IS A US BRAIN DRAIN ON THE HORIZON?

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During his recent trip to the United States, Indian Prime Minister Manmohan Singh said he invited Indians to return home. India also unveiled a policy that would allow Indians to hold multiple citizenships, enabling them to access the incentive benefits of Indian nationals without giving up their U.S. citizenship. China, too, has mounted campaigns and offered incentives to bring back business people, technologists and entrepreneurs who were living overseas.
Although India and China have long decried the "brain drain" they have not been able to entice many of their expatriates to return home. That appears to be changing, and fast. The reason is the strong economic growth rates in those countries, along with enhanced entrepreneurial opportunities and rapidly rising standards of living and wages. Conversely, the U.S. and most of the West continue to suffer from slower economic growth rates and living standards and wages that are, by some measures, declining in real terms.
The net result of this turnabout could be a drop in U.S. innovation as more talent decides to return to their country of birth or that of their parents. Such a shift is good for China and India but bad for the U.S. That foreigners residing in the U.S. contribute enormously to innovation is beyond dispute. My research teams at Duke University calculated that foreign nationals residing in the U.S. were named as inventors or co-inventors in one-quarter of World Intellectual Property Organization patent applications filed from the U.S. in 2006. Additionally, 16.8 percent of international patent applications had an inventor or co-inventor of Chinese heritage and 13.7 percent had an inventor or co-inventor of Indian heritage. Ethnic Chinese and Indians collectively represent less than 3 percent of the total U.S. population.
In 2006, immigrants contributed to 72 percent of the total patent filings at Qualcomm, 65 percent at Merck and 60 percent at Cisco Systems. These immigrant patent-filers emerged from the U.S. university system, where foreigners now dominate the ranks of advanced-degree seekers in science, technology, engineering and mathematics.
Beyond intellectual contributions, Chinese and Indian immigrants have been key entrepreneurial drivers in the U.S. According to another survey we conducted, one-quarter of all technology companies in the U.S. have at least one founder who is a Chinese or Indian immigrant. The concentration is even heavier in certain key industries such as semiconductors and enterprise software. Based on this data, we calculated that in 2005, immigrant-founded tech companies generated $52 billion in revenue nationwide and employed 450,000 workers. This revenue total bridges multiple multibillion-dollar sectors including semiconductors, Internet, software and networking.
No government tallies return immigrants or departing immigrants, let alone the types of work skills they have to offer. But stories of these departures are common in the popular press and circulating in immigrant-oriented electronic communities. We feel fairly certain that the numbers are most likely in the tens of thousands. As part of research on immigration funded by the Kauffman Foundation, we located more than 1,200 such foreign-born Chinese and Indian returnees with knowledge worker backgrounds on the social networking site LinkedIn alone. When we surveyed them as to reasons for their departure, they emphasized that they left to seek better economic opportunities and better chances for career advancement.
In a similar study of over 1,200 foreign national students matriculating in the U.S., we found that only 6 percent of Indian, 10 percent of Chinese, and 15 percent of European students said they want to stay permanently. Not surprisingly, many cited worries over obtaining visas, a logical concern, as restrictive immigration policies have left roughly 1 million immigrants and their dependents in a limbo that could go on for over a decade with no promises that they will ever obtain citizenship.
What's more, those that have departed did so at a particularly critical time in their careers - just before they would be likely to start their own companies. Those who had left will start companies in their home countries, where most of the benefits of this entrepreneurship will accrue.
A number of mitigating factors could, however, easily slow this tide. Political unrest in China or increased terrorism in India are two of the bigger potential hurdles. Likewise, as these economies mature and their currencies gain in value against the dollar, starting a new business in the home country with U.S. dollars will become more expensive. For the first time in decades, the U.S. federal government appears intent on spending big money on big science and research and development, a wild card that could influence scientists and technologists to stay. And it's very important to note that nearly one-third of the returnee respondents in our survey indicated that they had difficulty transitioning to their home cultures. Bureaucracy, corruption, pollution, congestion and a different work culture were all reasons they listed.
So clearly all is not lost. If the U.S. relaxed immigration policies by, say, allowing founders of companies to remain in the U.S. indefinitely, this could prove a strong magnet to retain talent. But for the near term, with U.S. unemployment over 10 percent, venture capital and corporate spending depressed, and U.S. universities rapidly cutting back their budgets, the rising East will continue to pull in its fair share of future science and technology rock stars who may build the next Google or Microsoft in Gujarat or Mumbai.

(Vivek Wadhwa is executive-in-residence at the Pratt School of Engineering, Duke University, and senior research associate at the Harvard Law School.)