As nations grapple with an increasingly competitive global talent landscape, a new study, published in the journal World Development, suggests that countries should rethink their approach to developing, attracting, and retaining talent. To address the need for a more complete understanding of cross-national variation in talent development strategy, the study proposes Talent Portfolio Theory (TPT), a novel approach to studying and improving human resource development.

The researchers, Stanford sociologist Gi-Wook Shin, the William J. Perry Professor of Contemporary Korea and the director of APARC and the Korea Program, and Haley Gordon, a PhD candidate at Stanford’s Department of Sociology, draw on the principles of Modern Portfolio Theory, a well-established framework in financial investment literature, to propose a new framework for talent development.

The new framework, TPT, views a nation’s talent strategy much like an investment portfolio, emphasizing the importance of diversification, risk management, and rebalancing. Shin and Grodon examine Japan and Singapore as case studies to illustrate how the TPT approach can help scholars, policymakers, and businesses better understand and optimize talent development strategies.

The study is part of the Talent Flows and Development research track of the Stanford Next Asia Policy Lab (SNAPL). Housed at APARC and directed by Shin, SNAPL is a new initiative committed to addressing emergent social, cultural, economic, and political challenges in Asia-Pacific nations through interdisciplinary, policy-relevant, and comparative research.

A Fresh Perspective on Talent Development

Talent development has long been a priority for nations aiming to boost economic growth and compete globally. Traditionally, countries have focused on building human capital — developing skills and education among citizens — and social capital — strengthening networks and relationships that facilitate cooperation and innovation. Existing strategies, however, often overlook the interconnected nature of various talent flows, including the movement of domestic talent, international talent, and diaspora engagement.

Just like financial theory evaluates a given investment (and its risk and return qualities) by how it impacts a portfolio’s overall performance rather than in isolation, TPT treats talent as a portfolio composed of four key elements, known as the “four Bs”: brain train (domestic talent development), brain gain (attracting foreign talent), brain circulation (movement of talent between home and abroad), and brain linkage (engagement with diaspora communities).

“In the study of national talent development, it is imperative to consider both the human and social capital facets of talent, as a country has multiple layers of talent available for use – domestic, diasporic, and foreign – each with different human and social capital potentials,” write Shin and Gordon. They propose TPT as “a better framework for illustrating and comparing different experiences and impacts of talent development at the national level, which is also key in offering policy prescriptions for human resource strategies.”

Insights from Japan and Singapore

Using Japan and Singapore as case studies, the authors demonstrate how countries can apply TPT to manage their talent portfolios. Japan's economic growth relied on two tiers of human capital: top-level scientists and engineers who adapted and integrated foreign technologies for domestic use, and skilled workers who grasped the fundamentals of these adapted technologies and carried out the manufacturing processes. With limited prospects for brain gain, circulation, or linkage, Japan developed these two layers of its workforce by relying on brain train, cultivating domestic talent for its industrial development.

In the early 1990s, however, Japan’s economy ran into trouble. Its system of brain train was well-suited for driving incremental innovation, but it became restrictive in the rapidly evolving landscape of the early 21st century, which demanded more disruptive innovation. “The Japanese model of human resource development necessitated a robust supply of domestic manpower which now became increasingly difficult to sustain, and a shrinking working-age population also meant labor shortage and reduced productivity,” say Shin and Gordon. “In the language of TPT, Japan urgently needed to diversify its talent portfolio beyond its reliance on brain train to address new risks.”

Recognizing the risks of a skewed talent portfolio, Japan began to rebalance its talent portfolio in the 2010s but has struggled with demographic decline and a slow pivot toward international talent. Despite efforts to internationalize higher education and attract foreign talent, Japan’s diversification of its talent portfolio has been stagnant and was hard hit by the COVID-19 pandemic.

