A simple set of changes to existing immigration policies would go a long way toward driving immediate entrepreneurial growth. The United States should make it easier for the more than 500,000 highly skilled foreign workers who are in the country on work visas and who are trapped in "immigration limbo" to start companies and stay permanently. It should also make it easier for foreign entrepreneurs in high-growth sectors (technology, biotech) to relocate to the United States from abroad. And the U.S. government should make it easier for advanced-degree holders in science- and technology-related disciplines to secure the right to work in the United States.
In my research I have found that, between 1995 and 2005, over 50 percent of technology companies started in Silicon Valley included at least one co-founder who was foreign-born. Nationwide, 25 percent of technology companies founded in this period had a foreign-born co-founder. An even higher percentage, in both cases, had a foreign-born person as a member of senior management. The largest percentage of these co-founders came from India and China (both mainland and Taiwan). These immigrant-founded companies generated $52 billion in revenues and created 450,000 jobs over this 10-year span. They likely paid billions of dollars into U.S. government tax coffers as well.
Less than 2 percent of these entrepreneurs came to the United States specifically to start a company. Most came for work or family reasons. And already there are more than 1 million skilled immigrants and their families currently residing in the United States on temporary work visas. They are already acclimated to American culture and, with immigration reform, could be freed to start companies. But present laws don't even allow them to work for start-ups that they found.
Students are increasingly seeing greener pastures abroad and are returning to their home countries after they graduate. This is largely because it has become harder and harder for them to secure work in the United States after they get their degree. In effect, the country is training students -- often with government subsidies and grants -- and then telling them to go to other countries to generate economic value or start a company. The United States has a pool of skilled workers who would be the envy of countries the world over and is telling them they can't stay. New York Mayor Michael Bloomberg wasn't exaggerating when he described the U.S. immigration policy as "national suicide."
It's worth examining how the system works in other countries. If a tech start-up wants to launch in Chile, the government rolls out the red carpet. Entrepreneurs get $40,000 grants, free office space, and expedited visa clearance. There are no strings attached -- provided the entrepreneur relocates to Chile and spends at least six months launching his or her idea. Australia, Britain, Canada, Germany, and Singapore all offer variations on this theme as part of aggressive efforts to recruit entrepreneurs. For its part, the Chinese government has pursued a particularly aggressive effort that includes awarding coveted city residency passes, free ownership of apartments, prestigious university posts, and outright cash grants to highly skilled returnees. Contrast this with Silicon Valley, where many foreign-born entrepreneurs spend a considerable amount of time, energy, and money worrying about their immigration status and the whims of the Department of Homeland Security (which has subsumed the immigration enforcement functions of the U.S. government).