countries such as Spain and France are desperately trying to persuade their citizens that Europe can no longer depend on the comforts of a welfare state. In order to stop the exodus, Spain and Co. must reform labor laws that make it easier to hire and lay off employees. In addition, an emphasis on growth and entrepreneurship must be implemented. Spain’s Prime Minister Rajoy is on the record pledging job creation being his main goal for 2014, backed by the Spanish government’s planned investment of $1.79 billion to combat unemployment, as a signal to young Spaniards that there is a future in Spain.

The last time there was such a flight of human capital, it was more than 60 years ago during the Spanish Civil War from 1936 to 1939. Spaniards leaving Spain is new and confusing for today’s Spain. Interestingly, another new development for Spain is that it produces an above average number of graduates compared to the EU, respectively 40 percent to EU’s 34 percent, making this generation Spain’s most qualified in their history. Unfortunately, while this generation is not able to currently reap the benefits now, with execution of much needed reforms, the brain drain can be a short term movement, giving Spain a chance to become at least a shadow of the booming Spain of the 2000s.

Oscar Montealegre is a Los Angeles-based Diplomatic Courier Contributor specializing in Latin American markets, finance, economics, and geopolitics. He holds an MA in International Relations, a BA in Journalism, and a Certificate in International Trade and Commerce.

This article was originally published in the Diplomatic Courier's January/February 2014 print edition.

About
Oscar Montealegre
:
Oscar Montealaegre is Diplomatic Courier’s Latin America Correspondent and the Founder of Kensington Eagle, an investment firm that specializes in private companies and real estate in the U.S. and Colombia.
The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.

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www.diplomaticourier.com

Curbing the Flight of Human Capital

February 4, 2014

Spain, in the first decade of the new millennium, was the land of opportunity for many Latin Americans. At one point during the early 2000s, Spain was considered one of the top ten largest economies of the world, thus it became a logical and hopeful alternative for Spanish-speaking workers throughout the Americas. Droves of people immigrated from Ecuador, Colombia, and Venezuela. For many, the dream did become a reality, and Spain was basking in its novel place of economic stability and might. But the construction boom in Spain popped in 2008 to 2009, bringing Spanish banks to their knees and spurring a deep recession that is to this date still dragging the Spanish economy to subzero growth.

Since 2008, 3.8 million Spanish jobs have been lost, rendering a Spanish economy with an unemployment rate of 26 percent. To give this high unemployment some context, during the U.S. Great Depression in the 1930s, unemployment peaked at approximately 25 percent, which was considered an economic calamity. To make matters even bleaker for Spanish workers, the International Monetary Fund published a report forecasting that it is very possible that Spain will be combating high unemployment of 25 percent until 2018. And if that was not enough bad news, 56 percent of Spain’s youth is unemployed, with an estimated total of 1 million university graduates without jobs.

Spain by no means has exclusivity on being saddled with high unemployment and meager economic growth; Greece, Ireland, and Portugal are on the same boat. In the periphery, France and Italy are not too far behind dealing with high unemployment, especially amongst young adults. But despite the obvious issue that jobs must be created to reduce the unemployment number, often a separate but related matter of equal importance goes unnoticed or perhaps discounted: the flight of human capital, or as many experts have coined it, brain drain.

The theory behind brain drain is that a country loses its talent pool to other countries due to lack of opportunity and economic and political instability, or in much worse cases, political oppression. Consequently, countries will struggle to recover from the economic crisis due to the qualified talent pool fleeing the country.

In Spain the flight of talent has begun in earnest, kindling a debate whether this is simply good or bad for Spain in the short and long term.

Germany is the main recipient in Europe of qualified Spanish labor migration. And it makes sense: Germany is the strongest and largest economy in the union compared to the other EU members, and it has been no secret that Germany has been tackling qualified labor shortages for quite some time. However, most surprising are the new lands of opportunity receiving qualified Spanish labor, namely Chile, Colombia, Brazil, and Mexico.

