Open Doors Wider for Skilled Immigrants

Our columnist, lead author of a nationwide study on immigrant entrepreneurs, argues the U.S. must get better at attracting skilled professionals

by Vivek Wadhwa

Skilled immigrants provide one of the U.S.'s greatest strengths. They contribute to the economy, create jobs, and lead innovation. A new study I helped lead at Duke University's Pratt School of Engineering, where I am an executive-in-residence, shows they are fueling the creation of hi-tech business across our nation and creating a wealth of intellectual property. To keep our global competitive edge, we need to attract more of the world's best and brightest. And we need them to come here and put down deep roots.

In previous columns I have written about our earlier research on globalization and the engineering profession. My students' work shattered myths about the graduation rates of engineers in India and China (see BusinessWeek.com, 12/13/05, "About That Engineering Gap…"), and the shortage of engineers in the U.S. (see BusinessWeek.com, 11/7/06, "The Real Problem with Outsourcing").

Our recent research, however, raised concerns about the growing momentum of outsourcing critical research and the impact of that on U.S. competitiveness. So we shifted gears to understand the sources of the U.S. global advantage and learn what the U.S. can do to keep its edge. We decided to study the contribution of students who came to the U.S. to major in engineering and technology and ended up staying, as well as immigrants who gained entry based on their skills.

Continuing Trends

In 1999, Dean AnnaLee Saxenian of the University of California, Berkeley published a study showing that foreign-born scientists and engineers were generating new jobs and wealth for the California economy. But she focused just on Silicon Valley, and this was before the dot-com bust. So we set out to update her research and look at the entire nation. We also wanted to quantify the intellectual contribution of this group.

After thousands of phone calls, our team was able to get responses from 2,054 engineering and technology companies founded over the last 10 years. We asked whether their chief executives or lead technologists were first-generation immigrants and where they were born. We were surprised by what we learned—the trend that Saxenian documented in Silicon Valley had become a nationwide phenomenon. Here are some highlights of our new research from the report, America's New Immigrant Entrepreneurs. (The report will be available on January 4).

•In 25.3% of technology and engineering companies started in the U.S. from 1995 to 2005, at least one key founder was foreign-born. States with an above-average rate of immigrant-founded companies include California (39%), New Jersey (38%), Georgia (30%), and Massachusetts (29%). Below-average states include Washington (11%), Ohio (14%), North Carolina (14%), and Texas (18%).

•Nationwide, these immigrant-founded companies produced $52 billion in sales and employed 450,000 workers in 2005.

•Indians have founded more engineering and technology companies in the U.S. in the past decade than immigrants from Britain, China, Taiwan, and Japan combined. Of all immigrant-founded companies, 26% have Indian founders.

•The mix of immigrant founders varies by state. Hispanics constitute the dominant group in Florida, with immigrants from Cuba, Colombia, Brazil, Venezuela, and Guatemala founding 35% of the immigrant-founded companies. Israelis constitute the largest founding group in Massachusetts, with 17%. Indians dominate New Jersey, with 47% of all immigrant-founded startups.

•Chinese (Mainland- and Taiwan-born) entrepreneurs are heavily concentrated in California, with 49% of Chinese and 81% of Taiwanese companies located there. Indian and British entrepreneurs tend to be dispersed around the country, with Indians having sizable concentrations in California and New Jersey, and the British in California and Georgia.