Adapted from the broadcast audio segment; use the audio player to listen to the story in its entirety.
Innovation is one of those magic words. We all want to be a part of it. And, the United States wants to be on the leading edge of it. One way, is to attract the best entrepreneurial talent on the planet to work here.
But, Edward Luce, who writes for the Financial Times says: “It’s been a great surprise, really, given that the U.S. is the home of the most dynamic innovation and of immigration almost as a national creed. The U.S. is really a laggard in this respect.”
Just how big are the economic advantages of immigrant entrepreneurs? According to President Obama, in a recent speech on immigration reform, the advantages are impressive:
“After all, immigrants helped start businesses like Google and Yahoo. They created entire new industries that, in turn, created new jobs and new prosperity for our citizens. In recent years, one in four high-tech startups in America were founded by immigrants. One in four new small business owners were immigrants, including right here in Nevada. Folks who came here seeking opportunity and now want to share that opportunity with other Americans. But, we all know that today we have an immigration system that is out of date and badly broken.”
The President and Congress are currently trying to hammer out a massive immigration reform bill.
Many experts, meanwhile, suggest that immigrant entrepreneurship has plateaued in the U.S., while other countries are doing more to attract the best and the brightest.
Robert Litan, who is the Director of Research at Bloomberg Government, says: “If you look at the trend of new firm formation, it’s been down since recession. We used to have around 600,000 firms formed a year. It’s fallen to around 400,000. That’s due to a lack of capital; it’s obviously due to a lack of risk taking, but we can use all the entrepreneurs we can get."
What should we do about this? Over the next hour, we will examine some options, such as lifting immigration caps on highly skilled workers.
“Until you get your green card, it’s unbelievable how much it drags on. You have to give up so much, to go through all this and knowing how much you have ahead…It just wears you down,” says one immigrant entrepreneur.
Or making a bigger commitment to train our own native-born engineers, scientists and mathematicians.
Governments across the globe have gotten wise to the fact that finding and attracting talented individuals is a key way to harness innovation and tap into economic growth.
Edward Luce says he sees an “across the board shift” by governments to value innovative thinkers: “For the simple reason I think that the way the global economy is moving, the way value is added in today’s world, is really through intellectual property. It’s through intangible assets. It’s through intellectual capital. It’s not through physical capital. It’s not through land. It’s through technology and that’s all about people and skills and so it’s no accident the world’s been moving that way, and it’s been a great surprise, given that the U.S. is the home of the most dynamic innovation and of immigration almost as a national creed. The U.S. is really a laggard in this respect.”
Luce agrees with the many economists and business leaders who say that the U.S. is missing a very large chunk of entrepreneurial thinkers in areas such as advanced manufacturing.
That’s where, he says, foreign talent comes in: “They tend to be a lot more entrepreneurial. They tend to be much stronger in the science, physics and mathematics area which is one of the areas where there are big shortages in the American economy."
This is what’s known as STEM workers, people who are strong in science, technology, engineering and math. Many foreigners are well trained in these areas.
Luce says: “They tend to be more inventive so the chances of a foreign visa holder generating a patent in the U.S. is a multiple of what it is for a native born American and that would be true anywhere in the world as immigrants tend to be more inventive and entrepreneurial so there are all sorts of other spin off effects to raising the proportion of skilled immigrants in the U.S. than just the simple one of addressing existing real time skill shortages. There are many other spin offs to this on which, really, so much of the American story is built, so it shouldn’t take somebody in my accents to make that point.”
A 2011 study by Jennifer Hunt, now the Chief Economist at the Department of Labor, argues that immigrants are more likely to start companies than native-born Americans. And, immigrants who entered on a student/trainee visa or a temporary work visa, have a large advantage over natives in wages, patenting and publishing.
Thomas Kochan, the George Maverick Bunker Professor of Management at MIT's Sloan School of Management, agrees foreign-born entrepreneurs are important because “they are very highly talented, very highly motivated. They often come out with ideas that if allowed to develop can create new enterprises and the evidence is quite clear that they’re successful in high proportions in doing so. We have to really revise our immigration policies to make that more possible, to make that more feasible so we not only keep the people that we have here, but we create more of a motivation for more of that kind of talent to come and seek out education here because they see a way of then applying their ideas and building on them. Even if in the long run they are only here for a period of time and then go back and do some things in their home country, you get then this circular migration of ideas, resources, people and opportunities that helps all parts of the world.”