Brain drain is one of the issues that developing country must face. Education made people have a good skills, intellectual, and capable on thing they want. But in developing country, those people who have a good skills, intellectual, and capable on their work which is projected could be the planner and developer for the issues for developing ecomomic on their birth country actually have a counterback projection. They go to the other promising country for many reasons. It make the nation lost because the nation human capital of it flew to the other country. The investment in education for human capital failed to reach the target.
But developing country not just face the brain drain. There are more numbers of internal migration than international migration. Urbanization is one of the classic problem for the countries. The people from the villages move to the cities for so many reasons. It made inequality between the cities and the village that can make so many problems because of urbanization. So, education, brain drain and internal migration linked as one path of issue that developing country couldn’t resist and have to face.
There are two reasons that linked between education and economic growth. First of all at the most general level it is known that living standards have risen so much over the centuries to centuries because of education. Secondly, at the more specific level, a wide range of econometric studies indicates that the individuals can reach the positions that possibly make a command depend on their level of education.
On the knowledge-based era of economic development, education which is the main part of knowledge, has been assumed an added importance. The fact is that education has been worked as a power driving push in the development process of a countries and brings so much usefull and needed intellectual capital and technological changes, that made the economy more innovative and competitive by developing human capital with better expertises, skills and specializations.
However in our beloved country, education was not the main priority. It has more been one of the most neglected sectors. Indonesia, like many others developing countries, has yet to decide the investment priority in education. Economic development usually reffered as the investment of present resources for increased future productions. Education is considered both for kind of investments and consumption. Education so considerable as highly productive form of investments. Machines and equipments are nothing more important than the people who invade them, make them, maintain them and improve them.
In fact, education is valuable and high importance both as a form of consumption and a form of investment for economic development. To see at education as a form of consumption results in assigning it low priority in allocation of resources. The 20th century gave the lessons that education abbeted by efficient, trusted and honest government comes first. The fact says that education have a multi-dimensional effect as a form of development investment.
Knowledge, science or technology being the intrinsic components of education which is emerging to be an integral part of the economic system of developed economies. The major developed countries nowadays, such as USA, Japan, Russia, China and other emerging economies owe a great deal to the high levels of education and skills. The key and vital resource of growth is human capital, which is taking advantage of the revolution, in the wake of the efficient and fast technology of communication, accelerating the process of production manifold and raising the quantity of global trade beyond expectations. Due to the reason is that 50% of the GDP in the many developed countries is now based on the production and distribution of knowledge.
It should be realized that it is the accumulation of knowledge, which is contributes to sustained economic growth. Information and knowledge could be shared and actually grow through application unlike the other resources that deplated when used. So, we can indicate that education is a vital and important issue for the developing growth. Without education, developing growth is just a big dream because human capital that be the main goal have a vital role on the developing economic. But, developing country like Indonesia has a problem because of a well-educated human capital like brain drain.
Brain drain is a common reffered as a human capital flight. Brain drain is the high numbers of emigration of a large group of individuals with technical skills and knowledges. There are two aspects that usually be the reason of brain drain which are come from countries and the individuals itself. In terms of countries, the reasons may be a social environtment that divided by two factors, source countries and host countries. The reason for the source countries could be such as lack of opportunities, economic depression, political instability, health risk, etc. Then for the host countries could be such as good opportunities, political stability, better living condition, freedom, etc. In terms of individual reasons, there are family influence and personal preference.
Brain drain is usually considered as an economic cost because emigrants take with them the fraction of value of their training which usually helped by the government or other institutions. It is called movement of financial capital regarding a parallel of capital flight. Brain drain is usually associated with de-skilling of emigrants in their nation of destination while their nation of emigration experiences the draining of skilled individuals.
Brain drain is a global phenomenon which is not just happened in Indonesia but also in the other developing coutries. It used to be phenomenon, but nowadays brain drain going to be a trend. This trend seems difficult to be avoid because of globalization which is make goods, services, and human capital flow freely. There’s no barrier that could stop globalization. Generally, brain drain was did by a potential human capital in the nation who have good technical skills, capability, knowledge and well-educated record. It seems like a human capital flight where a large group of individuals with knowledge and technical skill going abroad leaving their nation.
Ironically, brain drain regarded as an economic cost for the nation. Government or institution that support the financial needs for the individuals get lost because their investment in human capital just go away. After the individuals got a well education that made them capable, they flew to the other promising countries to get what they want without care about who made them capable like that. They want better living condition, political stability, good opportunities and welfare that perhaps they couldn’t have in their own nation.
But it make a nation get a lost because a nation support the financial needed for the individuals who potential and worth for their nation. And it make an economic cost for the country. This is the one of major problem on developing country. Brain drain is a phenomenon that the developing country must face. Human capital which is projecting to support of developing economic on their country don’t played well. So the education that regarded as the investment of human capital for developing economic in developing country still have a challenge. The international immigration which in this case was brain drain is the challenge for the developing country to face and solve for the developing growth.
