SOURCE: Kauffman Foundation

Kauffman Foundation

March 02, 2009 09:22 ET

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--(Marketwire - 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
--  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
--  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.

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