Why America Needs Immigrants

I came across a very interesting article on reverse migration of young entrepreneurs, inventors and scientists who complete their education in the U.S. and return back to their native countries.  The study mentioned in the article supports the observations made by our Group over the last several years.   The trend is disturbing and not easily reversible.  Although U.S. continues to be the country of choice for many immigrants who wish to receive world-class education, it has developed a bit of a staid image when it comes to economic opportunities.  Thus, when newly minted immigrant scientists or entrepreneurs survey the landscape post graduation, many of their home markets offer much more robust economic growth prospects, a lot more excitement and greater ability to make a more tangible impact.  U.S. educated entrepreneurs also have a strong competitive advantage back home, as they integrate their newly acquired knowledge with mastery of their home language, culture and ability to navigate through local bureaucracies. I cover this issue in greater detail in my new book “Fluent In Foreign Business”.

Immigrants represent a massive component of America’s scientific and business innovation. Yet, until such time as out investment climate improves and U.S. will again will be perceived as the thriving economic entity, the reverse immigration trend will likely continue and our competitor countries will benefit. Thus it is important to recognize the potential of immigrant entrepreneurs and focus on reforming our immigration policies and developing post educational business incubation programs and financing incentives to try and retain them in the U.S.   Please enjoy the article below and as always, I welcome your comments and suggestions.
Why America Needs Immigrants

The Wall Street Journal MAY 14, 2011
  • By JONAH LEHRER

If there’s one fact that Americans take for granted, it’s that other people want to live here. As President Barack Obama noted in his speech on immigration earlier this week, the U.S. has always attracted strivers from every corner of the globe, often willing to risk great hardships to get here.

Getty ImagesU.S.-trained entrepreneurs see bigger opportunities in their home countries.

Lehrer

During the 20th century especially, America became a magnet for the bright and ambitious. Millions of talented foreigners, from Alfred Hitchcock to Sergey Brin, flocked to our universities and benefited from our financial capital and open culture.

There are signs, however, that the allure of America is fading. A new study by researchers at U.C. Berkeley, Duke and Harvard has found that, for the first time, a majority of American-trained entrepreneurs who have returned to India and China believe they are doing better at “home” than they would be doing in the U.S. The numbers weren’t even close: 72% of Indians and 81% of Chinese said “economic opportunities” were superior in their native countries.

Some of the local advantages cited by these global entrepreneurs were predictable: cheap labor and low operating costs. What’s more worrisome is that these business people also cited the optimistic mood of their homelands. To them, America felt tapped out, but their own countries seem full of potential. This might also help to explain why the number of illegal immigrants entering the U.S. has plunged more than 60% since 2005.

These trends are troubling because they threaten to undermine a chief competitive advantage of the U.S. Though politicians constantly pay lip service to the importance of American innovation, they often fail to note that it is driven in large part by first-generation immigrants.

Consider some recent data. The U.S. Patent Office says immigrants invent patents at roughly double the rate of non-immigrants, which is why a 1% increase in immigrants with college degrees leads to a 15% rise in patent production. (In recent years, immigrant inventors have contributed to more than a quarter of all U.S. global patent applications.) These immigrants also start companies at an accelerated pace, co-founding 52% of Silicon Valley firms since 1995. It’s no accident that immigrants founded or co-founded many of the most successful high-tech companies in America, such as Google, Intel and eBay.

Why is immigration so essential for innovation? Immigrants bring a much-needed set of skills and interests. Last year, foreign students studying on temporary visas received more than 60% of all U.S. engineering doctorates. (American students, by contrast, dominate doctorate programs in the humanities and social sciences.)

These engineering students drive economic growth. According to the Department of Labor, only 5% of U.S. workers are employed in fields related to science and engineering, but they’re responsible for more than 50% of sustained economic expansion (growth that isn’t due to temporary or cyclical factors). These people invent products that change our lives, and in the process, they create jobs.

But the advantages of immigration aren’t limited to those with particular academic backgrounds. In recent years, psychologists have discovered that exposing people to different cultures, either through travel abroad or diversity in their hometown, can also make them more creative. When we encounter other cultures we become more willing to consider multiple interpretations of the same thing. Take leaving food on one’s plate: In China, it’s often a compliment, signaling that the host has provided enough to eat. But in America it can suggest that the food wasn’t good.

People familiar with such cultural contrasts are more likely to consider alternate possibilities when problem-solving, instead of settling for their first answer. As a result, they score significantly higher on tests of creativity. Perhaps it’s not a coincidence that many of the most innovative places in the world, such as Silicon Valley and New York City, are also the most diverse.

We need a new immigration debate. In recent years, politicians have focused on border control and keeping out illegal immigrants. That’s important work, of course. But what’s even more important is ensuring that future inventors want to call America home.

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About Alexander Gordin
An international merchant banking professional with over twenty years of business operating and advisory experience in the areas of export finance, international project finance, risk mitigation and cross-border business development. Clients include foreign governments, municipalities and state enterprises as well as Fortune 500 and small/medium enterprises. Strong entrepreneurial instincts, combined with leadership and strategic skills. Transactional and negotiations experience in over thirty five countries. Author of the highly acclaimed "Fluent in Foreign Business" book and creator of the "Fluent in OPIC", "Fluent in EXIM","Fluent In Foreign Franchising", "Fluent in FCPA",and "Fluent in USTDA" seminar/webinar series. Currently developing "Fluent In ......" seminars and publications. Co-author of the Fi3 Country Business Appeal Indices. Extensive international business development and project finance transaction experience in healthcare, aerospace, ICT, conventional and alternative energy infrastructure, distribution and hospitality industries. Experience managing international public and private corporations. Co-Founded three companies abroad. Strong Emerging and Frontier Market expertise. Published and featured in numerous publications including: The Wall Street Journal, Knowledge@Wharton, NBC.com, The Chicago Tribune, Industry Week, Industry Today, Business Finance, Wharton Magazine Blog, NY Enterprise Report, Success magazine, Kyiv Post and on a number of radio and television programs including: Voice of America, CNBC, CNNfn, and Bloomberg. Frequent speaker on strategy, cross-border finance and international business development. Executive MBA from the Wharton School at the University of Pennsylvania. B.S. in Management of Information Systems from the Polytechnic Institute of NYU. Specialties Strategic Management Advisory, Export Finance, International Project Finance & Risk Management, Cross-border Negotiations, Structured Finance transactions, Senior Government and Corporate officials liason

2 Responses to Why America Needs Immigrants

  1. Daniel Bruno says:

    Excellent points. Part of the problem for business in the USA is increasing regulation and costs ( like insurance and complex taxes, a government issue ) and the difficulty in getting people in the US to work hard. (This is a cultural issue) I speak from many years of experience as a business owner. And if you think the reason for poor worker motivation in the US is low wages, you are wrong; it matters not how much you pay, and immigrants are much more motivated to succeed.

  2. Caio Braga says:

    Alexander, great subject for further discussion and looking forward to read it in your book. Being myself an immigrant from Brazil, i can say that the opportunities for self-development and learning are unbeatable in the U.S. From a financial and advacement perspective though, it’s clear that most of immigrants from emerging economies realize the huge possibilities and edge over the same peers back in their homeland once they find their ways to apply their knowledge and expertise gained during their passage in this country.

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