The availability of brains is one of the strategic factors in the emerging knowledge-based economies of the 21st century. It will be the engine for strong growth rates, high income and lower unemployment – also for less qualified people. The importance of brains for the economic success of a society stems from the positive stimulating growth effects of knowledge externalities, and the fact that knowledge spillovers are locally bounded. A strategic decision therefore has to be taken by policymakers: should they produce brains nationally and invest in the accumulation of human capital by publicly subsidising education and research activities? Or should an economy “free ride” and “import” human capital that has been produced outside the country – and that has been financed by others?
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