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Alex Nowrasteh

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Immigrants Help Fuel Tech Growth

Posted: 01/19/12 03:41 PM ET

People are the most valuable resource. We see this most clearly among entrepreneurs, scientists, engineers, and innovators. Creating wealth and new ways of doing things drive economic growth. This is especially true in the technology sector. Encouraged by free markets, individual liberty, and the right incentives, innovators can achieve technological wonders. But unfortunately, our immigration system limits their number.

Nowhere is the positive impact of immigrants more noticeable than in high tech startups. According to a survey by the National Foundation for American Policy, immigrants have started nearly half of the top 50 venture-funded companies. Software, semiconductors, and biotechnology are the most common venture-backed startup firms started by immigrants. According to another report by Vivek Wadhwa, roughly 25 percent of all engineering firms founded between 1995 and 2005 were founded by immigrants.

A report from the Kauffman Foundation shows that immigrants are more than twice as likely as native-born Americans to start firms. Thanks to America's entrepreneurial culture, stories like those of the Hungarian-born Andy Grove, who founded Intel, and the Soviet-born Sergey Brin, who founded Google, are common.

There are many thousands more who create successful but smaller companies. Entrepreneur Andres Ruzo, who describes himself as "Peruvian by birth, Texan by choice," started the telecommunications firm Link America in 1994. He is also working on ITS Infocom, which manages communication networks for large companies. His firms also expanded into Latin America by trying to, in Ruzo's own words, "Americanize South and Central America: to bring the culture of performance and results and speed and punctuality and quality and reliability to Latin America."

With rare exceptions, immigrant entrepreneurs face immigration problems. Employment-based green cards, capped at 140,000 a year, are issued to some kinds of skilled workers and investors, under strict country of origin quotas and burdensome requirements. The H-1B visa is capped at 85,000 per year for temporary workers employed by American firms. Many times H-1B workers are issued a green card after several years. All the while, the worker has to be an employee, not an entrepreneur.

Roughly a quarter of master's students and a third of Ph.D. students in science and engineering at U.S. universities are foreign-born. Yet the amount of paperwork, bureaucracy, and requirements they face to stay in the U.S. after graduation throw up serious roadblocks to innovation and entrepreneurship. Innovators and entrepreneurs should spend their time starting new businesses, not navigating a byzantine and outdated immigration system.

America is uniquely meritocratic. We attract the best and the brightest from around the world, but our immigration system gets in the way. The government expects a potential entrepreneur to prove that he or she is an entrepreneur before he or she can start a business. There is no stamp or marking that shows who will be a successful entrepreneur ex ante. Only experience, not government fiat, can determine that. Our immigration rules need to allow for those experiences.

Many immigrant workers innovate within American firms, filling niche specialty roles. Many are graduates of the best universities and technical schools in the world. Jim Clark, the American founder of Healtheon (now WebMD), Netscape (now part of AOL), and Silicon Graphic affectionately calls his Indian engineers "the most talented engineers in the Valley... and they work their butts off." American-educated Indian engineer Srikanth Nadhamuni and others produced some of the most innovative websites and medical cost saving tools yet developed. His story is multiplied thousands of times over, but for every success that is realized, our immigration laws impede another through arduous bureaucratic barriers.

Chia-Pin Chang, a Taiwanese native and Ph.D. in computer engineering from George Washington University, co-founded the medical device firm OptoBioSense. In addition to the burdensome government regulations on medical devices, Chang faces yet another obstacle: He has to close his business in February and move back to Taiwan if he cannot secure an employer-sponsored green card.

Iranian-born Esmaeil-Hooman Banaei created an electricity generating fabric while getting his Ph.D. from the University of Central Florida. Now he is waiting for a green card and a legal chance to pursue the American dream while developing new technology. His invention may flop or it may produce benefits, profits, revenues, and opportunities for Americans. But we'll never know if he doesn't get a green card.

Immigration links together the world's most valuable resources, allowing immigrant and Americans to work together. The immigrants then become Americans and the process continues, replenishing America's talent pool.

The government cannot choose who will become an innovator or entrepreneur before they get an opportunity to do so. Immigration regulatory limbo ties the hands of hundreds of thousands of potential entrepreneurs and innovators. Those knots should be undone. Immigrants and Americans working together have produced enormous wealth and opportunities for everybody in the United States. Governments just needs to let them.

 

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