Entrepreneurship: US dependence on Foreign Minds

By Chris Dornfeld for Biotrends, Nov./Dec. 2005

A recent report by the Kauffman Foundation highlights the “substantially higher rates of entrepreneurship among immigrants as compared to U.S.-born individuals.” (1). This should come as no surprise if we think about what type of person would be willing to uproot and travel to a new country in pursuit of a better life. But what is interesting is how little attention is given to the recent contributions that foreign-born nationals make to the U.S. economy.

It appears that very little attention is given to the ongoing contributions of immigrants by either the main stream media or our political leadership. Typically discussion centers on the burden created on our social services organizations or law enforcement from immigration (often focused on illegal immigrants) or on immigrants’ willingness to apply a strong work ethic to jobs that are at the bottom of the U.S. pay scale. Most recently this discussion has played out in a battle in the southwest as Arizona and New Mexico have declared states of emergency attempting to force the Federal Government to bring additional resources to bear at the border with Mexico . The anti-immigrant talk is growing so much in political spheres that “being tough” on immigration is even a campaign issue in a Virginia gubernatorial race.

What is missed is the bigger picture of the total contribution of the immigrant population. At a recent talk, Annalee Sexenian, author of “ Regional Advantage, Culture and Competition in Silicon Valley and Route 128 ”, highlighted the fact that more than 50% of companies created in Silicon Valley in the 1990s were started by foreign-born nationals. Adding to that data, the “Kauffman index of entrepreneurial activity ” highlights that Latinos are about 20% more entrepreneurial than white, non-Latinos and immigrants have “substantially higher rates of entrepreneurship than U.S. born individuals”, almost 30% higher the report suggests.

It is obvious that not only Silicon Valley but the entire U.S. economy would look radically different and significantly less impressive without the contribution of people coming to this country from around the globe. It might even be argued that the ability of the United States to attract foreign talent is what maintains our economic leadership in the world.

There is a good deal of conversation in universities and our advanced technology companies about the changing immigration landscape in a post 9/11 world: too few scientific visas available, restrictive policies for foreign students and workers. But the real danger to our economic growth is how the U.S. is perceived in the eyes of the rest of the world. Entrepreneurial people will find ways to seek out opportunity and a global economy provides more paths for those entrepreneurs to follow. The less fair we appear as a nation, the less trust we build with the people of the world; and, as the result, the less vibrant and prosperous our own future appears.

If we as a nation continue to be viewed as an unattractive opportunity the potential damage could be much broader than simply the loss of entrepreneurs and our economic edge on the world. A recent study published in the New England Journal of Medicine (2) highlights that 25 percent of U.S. physicians are international medical graduates. Add to that the fact that U.S. medical schools turn out a relatively stable 17,000 graduates annually, but the demand for residency staffing exceeds this number by 30 percent (3) and you quickly begin to see the dependence we have on immigration driven by the perception of the United States in the world. If we are no longer viewed as the land of opportunity, will we cease to be the land of opportunity? Is the impact we have on the globe and our ability to lead the world a byproduct of our perception of people from around the world?

From a global perspective perhaps a little humility is needed by the United States and an appreciation of what the immigrants of the world are currently contributing to all of our lives in the United States . There are many serious discussions that need to take place around the issues of security, safety and the openness of our borders, but it should not be done without the understanding that a restrictive policy or even a damaged perception of the U.S. in the eyes of the world, could significantly (and negatively) impact the future of this country.

 Chris Dornfeld is the Director of Entrepreneurship Collaborations at Skandalaris Center for Entrepreneurial Studies, Washington University, St. Louis, MO.

 (1) Robert W. Fairlie (Associate Professor of Economics and Director of the Master’s Program in Applied Economics and Finance at the University of California, Santa Cruz) “Kauffman Index of Entrepreneurial Activity”, Ewing Marion Kauffman Foundation, October 2005.

(2) “Fatal Flows – Doctors on the Move”, Lincoln C. Chen, M.D., and Jo Ivey Boufford, M.D. New England Journal of Medicine, Volume 353:1850-1852, October 27 th , 2005 , Number 17.

(3) Council on Graduate Medical Education. Physician workforce policy guidelines for the United States, 2000-2020. (Accessed October 6, 2005 , at



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