In the hopes to continue a much-needed conversation on how to revamp the economy, this week I would like to highlight another policy recommendation that emerged from the Kauffman Foundation’s State of Entrepreneurship address: reform immigration policy to attract migrants who want to start new companies and create jobs.
First, let me remind you why immigration matters. High-skilled immigrants have been the lifeblood of entrepreneurial companies that have transformed entire industries and the ways we do things, creating tremendous wealth and valuable jobs during the process. Evidence shows that immigrants start a disproportionately high number of new U.S. firms. Of the technology firms started in the U.S. during 1995-2005, fully one-quarter had at least one immigrant key founder. In Silicon Valley, the proportion is much higher: over half the technology startups there were started by at least one entrepreneur born abroad. Several “rockstars” probably come to your mind: Vinod Khosla of India and Andreas von Bechtolsheim of Germany who co-founded Sun Microsystems; Google’s Russian-born co-founder, Sergey Brin; Jerry Yang, the Taiwanese-born co-founder of Yahoo; and Ric Fulop, an immigrant from Venezuela, who co-founded a revolutionary lithium ion battery company, A123sytems.
The existing system of immigration into the U.S. is unfriendly to prospective entrepreneurs. The processing of visas and green cards is bureaucratic, and the number of high-skill migrants to the U.S. is capped at an artificially low level. In the meantime, other nations have been reforming in order to compete for highly qualified human capital. As a result, America has been losing its attraction as a “brain magnet.”
The United States should rationalize its immigration system soon, with a special focus on immigrant entrepreneurs.
To start, considering that most high-skill immigrants have been attracted to the U.S. for its excellent universities, we must encourage them to stay to create valuable, fast-growing startup firms upon graduation. The U.S. should offer instant citizenship to bright young people from foreign countries who graduate from our universities.
We should also refine the EB-5 visa, the so-called “entrepreneur’s visa.” Instead of requiring prospective immigrants to bring cash into the country (the current rule requires $1,000,000 or $500,000 if the company is in a distressed area), the criteria should embody incentives to attract human capital. In particular, the EB-5 visa process should favor those who plan to come and start companies, with the possibility of extension once the visa holder begins hiring American residents. If bringing cash into the country has proven effective for distressed areas and EB-5 visas are seen as effective, create a new E category – the Entrepreneurs Visa.
It is time to make the U.S. once again a true magnet for entrepreneurs. Reforming our immigration system in a way that attracts innovative ideas and their executors holds great promise for unlocking our nation’s economic potential and assuring sustained economic strength.