[MUSIC] So how do we explain China's, I would say, relative success in fostering a reverse brain drain? First I would emphasize the role of leaders, because they're very important to public policy and particularly in a Leninist system where policies are led from the top, new leaders often bring in new ideas. The leaders have to overcome bureaucratic resistance and fear of linking internationally. The leadership in China has done a remarkable job of sustaining its attention on this policy for 35 years. They've invested a lot of money as we'll see in research and development, and they've enhanced the status of the private sector just as Newland suggested. A lot of the new proposals, new ideas, are first tested out in what the Chinese call small environments, an organization or a community where these new policies, if they generate a lot of opposition, so be it. If they fail, the impact is limited, but a really important aspect too in China, unique I think in some ways to China, is that cities are major actors in China's development. And as the power is often decentralized to them, but upward mobility for the leaders of these regions is based upon increasing the GDP, they have enormous incentives to bring back returnees and get them to add to the local economy. Now let's look here at the research and development investment. A table that shows the relative investment of China to other countries. You can see the total amount has gone up dramatically from 2001 to 2014. On average even looking here you have to save something like almost 20% a year, which is a remarkable investment. And here we can see that it went from only 0.95% of the GDP which is very, very low. But the leadership started to take it more and more seriously and now it's all the way up to 2.05%. Nevertheless, if you compare it to some of the other countries in East Asia or in the world it falls way behind the Japanese who are investing 3.6%. The South Koreans are seen to be the number one country in the world investing in R & D, research and development. The US still out invests China, Taiwan, right? Still 3% of the GDP and probably the weakest of them all is really the European Union. Now one of the concepts that I like to use is this concept of shortage and a shortage good. And what I mean by a shortage good is a skill, a resource, a technology, networks that people may have overseas, information that you may acquire abroad. But all this is in high demand in the home society and creates an economic or personal opportunities for those who return with it. So when I talk about these skills, this knowledge, these networks that people gain when they are abroad and becomes part of their personal attributes, I use the term transnational human capital. And a successful strategy then for those going overseas really involves finding something overseas. Finding an overseas good that is in short supply in China, bring it back where demand is high and there for the profits in the short term are likely to be high. You can use that resource or that technology that information to negotiate with some organization in China to get a special deal. And the leadership really understands the need to fill in these technological gaps, and they emphasize this issue of shortage in their speeches, in their documents and in their policies. Now, as we look at the role of the state, I also want to say that the state has severe limitations. For example, the state can't do much about the International Environment. And there may be changes in the global economy, multinational corporations may move people around, they themselves may move. The cost of labor, we talked about this in the open policy lecture, the cost of labor may be different in one country where the value of your own labor may be different in one country than it is in another. So you'll go, people, especially high talent will go where the value of their labor is higher. In fact, the world is often creating or shaping, these global forces are shaping people's choices. And they often don't even know that their choices are being constrained or directed. Another aspect would be the Networks, people have friends, they have colleagues who may return to China earlier. They may join some regional association back overseas which will help channel them back and they'll share information and they will learn about the opportunities that exist for returnee. Institutions such as multinational corporations, I said they'll transfer people back home or Chinese companies, organizations, universities, they'll try and attract people from overseas. The final level of analysis for this would be the Individual level. Here we see the decision often driven by family conditions, family choices, the need of aging parents so you go home, a spouse who does or doesn't want to go home. The ages of children can also affect, largely children in high school, you don't want to return home, if your children are younger than that, you may want to return home. These are individual choices, and they're actually made outside the boundaries of the constraints of the Chinese political system. And so the state really can't influence you very much and therefore it's largely a question of free choice whether or not you go back. Still the movement of high end human talent is deeply affected by the state, although at times, rather indirectly.