In contrast, Singapore’s approach showcases the benefits of a well-balanced talent portfolio. The city-state’s aggressive pursuit of foreign talent (brain gain) and robust engagement with its diaspora (brain linkage) have made it a leader in global talent strategy. Singapore’s government has continually adjusted its policies, actively rebalancing its talent portfolio to maintain a competitive edge.

Singapore started rebalancing its talent portfolio in the 1990s, not only enhancing its efforts toward brain train but also expanding brain gain by internationalizing higher education and actively promoting a “work-migration” path. In tandem with its brain gain initiatives, Singapore also turned to its diaspora, fostering brain circulation and establishing stronger brain linkages. Through concerted efforts by the government and industry, Singapore has successfully produced and attracted creative talent that allowed it to remain globally competitive.

“Talent Portfolio Theory enables a holistic understanding of the various components of Singapore’s talent strategy and its evolution over time, from the country’s focus on brain train during its catch-up phase to its rebalancing with a successful brain gain, in addition to more recent forays into brain circulation and brain linkage,” Shin and Gordon explain.

Toward Fostering Cultural Diversity

TPT offers a powerful framework for crafting more resilient and adaptive talent strategies. As the global competition for skilled workers intensifies, understanding the dynamics of talent portfolios can help countries mitigate risks, capitalize on opportunities, and avoid the pitfalls of overly narrow approaches to human resource development. For instance, countries experiencing demographic decline, like Japan, can look to Singapore’s model of timely rebalancing as a guide for policy adjustment. Businesses also stand to benefit from TPT. The framework encourages companies to look beyond the availability of local talent and consider the broader talent ecosystem, including international talent flows and diaspora engagement.

Shin and Gordon emphasize that structural and sociocultural factors often limit policy options for building and rebalancing talent portfolios. Japan and Singapore illustrate that developed countries with abundant domestic opportunities are better positioned to retain talent and attract brain gain, whereas developing countries often experience talent outflows, favoring brain circulation or linkage (as seen in China and India). Additionally, while ethnically homogenous countries like Japan may prefer to rely on domestic and diasporic talent, multiethnic countries like Singapore can better attract foreign talent and engage in brain gain.

The contrasting experiences of Japan and Singapore underscore the critical importance of fostering cultural diversity to attract foreign talent. Singapore’s success with brain gain, compared to Japan’s more mixed outcomes, largely stems from its multicultural environment, shaped by policies that protect minority rights and actively promote respect for diverse ethnic groups. To remain competitive in the global talent market, countries must prioritize sociocultural policies that cultivate openness, tolerance, and diversity. By embracing these values, nations can attract the best and brightest minds, ensuring their place in a rapidly evolving global economy.

The Stanford Next Asia Policy Lab (SNAPL) has received two grants to offer guidance for more effective U.S. foreign policy strategies in Asia and propose structural reforms that propel the region toward growth, innovation, and democratic resilience. The first grant, from the Freeman Spogli Institute for International Studies (FSI), supports SNAPL's policy engagements with stakeholders in Washington, D.C., forthcoming this September. The second grant, from Stanford Global Studies, funds a series of SNAPL-hosted research workshops throughout the 2024-25 academic year.

Both funded initiatives underscore SNAPL's commitment to generating evidence-based policy recommendations and promoting transnational collaboration with academic and policy institutions to advance the future prosperity of Asia and U.S.-Asia relations.

Housed at the Walter H. Shorenstein Asia-Pacific Research Center (APARC), SNAPL is led by Stanford sociologist Gi-Wook Shin, the William J. Perry Professor of Contemporary Korea, a senior fellow at FSI, and the director of APARC and the Korea Program. The lab’s mission is to address emergent social, cultural, economic, and political challenges facing Asia-Pacific countries and guide effective U.S. Asia policies through interdisciplinary, comparative research and collaboration with academic and policy research institutions in Asia and the United States.  

“We are grateful to FSI and Stanford Global Studies for supporting SNAPL's interdisciplinary, policy-relevant research,” says Shin. “The two grants provide a tremendous boost as we work to contribute evidence-based recommendations to advance a more nuanced understanding of Asia's role in global affairs and informed new directions for U.S. Asia policies.”

