The bidirectional causal links between high-skilled emigration and
poverty can give rise to multiple equilibria and coordination
failures. Two countries sharing identical characteristics may end
up in either a “low poverty-low brain drain” equilibrium or in a
“high poverty-high brain drain” equilibrium. In this paper, we
build a model which endogenizes high-skilled emigration and
economic performances in order to derive the conditions under which
multiplicity occurs. After identifying country-specific parameters,
we find that in the majority of developing countries, the best
equilibrium is selected and that the observed brain drain is
inevitable. In 22 small developing countries however, the worse
equilibrium prevails, implying that poverty and brain drain are
increased by coordination failure. These countries require
appropriate development policies, such as a temporary subsidization
of the repatriation of their high-skilled expatriates. Our results
are robust to the inclusion of a brain gain mechanism.