The conflict in Ukraine may trigger human capital outflow fr om Russia

Russia’s involvement in the Ukrainian conflict has led to several main outcomes, among which boosting growth rates of capital outflow from the country.

The remaining threat of further sanctions against Russia makes investors revise the expected return on investment in the Russian economy, and they tend to invest in less risky areas.

Decline in investment will result in not only missing the opportunity to create more technological jobs and additional output, but also reduced inflow of technologies which could have changed the national technological confines, enhancing the technological level of the Russian economy. It is the borrowing of technologies, not innovation, that plays a key role in the technological development of the country which is regarded a middle-income state, according to the internationally accepted standards.

Human capital outflow from the Russian economy is likely to become another result of the conflict in Ukraine, because the development of the foreign policy conflict is leading to concerns about potential serious changes that Russia might face in the years to come.

A growing, catching-up economy which borrows technologies from developed countries, accumulates physical capital, copies the latest economic, legal and political institutions, sets goals of joining international organizations of developed states, such as OECD, needs a great variety of highly qualified specialists who can help borrow from developed countries and maintain technological, administrative, legal and other changes.

The demand for highly qualified specialists, namely programmers, engineers, economists, analysts, etc., remains relatively weak in the situation when the country is being involved in political conflicts instead of undertaking reforms and developing, while its economy is stagnating. As a result, Russian graduates completing world-class educational programs both in Russia and other countries, as well as already employed specialists  will strive to continue their carrier in those states wh ere  they may take the best possible advantage of their qualification.

Finally, although this is not the single incentive to migration though. Many specialists have long been waiting for a moment when the development of the Russian economy not only extends the scope of their professional competence, but also approximates their living standards to those of the OECD member countries. Regretfully, the recent events have sent a strong signal to them that they are most likely to have to wait too long to see any changes happen. Although the question of losses in human capital and development potentials which the Russian economy might sustain from human capital fleeing the country (or those specialists who were about to return to Russia changed their mind), only can be given a more precise answer through a special survey, the first examples, e.g. Leonid Bershidsky has recently left this country, show that losses might be visible.

Inan Lyubimov, PhD, Senior Researcher