In a speech at the American University last Thursday, President Obama highlighted the incredible economic rewards that America has gained from its immigrants. He spoke of new waves of immigrants"”from places like Ireland, Italy, Poland, and China"”challenging the generations before them, and consequently being subjected to "rank discrimination and ugly stereotypes". Yet the immigrants kept coming to America. That's because it was the only land of opportunity. The President wants lawmakers to fix the immigration system so that America can remain globally competitive. But I don't think it's that simple. America is no longer the only magnet for the world's best and brightest. Fixing immigration policy is an important start, but it won't be enough to stop the brain drain of highly educated and skilled workers that the U.S. is presently experiencing.
Just last week, there were two notable visitors to Silicon Valley"”Russian President, Dimitry Medvedev, and Chile's minister of Economy, Juan Andres Fontaine. President Medvedev wanted the brilliant Russian-born and -educated programmers who write some of the Valley's most sophisticated software to know that they are welcome back home and that he is setting up a science park for them. Minister Fontaine wants to turn Chile into a tech hub and is following my advice on how to make this happen: by attracting immigrants; building a diverse culture that encourages risk-taking and openness; and creating networks of mentors. Over drinks (some excellent Chilean wine), the minister told me of a new program that Chile is piloting to lure bootstrappers. Chile will grant $40,000 and provide some really cheap office space and accommodation to budding entrepreneurs from anywhere in the world. All they have to do is to build their products in one of the most beautiful locations on the planet. Chile is betting that once these entrepreneurs get there, they will never want to leave.
China is also doing all it can to get its scientists and engineers to come back home. It is spending billions of dollars to establish research institutes and build technical capacity. Returnees to China are now powering its most significant scientific breakthroughs. For example, according to the Washington Post, at the National Institute for Biological Sciences, which is responsible for half of the peer-reviewed publications in China, all of the key scientists are returnees from the United States.
I witnessed on my recent trip to India how much things had changed there, as well.
At Startup Saturday, which has become a regular hangout for tech entrepreneurs in Delhi, I gave a talk to a group of about 100 company founders. I was surprised at how similar they were to the techies I know in Silicon Valley: they are building the same types of products; have the same interests; ask the same questions; and, like their Valley brethren, complain that venture capitalists won't give them the time of day. I learned that more than one-third of these entrepreneurs were returnees from the U.S. They went back for the same reasons that my research had highlighted: they missed their family and friends and saw greater opportunities in India than in the U.S. Now they are invigorating the entrepreneurial ecosystem back home.
The returning techies aren't only building tech companies. After completing his MBA at the University of Michigan at Ann Arbor, Ritesh Bawri built a very promising product that could capture a customer's real-time purchase intent. He had VCs lined up to provide funding but decided not to pursue this because he saw an even greater opportunity back home, in India. Among his father's business interests was a cement business that produced $10 million a year in revenue. Ritesh knew that, with India's need for infrastructure, there was almost unlimited potential for growth. But this would require rethinking production and distribution methods, importing new technologies from the west, and building the logistics infrastructure to consolidate the materials supply chain. Ritesh returned home in 2003 and raised about $110 million in financing from financial institutions and private equity funds to purchase assets and build plants, and revamped the cement business's operations and strategy. His bet paid off. His company, Calcom Cement, has become a hugely profitable $250 million business and expects to hit $2 billion in revenue in 2016.
Some of India's best and brightest won't even consider moving to the U.S. Ashish Sinha started his career in 1999 at one of the first successful tech companies in India, called Aztec software. Later, he worked for Ketera, IBM, and Yahoo, in India. He was offered several opportunities in the U.S., but believed his career would progress better in India. In 2007, Ashish started India's TechCrunch"”a site called PluGGd.in, which now draws 1.1 million visitors a month. Ashish takes a lot of pride in his decision not come to the U.S. as an H-1B worker. He says "I have seen a whole lot of my friends go to the U.S. for IT services/outsourcing jobs, and repent later as it hardly brings satisfaction to one's soul".
Arvind Nigam and Praveen Kumar Sinha are in the process of moving their ideas-crowdsourcing software company, called BubbleIdeas, to Singapore because the Indian government places restrictions on Paypal types of transactions, and they want to be closer to western markets. When I told Arvind about Chile, he thought it would be an even better place to move to, because of its physical and cultural proximity to the U.S. and Europe. I asked Arvind whether he had considered the U.S. His response: "too expensive"¦ and who needs to put up with the visa nightmares?".
The U.S. immigration debate will no doubt going be contentious and get bogged down in the issue of providing amnesty to people who entered the country illegally. The reality is that, no matter how long the debate takes or how it concludes, the poor and unskilled will still be here. But the educated and skilled professionals"”who could be creating new jobs and making the U.S. more competitive"”won't be here. They will, instead, be boosting the economies of other countries. The U.S. will need not only to change its immigration policies to welcome skilled immigrants, but also to keep those who are already in the U.S. And it will have to do what countries like China, Singapore, and Chile are doing: send its scouts out to find and recruit the best talent in other countries.
Editor's note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. You can follow him on Twitter at @vwadhwa and find his research at www.wadhwa.com.
Ever since the other countries started competing with US it went back on to the policy of "open market", the one it preached like a religion.
Open markets means a world increasingly out of government's hands as the artificial borders they created to keep people in (or out) dissolve away. Immigration isn't the problem, globalization is (in the point of view of a government entity) where citizens, no matter where they are born, can decide to work and play where they choose. I think this is fantastic, but if I was a government… I'd be increasingly concerned.