Today, the most migration in the world is internal migration. There are far more internal economics migrants than the international migrants. There are more Internally Displaced People (IDPs) than there are asylum-seekers and official refugees. Moreover, many of those that classified as international migrants, began their journey with internal migration within their own country or ultimately find themselves internal migrants of one kind or another within their destination country.
One of the important issues that concerned in the internal migration is urbanization. Urbanization is the booming growth of urban areas because of rural migration and suburban concentration into cities. Urbanization is often linked to industrialization and modernization. Urbanization could describes a specific condition at a set time, such as the proportion of total area or population in towns or cities and the term that can describe the increase of proportion overtime. So the term urbanization could shows the level of urban relative to overall population, or it could represent the rate at which the urban proportion is increasing.
Urbanization was not merely a modern phenomenon, but a historic and rapid transformation of human social roots on a global scale, where the predominantly village culture is replaced by predominantly urban culture. Urbanization occur as commercial, individual, and governmental efforts to reduce and expense in transporting and commuting while improving opportunities for education, jobs, housing and transportation. Living in the cities permits the advantages of the opportunities of proximity, diversity and marketplace competition.
However, urbanization have some issues for the other side such as, stress, increased daily life costs, and negative social aspects because of mass marginalization. Cities are well-known as a places where money, wealth and services are centralized. The reasons why so many rural inhabitants come to the cities are for seeking fortunes and social mobility. Businesses, which provide jobs and money are more concentrated in the cities or urban areas. Whether the source is tourism or trade, it is including the ports of banking systems that foreign money flows into a country which is commonly located in cities.
Nowadays, half of the world’s people (3.3 billion) live in urban areas and about 1 billiom live in slums surrounding urban areas. Capacity and infrastructures describes the ability of rapidly growing urban areas to absorb both internal migrants and immigrants. Inequality which is the results of urbanization is a phenomenon that seen in many developing countries. The concentration of people who living in such disparate lives in such close proximinity can be destabilizing. However, urban planners are seeking to avoid the booming of slum areas through rigorous planning and federal purchases of land to make more humanize and highly managed mega cities.
Meanwhile, urbanization in Indonesia is increased rapidly following the country’s quick development in 1970’s. Since 1970’s, Indonesia has been facing the fantastic urbanization rate driven by rural-urban migration. In 1950, 15% of doubled to 30%. Indonesia took only another 20 years to increase the urban population to 44% as reported in 2010. Badan Pusat Statistik (BPS) reported that the average population density in the capital of Indonesia, Jakarta, had reached more than 14,400 people per square kilometers. BPS also predicted that the population in Jakarta will grow rapidly until 11 million people in 2020, unless the population are controlled by measurement.
Regarding the high intensity of rural-urban migration, local government in each province in Indonesia are required meet the escalating demand of services and infrastructure in terms of housing, transporting, and employment. When these demands are growing at a faster rate than the availability of infrastructure, there will be a “socio-economic dualism” within urban society in Indonesia. Socio-economic dualism portrays modernity and village society co-existing in urban areas. In Central Java, there are 14.1% or 2,092,500 people whose incomes are below the poverty line. In West Nusa Tenggara, the number of poor people is reported to be 23.7% out of the total urban population.
Without availability of employment catered for the needs of rural-urban migrants, the income gap between the haves and the have nots in urban areas will worsen. This potentially makes a political tension and social friction as well as discrimination in areas such as a healthcare and education. Without sufficient management, policies, and actions taken, the continuous of rural-urban migration may pose as a serious threat to the infrastructures in the cities or urban areas. In terms of transportation for instance, traffic crisis costs Jakarta $1.4 billion a year due to traffic congestion and public transportation.
Another problems of massive urbanization is the fall of investments in rural infrastructures. There are abundant investments in urbanization projects. Population of people which live in cities or urban areas are predicted to increase rapidly by more than 65% in 2030. However, after 1980’s, investments in rural projects were began to fall. Roads and transportation systems are very important forms of infrastructures that help in the development rural areas. Healthcare services in rural areas that one of the parts of Indonesia have also worsened with the fall in investments in rural infrastructures.
Indonesia also have an additional problem like the suffering from a lack of healthcare professionals such as doctors and nurses. The bulk of them remain at urban areas which has caused a shortage of doctors and nurses in the rural areas. The poor people in rural areas do not have a strong, efficient and proper healthcare system to turn to in times of need.
So, education, brain drain and internal migration linked as one path of issue that developing country. They have a correlation that depend on each others. Education is the investation of human capital. Education built capable human capital which is one of the parameters for developin economics. But human capital that invested by developing country seems not easy to gain back. There are brain drain or human capital flight which be the challenge of developing country.
