Kauffman Foundation Report on Immigration: America's Loss is India's (and China's) Gain!

Message from Vivek Wadhwa, Senior Research Associate, Harvard Law School, Exec in Residence, Pratt School of Engineering, Duke University and Columnist BusinessWeek.com

This report titled Americas Loss is the World's Gain, details the plight of skilled immigrants who came to the U.S. from India and China to work or study and returned home. The big surprise is how well they are doing back home. The vast majority say they have done better professionally, are happy to be home with friends and relatives and enjoy a better quality of life back home. They came to America because of the education and professional development it offered and went home to find even better opportunities.

There are no hard numbers available on how many have returned, but anecdotal evidence shows that this is in the tens of thousands. With the economic downturn, my guess is that we'll have over 100,000 Indians and as many Chinese return home over the next 3-5 years. This flood of western educated and skilled talent will greatly boost the economies of India and China and strengthen their competitiveness. India is already becoming a global hub for R&D. This will allow it to branch into many new areas and will accelerate the trend. India's outsourcing industry is likely to experience a second-wind as a result.

The U.S. has always had the luxury of being arrogant about immigration because it has been the strongest magnet for the world's best and brightest. As this paper shows, there are other strong magnets now. So immigrants who used to have to make substantial sacrifice to give their families better lives can achieve their objectives without the sacrifice -- they can return home to parents and friendsÂ…to a land where they are at the top of the social ladder rather than at the bottom.

The hollowing out that this will cause to our S&E workforce and the competition that this will create for the U.S. will hurt us for decades. Other countries like Australia, Singapore and CanadaÂ…and even Europe and Dubai have figured out that bringing in skilled talent provides a major economic boost. We [Americans] haven't. We're sending ours away. We are effectively exporting our economic stimulus. Policies like those which the U.S. just enacted which prevents some banks from hiring foreign workers will have the opposite effect from what they intended -- they will send jobs abroad and scare away top talent.

Download the 20 page paper from -- http://ssrn.com/abstract=1348616 (click on "download" at the top of the page. This is a free download).

If you click "Vivek Wadhwa" on the SSRN website, you can find several other papers on immigration which show the amazing contribution which skilled immigrants have made to the U.S. economy (52% of Silicon Valley startups, 25% nationwide, 25% of global patentsÂ…with Indians being the dominant company founding group). There are also papers there which show how India is racing ahead in R&D and how the U.S. can learn workforce development from India.

Here are some BusinessWeek articles which you may find interesting and below is a press release about the study:

Don't Blame H-1B Workers for Woes:  http://www.businessweek.com/technology/content/feb2009/tc2009029_333899.htm

India: Toward High-End Outsourcin: http://www.businessweek.com/technology/content/dec2008/tc20081215_086821.htm

What the U.S. Can Learn from Indian R&D: http://www.businessweek.com/technology/content/jul2008/tc20080722_958899.htm

Kauffman Foundation Study Presents Insights into Why U.S. is Losing Growing Number of Immigrants Who Spur Innovation and Economic Growth

Economic and professional opportunities top list of reasons

(KANSAS CITY, Mo.) March 2, 2009: The Ewing Marion Kauffman Foundation released a study today that indicates placing limits on foreign workers in the U.S. is not the answer to the country's rising unemployment rate and may undermine efforts to spur technological innovation.

For the study by Duke professor and Harvard researcher Vivek Wadhwa titled America's loss is the world's gain: America's New Immigrant Entrepreneurs, Part IV, researchers surveyed highly skilled immigrants who had studied and/or worked in the United States and subsequently returned to their home countries.

"A substantial number of highly skilled immigrants have started returning to their home countries in recent years, draining a key source of brain power and innovation," said Robert E. Litan, vice president of Research and Policy at the Kauffman Foundation. "We wanted to know what is encouraging this much-needed economic growth engine to leave our country, thereby sending entrepreneurship and economic stimulus to places like Bangalore and Beijing."

This report builds on an earlier Kauffman Foundation report by Wadhwa documenting a queue of 1 million H-1B holders and their families anxiously awaiting longer-term work visas and growing frustrated with the immigration process. Until recently, America has been the prime destination for the world's best and brightest immigrants.

"Immigrants have made tremendous personal sacrifices," said Wadhwa. "They would leave behind relatives and friends and accept second-tier status in American society. Now countries like India and China are providing equal career opportunities and a better quality of life. So the most highly educated and skilled are often returning home."

In the two-year study of 1,203 Indian and Chinese subjects who had studied or worked in the United States for a year or more before returning home, Wadhwa and his team uncovered several trends:

· Most returnees originally came to the Unites States for career and educational opportunities. The majority of returnees cited career and quality of life as primary reasons to return to their home countries.

· The most common professional factor (86.8 percent of Chinese and 79.0 percent of Indians) motivating workers to return home was the growing demand for their skills in their home countries. Returnees also believed that their home countries provided better career opportunities than they could find in America.

· Most respondents (53.5 percent of Indian and 60.7 percent of Chinese) said opportunities to start their own businesses were better in their home countries.

· Most respondents (56.6 percent of Indians and 50.2 percent of Chinese) indicated that they would be likely to start a business in the next five years.

· Being close to family and friends was a significant consideration in the decision to return home, with many returnees considering their opportunities to care for aging parents to be much better in their home countries (89.4 percent of Indians and 78.8 percent of Chinese).

· Most of the Indian and Chinese immigrant subjects who returned to their home countries were relatively young (in their low-thirties) and were very well educated. Nearly 90 percent held master's and PhD degrees, primarily in management, technology or science.

Immigrants historically have provided one of America's greatest competitive advantages. 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. Said Wadhwa, "Losing these skilled immigrants is an economic catastrophe that will hurt U.S. competitiveness for decades to come."

About the Kauffman Foundation

The Ewing Marion Kauffman Foundation is a private nonpartisan foundation that works to harness the power of entrepreneurship and innovation to grow economies and improve human welfare. Through its research and other initiatives, the Kauffman Foundation aims to open young people's eyes to the possibility of entrepreneurship, promote entrepreneurship education, raise awareness of entrepreneurship-friendly policies, and find alternative pathways for the commercialization of new knowledge and technologies. It also works to prepare students to be innovators, entrepreneurs and skilled workers in the 21st century economy through initiatives designed to improve learning in math, engineering, science and technology. Founded by late entrepreneur and philanthropist Ewing Marion Kauffman, the Foundation is based in Kansas City, Mo. and has approximately $2 billion in assets.