US report: number of immigrant business startups has fallen
Posted on October 5, 2012
A new report published today says that the number of businesses set up by immigrants in the US is falling. The report’s authors and backers hope that it will influence the immigration policies of the candidates in the presidential election in November 2012.
The report, America’s New Immigrant Entrepreneurs: Then and Now, says that in 2005, at least one of the co-founders of 25.3% of US start-up companies was an immigrant. In 2011 this figure had fallen to only 24.3%. In Silicon Valley, a greater decline has occurred. There, 52.4% of start-up companies had at least one immigrant co-founder in 2005. That figure has fallen to 43.9%.
Dane Stangler of the Kaufman Foundation, which funded the report, said ‘For several years, anecdotal evidence has suggested that an unwelcoming immigration system and the environment in the US has created a ‘reverse brain drain’. This report confirms it with data.’ He added ‘To maintain a dynamic economy, the US needs to embrace immigrant entrepreneurs’.
The report examined a random sample of 1,882 companies throughout America and found that 458 had at least one immigrant co-founder. Among the sample, there were immigrants from 60 countries. By far the largest proportion; 33.2%, of the sample came from India. This was an increase of 7% on the 2005 figure. 8.1% came from China and 6.3% from the UK.
The report finds that immigrants are most likely to found innovative manufacturing companies or software firms. It estimates that, since 2006, industries with at least one immigrant co-founder have created 560,000 jobs in the US and have contributed an estimated $63bn to the economy.
The report was co-authored by three academics including Vivek Wadhwa, who has also written a book on the subject entitled The Immigrant Exodus: Why America is Losing the Global Race to Capture Entrepreneurial Talent. Mr. Wadhwa says that it would be disastrous for the US to allow the number of immigrant-led start-ups to fall any further.
Mr Wadhwa argues that the US could reverse the decline by introducing a few immigrant-friendly policies. At present, because of the difficulties put in their way, many immigrants are returning to their own countries of origin after a short stay in the US to set up businesses there. Wadhwa says that interviews have shown that many would prefer to stay in the US.
Mr Wadhwa said ‘It is imperative that we create a start-up visa for these entrepreneurs and expand the number of green cards for skilled foreigners to work in these start-ups. Many immigrants would gladly remain in the US to start and grow companies that will lead to jobs. We would have tens of thousands of start-ups nationwide’.
04 October 2012