Policy Considerations for U.S.-China and U.S.-Asia Relations

With a grant from FSI to support policy engagement, SNAPL team members will share research findings from several of the lab’s flagship projects. The SNAPL team — including Shin, Research Fellow Xinru Ma, and Postdoctoral Fellows Gidong Kim and Junki Nakahara — will travel to Washington, D.C. in September 2024 to present these findings at forums and meetings with academic and policy communities. The trip includes a joint symposium with the Center for Strategic and International Studies (CSIS), a presentation at George Washington University’s Elliott School of International Affairs, and meetings with think tanks and Congress members.

Three core projects the team will share guide U.S. policies in Asia, particularly toward China. The first project challenges many pundits’ framing of the U.S.-China competition as a “new Cold War.” In contrast to this narrative, a recent SNAPL study reveals that contemporary U.S.-China relations are markedly different from the U.S.-Soviet Cold War dynamics. “Our analysis of over 41,000 Congressional speeches spanning 36 years suggests that current U.S. discourses on China mirror those on the past economic competition with Japan rather than the ideological or military conflicts with the USSR in the Cold War era,” says Ma. “Applying Cold War analogies to today's geopolitical landscape would thus misguide efforts to navigate current U.S.-China tensions.”

The research findings from a second SNAPL study offer a better understanding of how U.S. alliance relationships and U.S.-China tensions shape public attitudes toward China in the Asia-Pacific region. Furthermore, another study challenges the conventional wisdom that democracy promotion gives the U.S. a competitive edge in its foreign policy over China. “Our research indicates that liberal values do not serve as a key lens through which Asia-Pacific citizens view recent geopolitical developments,” notes Kim. “The United States should therefore pivot from focusing on liberal rhetoric to emphasizing its role in promoting shared benefits with Asia-Pacific citizens in economic, trade, and military security areas.”

These studies are part of SNAPL’s U.S.-Asia Relations research track.

Racism in Global Context

At George Washington University, the SNAPL team will discuss findings from a project the lab explores as part of another research track, Nationalism and Racism. Recognizing that racism is a global problem with diverse roots and manifestations, this research track examines how nationalism and racism intertwine to create forms of exclusion and marginalization in Asia and provides policy recommendations to advance more inclusive societies in the region and beyond.

At this discussion, to be hosted by the Elliott School of International Affairs’ Sigur Center for Asian Studies, the team will present findings from a study that analyzes how 16 Northeast, Southeast, and South Asian nations discuss and justify their positions on race and racial discrimination. “Our study reveals various forms of racism ‘denial’ rooted in nationalist and religious ideologies, hindering efforts to address ongoing inequalities,” says Nakahara. “Addressing these forms of denial is crucial for promoting critical dialogue on race and racism in Asia and dismantling systems of oppression in the region and elsewhere.”

A Platform for Interdisciplinary Research on Contemporary Asia

SNAPL’s second grant, awarded by Stanford Global Studies, will enable the lab to host throughout the 2024-25 academic year a research workshop series focused on projects from the two research tracks above. Involving scholars and students from Stanford and Asia, the six-part series will foster cross-disciplinary dialogue and share policy-relevant findings grounded in the lab’s research.

The four workshop installments in fall and winter quarters 2024 will be dedicated to the projects discussed above. The spring quarter 2025 workshops will focus on two additional projects: one that examines the discursive construction of U.S. rivals and the respective roles of the media, executive, and legislative branches in this process, and the second that investigates elite articulation of “multiculturalism” in four Asia-Pacific nations.

“These workshops will be invaluable to advancing exchange and partnerships with academics and experts from Stanford and across Asia,” says Shin. “They directly promote SNAPL’s mission to serve as a platform that facilitates trans-Pacific, network-based collaboration."

Visit SNAPL's website for information about the workshops’ schedule and discussion topics.