Tags: Kauffman | reverse | brain | drain

Study Raises Concerns About 'Reverse Brain Drain'

Wednesday, 03 Oct 2012 02:31 PM

By Michelle Smith

There might be yet another threat to the U.S. economy: Increasingly strict immigration laws are prompting a “reverse brain drain,” according to a study from the Kauffman Foundation, which reveals the proportion of foreign entrepreneurs in the United States is declining.

The findings show that over the past six years, the proportion of new companies founded by foreign-born individuals slipped to 24.3 percent from 25.3 percent.

The drop is even more pronounced in the nation's preeminent start-up community, Silicon Valley, where the percentage of new firms with at least one immigrant founder dropped to 43.9 percent from 52.4 percent in 2005.

Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.

This reversal raises concerns since for decades foreign entrepreneurship in the United States was booming.

A study from the National Foundation of American Policy last year found that nearly half of the country's top venture-backed, early-stage companies were founded by at least one foreigner, the Washington Post reports.

However, unfriendly immigration policies are weighing on these results. One might assume that the primary problem is vast numbers of innovative foreigners who are finding it difficult to enter the country. But on the contrary, the issue seems to be that talented and educated foreigners who are already here find it hard to stay.

“The data show the significance of the reverse brain drain — immigrants educated or trained in the U.S. who can't get green cards,” Vivek Wadhwa, who co-authored the study and wrote a companion book, tells Bloomberg Businessweek.

Some warn the U.S. policy of shipping highly educated individuals overseas is not only shortsighted, but a real economic threat, as American entrepreneurs are certainly not picking up the slack. Native-born company startup rates have remained relatively flat over the last 16 years and declined in 2011, Businessweek says a recent Kauffman index reveals.

“If we wait five years to fix the immigration system, the undocumented, illegal workers will still be here, but the high-skilled immigrants will be long gone,” Wadhwa tells the Post. “They’ll be back home building the next Googles and Intels in other countries, and we will wake up five years from now and wonder how we let this happen.”

Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.

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