Zoo Station

I received quite a bit of feedback/e-mail to my last post -- the Bhagwati essay -- mostly agreeing with my take that external taxation was a bad idea. I just want to elaborate on that a little bit, especially on an idea that Edward touched on briefly. Much has been made about the cost to developing countries of emigration. In fact, a UNDP report suggested that India loses about $2 billion every year because of the emigration of computer professionals alone. Let me ballpark that number a bit and suggest that India perhaps loses $5-$6 billion every year due to emigration of all hues. Sounds huge, except none of the naysayers takes into account the role of remittances. The remittances from Indians abroad amounts to somewhere in the region of $9-$11 billion per year, depending on where you look. That's a net gain to India and makes the idea of taxation on emigrants rather superfluous, besides complex and problematic to enforce. And this net gain is purely expressed in monetary terms here. Once we add the effects of "brain circulation," we are probably looking at a serious net gain.

As far as I can remember, Eritrea imposed a 2% exit tax on emigrants and the results weren't all that great and caused a great deal of friction in the Eritrean diaspora.

VK also makes a good point about Prof Bhagwati's numbers when he suggests that India produces about 25,000 engineers per annum. Yes, the state of Karnataka alone produces something like 15,000 engineers per year. My guess (and I could be wrong) is that India graduates about 150,000 engineers every year of which around 50,000 or so are from IT-related courses. If anyone has better numbers/guesstimates, please let me know.