To Out-Innovate Global Competitors, the United States Should Embrace Immigrant Talent

With the recent passage of the Inflation Reduction Act, the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, and the Infrastructure and Jobs Act, the United States is poised to invest over $133 billion more in innovation—as well as critical and green technologies—that will revamp U.S. economic competitiveness. That recent debates on innovation and economic competitiveness elevate science, technology, and engineering prowess as national security imperatives bodes well for ensuring American prosperity and stability. Innovation—creating and developing ideas, building scientific knowledge, developing new products and processes that then scale into new ventures—is vital for economic security in a technology-driven age. Out-innovating will allow the United States to compete effectively against China and other strategic competitors in the battle for technological primacy and economic security. 

To that end, the CHIPS Acts seeks to bolster domestic talent by funding science, technology, engineering, and mathematics (STEM) education programs. We desperately need this. The United States currently does not produce enough people with the STEM degrees and training to work in the U.S.-based semiconductor sector. Increasing homegrown STEM talent will do much to help our aging manufacturing and industrial workforces, and continue to support the development of future innovators. But the race for STEM talent is a global game, not a regional or local one. What is missing is action to attract, grow, and retain the many talented foreign students and immigrants who come to the United States and become startup entrepreneurs. If the United States is to remain competitive and out-innovate strategic competitors, it needs to attract and retain foreign talent, too.

Innovation is a cornerstone of social and economic progress, but an innovation strategy that overlooks the importance of immigration threatens strategic objectives and economic competitiveness. Manufacturing and technology industry advocates have warned for years that underinvestment in STEM education, a laissez-faire policy toward basic science research and development, and immigration laws that inhibit U.S.-trained STEM graduates from remaining in the United States all undermine U.S. innovation. 

The Silicon Valley model of innovation stands to suffer most. According to a 2018 study by the National Foundation for American Policy (NFAP), immigrants have started or are key members of the management teams of 55 percent of startups valued at over $1 billion. And that figure is likely an underestimate since the authors do not include publicly-traded companies. During Silicon Valley’s apex in the 2000s and 2010s—when Apple introduced the now ubiquitous iPhone, Google became the standard for searching the internet, and Tesla pushed boundaries by mass-producing battery-powered electric vehicles—33 percent of the venture-backed technology firms that went public between had at least one immigrant founder. Immigrants educated in the United States are a critical part of this story. Today, nearly one quarter of billion-dollar startups had a founder who first came here as a student. Nearly 12 percent of privately-held “unicorns,” companies valued at $1 billion or more, were started by immigrants who came to the United States as children.

Beyond Silicon Valley technology firms, many of today’s most valuable companies have immigrant roots. Immigrants have founded 43.8 percent of Fortune 500 companies, which employ more than 12.8 million people globally. 

Restricting immigrant talent hurts U.S. innovation in the long run. Economists have found that quotas preventing Eastern and Southern European-born scientists from moving to the United States in the 1920s caused major damage to U.S. innovation that persisted into the 1960s. And because collaboration is an important part of scientific advancement, the loss of this talent also hurt U.S.-born scientists. The same study estimated that the U.S. produced 60 percent fewer patents (a common measure of innovation) in the scientific fields of those who were prevented from immigrating to the United States. Finally, these quotas cut innovation in U.S. businesses by 53 percent. Many of these talented scientists went on to immigrate to other countries.

Meanwhile, Canada has today positioned itself to benefit from would-be U.S. high-skilled immigrant talent and entrepreneurs. The Canadian startup visa program targets foreign entrepreneurs with the skills to start innovative businesses that create Canadian jobs and support growing technology hubs in Vancouver and Toronto. 

Whether coming to the United States as young children, as students seeking higher education, or as adult professionals, researchers or entrepreneurs, immigrant talent is a critical component of U.S. innovation. Barriers to entry for foreign STEM students and startup entrepreneurs undermine U.S. policies to spur innovation. And without that innovation, the United States will not out-compete our strategic competitors, falling short in building the technological prowess needed to ensure the prosperity and security of the American people in the decades ahead.