To reduce this movement, it will be better if there is a cooperation between rich and poor countries. Poor countries should make a good working situation such as large salaries, position in society, and etc. In the other side, rich countries should invests more in poor countries so that people can work in their own nations with good environtment as that in rich countries. Reducing this movement is a good way for poor countries to reduce gap.
But not just the brain drain that be a problem for developing country. Internal migration is far more than international migration nowadays in developing country. Seems developing country have a challenge for develop their economic growth. Needs a concern not just from government but also from the people who lived and born in the country. They must commit to develop their country by doing education and avoid such things as brain drain and discouraging the interest of urbanization.
SOURCE : http://worldsavvy.org/monitor/index.php?option=com_content
Differences Between Hard Currency And Soft Currency Economics Essay
Hard currency: Hard currency is very stable; it doesn’t change with the changes in the value related with the other currencies which we express as exchange rates. This currency can be converted easily and its value cannot be depreciated. Due to its stability and convertibility, the demand for this currency becomes very high and investors have confidence in investing with this hard currency. It is a suitable currency for such a country where there is low inflation and the monetary and fiscal policies are sound. Such currencies will appreciate with other countries on a trade weighted basis. Some of the examples of hard currencies are: dollar of United States, yen of Japanese, pound of British, franc of France, and the euros of Europe. Before deutschmark currency was considered the best of the hard currencies which was replaced by the euros,
Soft currency: Soft currency is unstable, unconvertible with other currencies. It is such a currency where in, it can be converted to other soft currencies of other countries but not against the hard currencies. Due to currency fluctuations in the exchange rates or because of its unrealistic official rates of change, these soft currencies are not acceptable in the international business transactions.
Country: Currency is influenced by the country too. Country should have a stable government like America for example although it has every four years a potential to change its political leaders and views and has little chance of revolution or an invasion its currency dollar, has a very good demand from all parts of the world. It is heard that American dollar is the only currency with which we can trade with the Middle East for oil supplies. On the other hand people who keep travelling overseas for vacations some times will not be able to buy anything although they have some American dollars.
Inflation: Currency of a country is influenced by the inflation factor of a country. Lack of inflation is through which countries currency is considered. All currency goes through different levels of inflation. When there is an increase in inflation the investors and the ordinary people prefer hard currencies to soft currencies. When there is an increase in the circulation of a currency there will be a sudden fall in its value and the prices rise. Increase in the issue of paper money or gold mined might have given rise to fall in the value of currency. Increase in expenditure results in decrease of supply of goods which in turn fails to meet the demand. Hard currency will depreciate much lower when compared with the currency in other countries. From experience or from observations we can say that the American government has done a good job of controlling inflation using both monetary and fiscal policy.
Global financing operations: Developed countries use Hard Currency in global financing operations. It is easily traded and bartered throughout the world. The values of the hard currency does not fluctuate, using of this hard currency ensures that there is an even play field for all parties in the transaction. But, in the case of soft currency it fluctuates often, and other countries do not want to hold these currencies due to political or economic uncertainty within the country. Many things which contribute to the fluctuation of currency are inflation, strong financial market, and political or military unrest.
Investors: Investors and the ordinary people feel that when there is a political risk or imposed exchange rates are unrealistic they prefer to invest in the currency of other countries than investing in their home land. This kind of decision of investing in another country may have a significant effect on the economy of their home land. Investors desire to hold the dollar denominated assets which helped to finance the American government large budget deficiency and supplied funds to private credit markets.
The advantages a country has by holding the hard currency than the soft currency appears to be much better. Soft currency is less desired for the payments than that of the hard currency, the reliability is more in case of hard currency. Frequent devaluation, difficulties in payments and political influences of a country are more prominently noticed in the usage of soft currency
Economic risk: Economic risk can be broadly summarized as a series of macroeconomic events that might impair the enjoyment of expected earnings of any investment. When a company takes a decision to venture abroad it has to take many risk factors into consideration for its success. Some economists further specify this economic risk into financial factors and these factors leading to inconvertibility of currencies. The decision which a businessman takes to invest in another country will have a very prominent influence on economy of that country. Economic factors such as government finances, inflation, and others will lead to higher and sudden taxation or desperate government imposed restrictions on foreign investors’ or creditors’ rights.
When we go through the laws of supply and demand, we see that when there is an increase in supply of funds provided by other countries the price tends to lower these funds. The increase in the funds which are extended by the foreign investors will help to fill the budget deficit incurred and in turn lower the interest rates. The price of funds is the interest rate which we have to take into consideration. When we talk about the American government it gives a very clear picture that when the foreign investors hold the dollar denominated assets it helped the government’s large budget deficit and supplied funds to private and credit markets, foreign indebtedness or current account deficits. Whether a currency is said to be strong or weak it contains both positive and negative impact on a nation’s economy. Currencies that are strong and weak will not only affect the individual economy, but also tend to give a twist to the international trade, economy and political decision all over the world