The term "brain drain" first appeared in 1957 in a novel called Atlas Shrugged and the term reflects to the loss of skilled researchers, analysts, the accomplished and the talented – for political, industrial and social reasons.

It's currently frequently used as a dramatized synonym for loss and could be outlined as " the world transfer of resources in the shape of human capital " and " the loss of abilities or human capital to society or to the country from which migration takes place ".

Brain drain appeared in Hong Kong in 1987 when a major wave of immigration was seen due due to the uncertainties surrounding Hong Kong's future in light of the 1997 hand back to China. The trend endured in the following decade thanks to the concerns of some HK residents, particularly those educated and professionally talented, about the political future under Mainland Chinese sovereignty and the expanding immigration opportunities to have had in the more well-liked destination nations.

An annual average of 55,000 émigrés left Hong Kong between 1989 and 1995. This resulting outflow of talent impected on the economy of Hong Kong in four discrete ways:

Loss of Efficiency

In order to compensate for the lack of professionally trained employees due to their emigration, junior staff were promoted 'beyond their station' to take up their vacancies. As such junior staff had neither adequate coaching nor experience for these higher level positions, the standard of service and operational effectiveness were significantly negatively impacted.

Productivity of Subordinates

The exit of the highly skilled affected the output of their subordinates due to the lack of their supervision. The economy so suffered an indirect loss of output.

Loss of Human Capital

Émigrés were often highly educated, had received significant job related training and were well-experienced in their work having typically been engaged with their employers or within their professionals since the end of their formal education. Their exit represented a great loss of human capital to Hong Kong's economy.

Outflow of Capital

Most émigrés left Hong Kong with their wealth. Depending on their destination of choice, quite a number of them had to commit significant sums of capital in their new countries in order to qualify for immigration overseas.

To address the issues caused by brain drain in the 1980s and 1990s, the government of Hong Kong has taken concrete measures in the development and implementation of immigration policy.

These initiatives including retention, return migration, replacement and retraining. Among those measures, replacement was a comparatively simple and acceptable way to fill the vacancies of the émigrés. Aside from the swift growth of tertiary educational opportunities, the HKSAR Government has relaxed its limitations on the importing of professionally trained employees, particularly those from the Mainland, to fill manpower openings.

Out of the phenomenon of Brain Drain emerged the Admission of Mainland Talents and Professionals Scheme, the Quality Migrants Admission Scheme, the Immigration Arrangements for Non-local Graduates and the Capital Investment Entrant Scheme. In the meantime, the private sector has responded aggressively to the lack suitable talent caused by emigration by employing more expatriates under the General Employment Policy.