Study: Immigrant Entrepreneurs Leaving U.S. for Better Opportunities at Home

Once upon a time, if you were a gifted student from China or India, you struggled mightily to secure a place at an American university, in the hope of landing a good job on the cutting edge of computer science, engineering, medicine, and higher math. If you wanted a bright future, you needed to be where the state-of-the-art research was happening, where the latest developments in the lab were being brought to market. In those days, going home was not an option; once you had cutting-edge skills, you needed to stay here, where the best opportunities were.

America benefitted from this brain drain for decades, and still takes it for granted, even though we can no longer afford to. (See Reversing the Reverse Brain Drain, MurthyBlog, 10.Mar.2011.) Indeed, in a new Kauffman Foundation study, Vivek Wadhwa and a team of researchers from several leading universities – Duke, Harvard, and UC Berkeley – found that it no longer is unthinkable for talented Indian and Chinese entrepreneurs to leave the U.S. and return home to start their businesses, using knowledge and experience gained at American universities and companies. (See The Grass is Indeed Greener in India and China for Returnee Entrepreneurs, by Vivek Wadhwa, Sonali Jain, AnnaLee Saxenian, Gary Gereffi, and Huiyao Wang, Apr. 2011, Ewing Marion Kauffman Foundation.)

The study’s lead author, noted immigration authority Vivek Wadhwa, described the genesis of this project in an article in Bloomberg Businessweek; after publishing a study on the reverse brain drain, many policymakers and academics told Wadhwa essentially, “Don’t worry, they’ll be back!,” predicting that frustrations with red tape and official corruption – not to mention an authoritarian government in China and weak infrastructure in India – would have them back here in no time. (See Why Immigrant Entrepreneurs Are Leaving the U.S., by Vivek Wadhwa, Bloomberg Businessweek, 27.Apr.2011.) Wadhwa cautions against those assumptions in the strongest possible terms, having taken time to carefully unpack the reasons why Indian- and Chinese-born entrepreneurs leave the U.S. to start businesses at home. So, why did they return home? Wadhwa explains:

“Because of burgeoning economies, access to local markets, and family ties. More than 60 percent of Indian and 90 percent of Chinese returnees said the economic opportunities in their countries were a major factor in their return. Seventy-eight percent of Chinese were lured by local markets, as were 53 percent of Indians. And 76 percent of Indians and 51 percent of Chinese said family ties were strong factors. Respondents took pride in contributing to their home country’s economic development. More than 60 percent of Indians and 51 percent of Chinese rated it as very important.”

According to Wadhwa, we no longer can rest in smug complacency, convinced that the United States is the best of all possible worlds. Things are getting better in India and China, and the business climate is becoming increasingly attractive there. Wadhwa says many respondents cited business benefits such as lower operating costs and employee wages, as well as access to enormous local markets. Many also cited personal factors such as faster career advancement and a quality of life similar to what they would have enjoyed in the United States.

What to do? Wadhwa urges the U.S. government to recruit more entrepreneurs, arguing that we cannot stop this reverse brain drain, but we can “level the playing field by fixing our immigration system,” and by “increasing the number of permanent resident visas available for the one million engineers, scientists, doctors, and researchers and their family who are in the U.S. legally but trapped in immigration limbo.” He also calls for an expanded startup visa program to be passed through Congress on the fast track – not held up by partisan infighting over comprehensive immigration reform. Urgent as these measures are, we need not panic, Wadhwa says; some of our best and brightest minds will go back to their home countries, but their presence in India and China will further interconnect our economies, in ways that should benefit us all.

That is not to say we should rest easily. In the run-up to their May 2nd parliamentary elections, Canadian politicians sought to woo their Indo-Canadian constituencies with promises of more liberal policies toward Indians seeking to work or study in Canada. (See Canada promises faster immigration, more student visas for India, Economic Times, 28.Apr.2011.) As one MP from the Toronto suburbs noted, Australia was “‘eating Canada’s lunch’ in attracting Indian students,” and called on federal authorities to “usher in friendlier policies on visa and work.” If Canada follows through with more immigrant-friendly policies for Indian workers and students, we may find our neighbors to the north eating OUR lunch, when it comes to recruiting the best and brightest to our shores. Let’s hope Congress and the immigration-industrial complex are paying attention.

Disclaimer: The information provided here is of a general nature and may not apply to any specific or particular circumstance. It is not to be construed as legal advice nor presumed indefinitely up to date.