Research Briefing | Oct 31, 2022

Russia’s brain drain benefits its ex-USSR neighbours

Since the invasion of Ukraine in late February, hundreds of thousands of Russians have fled to neighbouring countries to avoid the draft. The September mobilisation has added to that wave.

What you will learn:

  • Several countries have recorded large influx relative to the size of their populations, including Armenia, Georgia, and Kazakhstan. In some smaller ex-USSR economies, capital transfers that accompanied the arrival of Russian immigrants have resulted in growth in foreign exchange (FX) reserves. Current accounts have also strengthened, likely bolstered by the inflow of remittances.
  • In the short term, the new arrivals increase demand for goods and services. On the flip side, though, that migration fuels house price increases and stokes inflation. It may also lead to a rise in tensions by evoking echoes from the Soviet past and more recent conflicts.
  • In the long term, however, the influx of high-quality human capital could lift growth if these educated, skilled Russian arrivals decide to remain. If host countries handle things right, they could end up with more businesses employing more workers and generating higher tax revenues.
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