For the first time in our collective history, people can experience true freedom from the confines we were all subjected to by our increasingly inept politicians or "rulers". There is now global competition for the best and the brightest… the only cost of entry nowadays is a plane ticket and a few hours.
Jon @ WoodMarvels.com
Would be helpful to us all if you DETAILED your meteoric fame and accomplishments pronounced by YOU, not the industry!
^^ dumbfuck here
well said. Completely agree.
Its not so much about immigration…its the type of immigrants on which the bill should focus. Non-educated low skill immigrants tend to a) make up the greater amount of illegal immigrants and b) produce large families therefore taking from the system more than they provide. The immigrants you talk about are highly educated and should get a fast track to american citizenship. America is a beautiful place with a great infrastructure but that is being squandered on the type of immigrants that frankly are not value added.
Additionally, the caveat you don't mention is regulation. America is simply overregulated which augments costs to businesses. Limit regulation and then you have a trump card to innovation because of the sound infrastructure and educated base. South America and similar areas and Russia can do all they want but there is still corruption in government that can change the economic climate overnight (see venezuela, argentina and cuba) which businesses will always have as a weighting factor. The US simply doesn't have that fear.
I am in agreement with you that we must keep skilled individual's in the US
What About Singapore ? Much more regulated than US? You can't beat that .
Name one product they innovated. Lets not confuse IT slave labor with innovation
The JooJoo ? :P
You should research, friend…
OSIM massager. Next question.
Furthermore they do not have product quality regulation. From pharma to IT development they can produce an inferior product and not have their manufacturing closed down on a whim. So lets not confuse personal freedom regulation with business regulation
Do you have any research to back up your claims that most illegal immigrants are low-skilled and have large families? Or are you just being stereotypical?
What makes you think deregulating anything helps to create a sound infrastructure and an educated? Didn’t happen during the Bush administration. In fact, deregulation is probably the biggest cause of our failing infrastructure and “brain drain.”
Excellent post, America needs two pronged strategy: Educating its own citizens and raising their level, and letting the floodgates to talent & entrepreneurship open. Only that can save attrition, loss of talent, opportunities etc.
Competition from East & South are early signs of taking pro-active actions. Or losing the shine.
- Arvind
actually the US has a highly educated base. I work with both and the weighting factor is that overseas cost is cheaper. In my experience with CS, US generated code is usually better and more scalable to future operations changes. This doesn't mean one country is better, perhaps its just that the best overseas labor works on local projects not US hired ones…who really knows on that one. Not to be harsh but the argument about local educated base is hogwash. Its simply about money. If you fastrack citizenship it eliminates that gap as companies don't own your visas and wage demands are in the hands of the employees. That my friend would be a competitive superforce for innovation. CEOs aren't worth what they make and employees aren't payed what they are worth in today's times.
I completely agree with your PoV that US has a highly educated base. And that base attracts the young ones who want to be inspired & close to the company of such a talent. What I meant here is that what %of that educated base is "sourced" from outside? And is that % going down in future.
As you said it @bbb, regulation raising the costs, CEO's not being worth it etc. are an outfall of lack in availability of such talent who can compete to bring the cost down. Right there seems a virtual unsaid cartel among CEO ranks. Hope I make it sound sense, coz I am really not a native English speaker.
- Arvind
I mean "Right now* there seems a virtual unsaid cartel among CEO ranks."
lol – Correction atop. Arvind
You hit the nail on the head. Totally agree.
Why should anyone in tech want to move to the US any more? All the US companies are off-shoring their jobs to India and Malaysia, etc., leaving Americans jobless. It does not make sense to invite more people from overseas here – there are no jobs here, they are all over there. Yes, seriously.
Not really dude. With recession at your place almost every country & company suffers with loss of jobs. While Americans are being left jobless, but Asians suffer the brunt even more. Your economy is the driving force for rest of the world. You need to let talent come as it used to for last 200 years.
Of course there is a flip side. Undertaking a Risk. No other country has shown similar guts.
Thanks for covering sites like Pluggd.in and to me, that's more than TC. I mean – its a great combination of TC/VentureHacks and the guys bring great insights from product space.
and guys like these are drawing serious attention to indian startups, owing to their understanding of the mkt (they arent journos!). Aside, center of gravty of innovation is moving towards south east asian market..and am glad that ppl are making ballsy choices – to stay back in India and reap the opportunity there.
Great going Prof Vivek – you bring interesting discussions during the weekend..to ponder thru' out the week :D
-Rajesh
Interesting post . Enjoyed reading it
A "brain drain" has historically referred to highly educated individuals who leave their home country to be educated, live & work in a foreign country rather than returning home to work in their native country.
Having people NOT immigrate to the U.S. & stay in their native countries or choose to return to their home country after living abroad in the U.S. isn't a brain drain. It would be a brain drain if there was a sudden flood of Americans going to universities outside the U.S. and staying there to work.
Valuing living in another country above life in the U.S. has always been the preference of a minority of adventurous Americans and most U.S. citizens who live abroad do so for a temporary period time. They see it as a way to take advantage of a job opportunity or a way to advance their careers but few people relocate abroad for the rest of their lives as was common with the brain drain of developing countries to the U.S. & Europe in the 1960s-2000s.
This isn't to say that the U.S. won't miss the contributions of brilliant scientists, engineers & businesspeople who now choose to stay at home or to return home after living in the U.S. But if it benefits the development of other countries, I'd say it was a positive move.
I think that the increasing rate of high school / college dropout equates to brain drain as well. for every 1 American student that drops out, there are at least 5 students from other countries doing everything it takes to continue.
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