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Immigrants and Innovation

A new book out by Thomas K. McCraw, professor emeritus at Harvard Business School, called “The Founders and Finance: How Hamilton, Gallatin, and Other Immigrants Forged a New Economy” looks at the history of immigrants to the US and their innovations. In a New York Times op-ed by Professor McCraw, Innovative Immigrants, he discusses how immigrant entrepreneurs have fostered economic prosperity since the country was founded and why our immigration laws should be reformed to accommodate the “geographic mobility” of entrepreneurial immigrants whose “rootlessness” enables them be innovative. Professor McCraw cites the work of the economist, Joseph Schumpeter, who said: ‘”‘The typical entrepreneur is more self-centered than other types, because he relies less than they do on tradition and connection’ and because his efforts consist ‘precisely in breaking up old, and creating new, tradition.’ For that reason, innovators always encounter resistance from people whose economic and social interests are threatened by new products and methods.”

Professor McCraw goes on to say that “[c]ompared with the native-born, who have extended families and lifelong social and commercial relationships, immigrants without such ties — without businesses to inherit or family property to protect — are in some ways better prepared to play the innovator’s role. A hundred academic monographs could not prove that immigrants are more innovative than native-born Americans, because each spurs the other on. Innovations by the blended population were, and still are, integral to the economic growth of the United States.”

Here in Washington State, immigrants play a huge role in entrepreneurship and innovation. According to the Immigration Policy Center of the American Immigration Council (AIC), ” Washington’s 37,373 Asian-owned businesses had sales and receipts of $12.3 billion and employed 71,421 people in 2007, the last year for which data is available. The state’s 17,795 Latino-owned businesses had sales and receipts of $9.7 billion and employed 23,051 people in 2007, according to the U.S. Census Bureau’s Survey of Business Owners.” The AIC also produced a publication, Immigrant Entrepreneurs: Creating Jobs and Strengthening the Economy, with the Public Education Institute at The Immigrant Learning Center, Inc. and the US Chamber of Commerce on the plight of immigrant entrepreneurs, their contributions to the country, and the need for reforms in the business immigration arena.

Meanwhile, Vivek Wadhwa, Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University’s Pratt School of Engineering, has researched the exodus of talented and entrepreneurial immigrants from the US to lands of more opportunity. He has written extensively on America’s immigrant brain drain. In “America to Immigrants: ‘Give me your tired and poor’ but keep your entrepreneurs,” Wadhwa gives examples of innovators and entrepreneurs educated or trained in the US who have not been able to make the current immigration system work for them, and so they have decided to leave to benefit other nations. Wadhwa cites to a study he conducted with the Kauffman Foundation, “America’s New Immigrant Entrepreneurs: Then and Now” that shows a decline in the number of immigrant start up companies in Silicon Valley and elsewhere. Wadhwa and his team monitor this immigrant brain drain, while highlighting the dreams of immigrant innovators at his site www.immigrantexodus.com based on his book by the same title.

Of course, immigration attorneys, such as this Seattle immigration lawyer, work daily at the front lines trying to help would-be entrepreneurs and innovators navigate our complex immigration system. Every one of us practicing in the business immigration area can give multiple examples of the endless obstacles Congress, USCIS, and the Consulates abroad throw in front of our clients, from work visa caps and quotas, adjudication delays, second-guessing the reasonableness of job duties or requirements to perform a job, to kitchen sink endless questions in Requests for Evidence, to re-adjudication of prior grants of work visas at the time of extension or post approval visa processing abroad, to restrictive interpretations of ownership issues, job site locations and duties, to adequacy of financing, premises and staff, to an assortment of issues reflecting adjudicators’ ignorance of or antagonism toward modern day business models, and work styles, or collaboration arrangements. The next Congress and Administration really needs to take a fresh new look at whether all business immigrants should be viewed through the current prism of presumptively fraudulent applicants and job-stealers, or as future job creators and/or product or service innovators. As Professor McCraw says above, America’s economic growth is dependent upon an intertwined synergy of native-born Americans and immigrants. Our immigration policies and laws should enable that synergy to exist in order to foster, not frustrate innovation.