In Europe, it is forecasted that the EU will contract by 0.2 percent; while in Latin American economies the forecast is further growth, expected at around 3.6 percent. Spaniards have taken notice; between 2007 and 2012, the number of Spaniards immigrating to Brazil rose 227 percent; Chile, 144 percent; Mexico, 129 percent; and Ecuador, 467 percent. It must be noted that the majority of Spaniards relocating to Ecuador are Ecuadorian citizens returning to their home country but became naturalized as Spaniards while working and living in Spain.

In the last two years, behind the backdrop of Mexico’s recent emergence, Spaniards have been flocking to the country due to the ease of getting a working visa. Currently, there are 4,500 Spanish companies in Mexico, and in 2012, Mexico’s immigration office reported that 7,630 work permits were granted to Spaniards—not accounting the unknown Spanish tourists who outstay their visitor visa in pursuit of employment. Mexico, like many countries in Latin America, has suddenly and surprisingly become both a launching pad and a landing pad for working immigrants of all skills levels.

Countries in Latin and North America and Europe are attracting much-needed Spanish doctors, nurses, engineers, architects, marketing, and IT professionals. Yet, there are struggles. For instance, too much red tape in Latin America makes it difficult for aspiring Spanish workers wanting to enter the job market. A lost opportunity for Latin America, but (on a side note), an opportunity for another country such as the U.S., if immigration were to ease towards foreign skilled labor.

An interesting positive effect from Spaniards finding employment in foreign countries is remittances. Remittances are a valuable stream of monetary inflows towards GDP in developing countries; now it is equally important for the fourth largest economy of the EU, Spain. In Spain, remittances between 2007 and 2011 rose by 7.5 percent, or $7.4 billion. According to The Economist, remittances from Brazil to Portugal are greater than Portugal to Brazil; in addition, Spaniards in Argentina wire an approximate $1 billion per year to Spain. What is astonishing is that Argentina is considered one of the most worrisome economies and governments in the Americas, yet by only viewing remittances, it does more for Spain than vice versa.

Spanish emigration has certain benefits for Spain. First, it relieves pressure on the Spanish government in creating jobs for the unemployed. Second, less Spaniards will depend on the welfare state for benefits. Third, through remittances, Spain is gaining market share of much needed foreign money. The million-dollar question remains: What will happen when Spain recovers? Will the talent pool that left Spain return?

Migration patterns have been radically altered in the last ten years—sounds cliché and lazy—but the world is definitely changing. No longer can they been seen as developed and developing: emerging markets are hotspots for growth and employment, and countries such as Spain and France are desperately trying to persuade their citizens that Europe can no longer depend on the comforts of a welfare state. In order to stop the exodus, Spain and Co. must reform labor laws that make it easier to hire and lay off employees. In addition, an emphasis on growth and entrepreneurship must be implemented. Spain’s Prime Minister Rajoy is on the record pledging job creation being his main goal for 2014, backed by the Spanish government’s planned investment of $1.79 billion to combat unemployment, as a signal to young Spaniards that there is a future in Spain.

The last time there was such a flight of human capital, it was more than 60 years ago during the Spanish Civil War from 1936 to 1939. Spaniards leaving Spain is new and confusing for today’s Spain. Interestingly, another new development for Spain is that it produces an above average number of graduates compared to the EU, respectively 40 percent to EU’s 34 percent, making this generation Spain’s most qualified in their history. Unfortunately, while this generation is not able to currently reap the benefits now, with execution of much needed reforms, the brain drain can be a short term movement, giving Spain a chance to become at least a shadow of the booming Spain of the 2000s.

Oscar Montealegre is a Los Angeles-based Diplomatic Courier Contributor specializing in Latin American markets, finance, economics, and geopolitics. He holds an MA in International Relations, a BA in Journalism, and a Certificate in International Trade and Commerce.

This article was originally published in the Diplomatic Courier's January/February 2014 print edition.

About
Oscar Montealegre
:
Oscar Montealaegre is Diplomatic Courier’s Latin America Correspondent and the Founder of Kensington Eagle, an investment firm that specializes in private companies and real estate in the U.S. and Colombia.
The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.