Vivek Wadhwa
Executive in Residence, Pratt School of Engineering, Duke University;
Wertheim Fellow, Labor and Worklife Program, Harvard University; Fellow, Social
Sciences Research Institute, Duke University
Although immigration in the United States has been the subject of hot policy
debates in recent years, one group of immigrants has been virtually absent from
those discussions—skilled immigrants who become entrepreneurs. I have led a
series of research studies that show that this group has brought enormous
economic benefits and innovations to the United States—further reinforcing the
fact that the United States provides a fertile environment for spawning
entrepreneurship.
The genesis of our research was a 1999 report by AnnaLee Saxenian of the
University of California at Berkeley that showed that Chinese and Indian
engineers ran a growing share of Silicon Valley companies. They were at the helm
of 24 percent of the technology businesses started from 1980 to 1998. Saxenian
concluded that foreign-born scientists and engineers were generating new jobs
and wealth for the California economy. Even those who returned to their home
countries to take advantage of opportunities there were building links to the
United States and spurring California's technological innovation and economic
expansion.
With support from the Kauffman Foundation, we decided to expand on Saxenian's
study and focus on engineering and technology firms started in the United States
from 1995–2005. Over a two-year period, we completed several research projects
that surveyed thousands of companies and interviewed hundreds of company
founders.
Boosting Jobs and Output
We found that the trend Saxenian documented had become a nationwide
phenomenon. According to the studies, in a quarter of the U.S. science and
technology companies founded from 1995 to 2005, the chief executive or lead
technologist was foreign-born. In 2005, these companies generated $52 billion in
revenue and employed 450,000 workers. In some industries, the numbers were much
higher; in Silicon Valley, the percentage of immigrant-founded startups had
increased to 52 percent. Indian immigrants founded 26 percent of these
startups—more than the next four groups from Britain, China, Taiwan, and Japan
combined.
These immigrant founders tended to be highly educated—96 percent held
bachelor's degrees and 74 percent held graduate or postgraduate degrees, with 75
percent of these degrees in science, technology, engineering, and
mathematics-related fields. The vast majority of these company founders didn't
come to the United States as entrepreneurs—52 percent came to study, 40 percent
came to work, and 5.5 percent came for family reasons. Only 1.6 percent came to
start companies in America.
Even though these founders immigrated for other purposes initially, they
typically started their companies just 13.25 years after arriving in the United
States. And, rather than settling in well-established immigrant gateways, such
as New York or Los Angeles, they moved to a diverse group of tech centers across
the country and helped fuel their growth.
Visa Backlog Creates Brain Drain
We uncovered some puzzling data in the World Intellectual Property
Organization database, which is the starting point for obtaining global
intellectual property protection. In 2006, foreign nationals residing in the
United States were named as inventors or co-inventors in an astounding 25.6
percent of patent applications filed from the United States, a substantial
increase from 7.6 percent in 1998. Foreign nationals also contributed to a
majority of some U.S. companies' patent applications, including Qualcomm—72
percent, Merck—65 percent, GE—64 percent, and Cisco—60 percent. More than 40
percent of the U.S. government-filed international patent applications had
foreign authors. These numbers did not include immigrants who had become
citizens at the time of filing.
The question was: Why were these numbers increasing so dramatically—337
percent over eight years? Did the United States have an influx of potential
immigrants and, if so, why weren't they becoming U.S. citizens and filing
patents as Americans?
We found that, as of September 30, 2006, 500,040 individuals in the main
employment-based visa categories and an additional 555,044 family members were
in line for permanent-resident status in the United States. Another 126,421—who
already had job offers—were waiting abroad, a total of 1,181,505 educated and
skilled professionals waiting to gain legal permanent-resident status.
Thus, far more skilled workers are waiting for U.S. visas than can be
admitted under current law. Only around 120,000 visas are available for skilled
immigrants in the key employment categories. These numbers are particularly
troubling when you consider that no more than 7 percent of the visas may be
allocated to immigrants from any one country. So, immigrants from countries with
large populations like India and China have the same number of visas available
(8,400) as those from Iceland and Mongolia. We estimate that more than one-third
of the million workers in line for permanent resident visas are from India.
This means that immigrants from the most populous countries who file for
permanent resident visas today could be waiting indefinitely. In the meantime,
they can't start companies or lay deep roots in American society.
While those immigrants wait, both India and China are racing ahead as centers
of research and innovation. Further research may confirm what seems likely—that
returnees from the United States are increasingly fueling this growth. Our
interviews reveal these returnees typically went home because they saw
tremendous opportunity in their home countries. And the best foreign students in
the United States, who typically have stayed after graduation and contributed to
U.S. economic growth, are growing increasingly frustrated with visa delays and
are choosing to return home.
We are on the verge of a reverse "brain-drain." If the United States doesn't
fix its policies and keep these highly skilled immigrants, India and China will
welcome them home. So will countries like Singapore, Canada, Dubai, and
Australia, which are opening their arms to skilled immigrants. They will start
their ventures in Bangalore or Shanghai instead of Silicon Valley and Research
Triangle Park. Our loss will be their gain.
