Why Immigrant Entrepreneurs Are Leaving the U.S.

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What are the advantages of doing business in India and China? More than 70 percent of Indians ranked operating costs and employee wages as very important advantages; over 60 percent of Chinese reported similarly. Seventy-six percent of Chinese ranked access to local markets as very important; 64 percent of Indians ranked it the same.

Optimism about the fast-growing economies also made a big difference. Indians and Chinese (55 percent and 53 percent, respectively) saw the mood in their countries as a very important advantage. And as you would expect, given the support the Chinese government provides businesses, far more Chinese (31 percent) consider government support very important than do Indians (7 percent).

There is a silver lining to this cloud.

Yes, returning entrepreneurs in India and China are exploiting their privileged position in the world economy, building businesses that take advantage of their access to the lower costs and expanding markets and business networks in their home countries. And yes, we would benefit if all this startup activity was in the U.S. But there is also a two-way circulation of ideas and opportunities happening. According to our study, a majority of the returnees exchange business information with their counterparts in the U.S. at least monthly; about one-third do it weekly or more frequently. The accumulation of linkages between entrepreneurs in Bangalore and Beijing and entrepreneurs in the U.S. offers opportunities for mutually beneficial growth.

Our policymakers urgently need to recognize that we are in a new era of competing and collaborating at the same time. While we can't stop the brain drain, we can level the playing field by fixing our immigration system. Let's start by increasing the number of permanent resident visas available for the 1 million engineers, scientists, doctors, and researchers and their families who are in the U.S. legally but trapped in immigration limbo. To speed its passage, let's decouple the Startup Visa legislation from the comprehensive immigration reform package. Then we can focus on recruiting entrepreneurs from all over the world to play on our turf, as President Obama urges.

Vivek Wadhwa is a visiting scholar at University of California-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 (@wadhwa) and find his research at wadhwa.com.