Inventors Emigrate Due to Political Uncertainty

Research

A recent ZEW study on European countries shows that political uncertainty in a country is a factor that drives inventors to emigrate. In the years following emigration, this country loses billions of dollars in patents.

Since the late 1990s, both political uncertainty and migration among inventors have increased. An analysis by researchers at ZEW Mannheim and KU Leuven shows that this parallel development is no coincidence. On the contrary, political uncertainties have prompted more inventors to leave their home countries and move abroad.

The researchers analysed the migration of a total of 716,055 inventors between 1997 and 2013 in the following ten European countries: Belgium, Germany, France, Greece, Ireland, Italy, Croatia, Sweden, Spain and the United Kingdom. They used the Economic Policy Uncertainty Index, published monthly by US professors Scott R. Baker, Nick Bloom and Steven J. Davis. The index quantifies the coverage of policy-related economic uncertainty by leading newspapers for the countries studied. At the same time, the researchers exclude other factors that may influence the emigration of inventors besides political uncertainty. These include income, quality of life, crime rate, inflation rate, unemployment rate and professional networks abroad.

General documents

Policy Uncertainty and Inventor Mobility

Emigration due to political uncertainty has long-term effects

As the empirical analysis shows, an increase in policy uncertainty by one standard statistical unit leads to a rise in the outflow of inventors by almost 40 per cent. Furthermore, the researchers find that emigrating inventors are exposed to less political uncertainty in the following years than their colleagues who stayed in their country of origin.

The researchers assume that the majority of those who emigrate remain abroad for a long period of time, if not forever. Emigration due to political uncertainty thus has long-term effects, as the study shows with a simple calculation for 2011.

In 2011, a total of 54,781 patents were granted in the countries studied; this results in an average of 6,848 patents per country with an average of 8,885 inventors. On average, 0.771 patents were attributed to each inventor. Increased political uncertainty caused the emigration rate to rise by almost 40 per cent from an average of 0.746 per cent to 1.05 per cent. This means that 93 inventors emigrated due to increased uncertainty – that is 27 more than under normal circumstances. The 21 lost patents of these 27 additional emigrants seem negligible in view of the total of 6,848 patents per year, but only at first glance. Assuming that the emigrated inventors are as productive in the following ten years as they were at the time of emigration, the country of origin loses 210 patents. US researchers have calculated the average patent value to be 10.36 million dollars. Based on this, the damage in the decade following emigration adds up to more than two billion dollars.

Other highly qualified workers could behave similarly

The researchers conclude that these results apply not only to inventors, but also to other highly qualified workers. On the other hand, they see no evidence that low-skilled workers could draw similar consequences from political uncertainty. Nevertheless, their recommendation is that policymakers should pay more attention to the connection between political insecurity and emigration.