New Study Shows America is Losing the Best and the Brightest Foreign Entrepreneurs

We should pay serious attention to the message that we are getting from the next generation of entrepreneurs: that America is no longer as appealing as it was.  Multiple measures of economic trend reversals strongly support the argument that America's global competitiveness is declining, and the worst part is that our misguided current immigration policy is contributing to this trend. The Kauffman Foundation released a study on March 17th that points to the negative implications for our country and also distinguishes between the desire to protect American jobs and the destruction of future jobs created by immigrant entrepreneurs.   

The study "indicates that reducing the number of immigrant students in U.S. jobs may be detrimental to the economic health of the country by accelerating the return of talented immigrant students to their home countries.

“Highly skilled foreign national students used to come to the U.S. to study and stay. They start innovative companies that employ millions or  used their engineering and science skills to benefit U.S. companies. Many now believe there are better future prospects in their own countries,” said Robert E. Litan, vice president of Research and Policy at the Kauffman Foundation. “Policymakers are misguided if they believe these talented next-generation entrepreneurs and innovators threaten U.S. jobs. They, in fact, offer the promise of more jobs by building successful, high-growth companies—either in their own businesses or those for which they work.”


The study, conducted by Duke professor and Harvard researcher Vivek Wadhwa and titled “Losing the world’s best and brightest: America’s New Immigrant Entrepreneurs, Part V,” surveyed 1,224 foreign nationals currently studying in institutions of higher learning in the United States or who had graduated by the end of the 2008 academic school year. The survey was comprised of responses from 229 students from China (and Hong Kong), 117 students from Western Europe and 878 students from India.

“What many people do not realize is that these foreign nationals are making a job, not taking a job,” said Wadhwa. “According to research by the National Science Foundation, foreign students received more than 60 percent of all engineering doctorates and more than half of all science and mathematics doctorates awarded in the United States. That’s a lot of talent to lose to other countries.”

According to the findings, many respondents do not wish to live in the United States permanently, with 55 percent of Indian, 40 percent of Chinese and 30 percent of European students reporting that they want to return home within five years. This shows a stark reversal from past retention rates. In the past, greater than 75 percent of Indian and Chinese students who received science and engineering advanced degrees in the United States remained in the country for extended periods or permanently.

Among the study’s findings:

•    A key impetus behind students’ intentions to depart is the fear that they will not be able to find a job in the United States upon graduation and their growing belief that the U.S. economy will lag global growth rates in the near future. 

•    Chinese students, in particular, strongly feel the best job opportunities lie in their home country—52 percent said their home country has the best job opportunities versus 32 percent of Indian respondents and 26 percent of Europeans respondents. This contrasts starkly with the beliefs of most skilled immigrants in the 1980s and 1990s that the best opportunities were in the United States.

•    The vast majority of foreign students—85 percent of Indians and Chinese and 72 percent of European—are concerned about obtaining work visas; 74 percent of Indians, 76 percent of Chinese and 58 percent of Europeans are also worried about obtaining jobs in their fields.

•    A large percentage of respondents have entrepreneurial hopes; 64 percent of Indian, 66 percent of European and 68 percent of Chinese students indicated they want to start a business within the next decade. For Indian and Chinese students, the majority (53 percent and 55 percent respectively) hope to start businesses in their home countries. Only 35 percent of European students wish to open a business in their home country.

•    All nationalities hold the U.S. educational system in high regard. Indians and Chinese, in particular, found that the United States educational offerings are better than their home countries’, including preparing foreign graduates for entry into their home country’s workforce.

•    Respondents from India and China both expect that the next generation of innovative products and services in their home countries will increase during the next quarter century at a much faster pace than in the United States.

The students’ desires to return to their native country echoes a sentiment expressed by highly skilled Chinese and Indian immigrant entrepreneurs who were surveyed in the recent Kauffman Foundation study, “America’s Loss is the World’s Gain.” In this study, 47.8 percent of Chinese and 46 percent of Indians who had returned to their native country said that they were unlikely to return to the U.S. Additionally, 60.7 percent of Chinese and 53.5 percent of Indian respondents said that opportunities to start their own businesses are better in their home country than in the United States, and 50.2 percent and 56.6 percent respectively considered it likely that they would do so within five years. This study is fifth in a series of reports Wadhwa has conducted on immigrant entrepreneurship for the Kauffman Foundation.

Immigrants historically have contributed to some of America’s most successful businesses and innovations. Between 1990 and 2007, the proportion of immigrants in the U.S. labor force increased from 9.3 percent to 15.7 percent, and a large and growing proportion of immigrants bring high levels of education and skill to the United States. Immigrants have contributed disproportionately in the most dynamic part of the U.S. economy—the high-tech sector—co-founding firms such as Google, Intel, eBay and Yahoo. In addition, immigrant inventors contributed to more than a quarter of U.S. global patent applications. Immigrant-founded U.S.-based companies employed 450,000 workers and generated $52 billion in revenue in 2006.

“Better job prospects, a loosening of visa restrictions and an economic rebound in the United States could prove powerful magnets to recapture would-be entrepreneurs holding newly minted sheepskins,” Wadhwa said. “Incentive programs to encourage foreign immigrant entrepreneurship—perhaps pairing fast-track residency status with launching of companies—also could help ensure that those who want to stay and start companies can do so.”

I am a first-generation American, born in Puerto Rico.  Both of my parents were naturalized Americans.  I'd like to think that America will recognize that the rich diversity of our nation's cultural tapestry must be reinvigorated before we lose the next generation of entrepreneurs to greener pastures. 


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