Skilled, Educated Immigrants Contribute
Significantly to U.S. Economy
Durham, NC --
Immigrant entrepreneurs founded 25.3 percent of the U.S. engineering
and technology companies established in the past decade, according
to a new study from Duke University. What's more, foreign nationals
-- those living in the United States who are not citizens -- contributed
to an estimated 24.2 percent of international patent applications
The study, conducted by a student research team at Duke's Master
of Engineering Management Program, brings new context to the nation's
immigration debate. Until now, much of the discourse has focused
almost exclusively on unskilled laborers who cross the U.S. border
illegally, primarily from Latin American countries. The team is
providing its project results online to contribute to the overall
"To sustain our economic and global competitiveness, America
needs to focus on its many strengths. One of these is our ability
to attract and assimilate the world's best and brightest,"
said Vivek Wadhwa, executive in residence at the Pratt School
of Engineering's Master of Engineering Management Program. Wadhwa
himself is an immigrant who has co-founded two technology companies.
The Duke research team of 18 students from the Master of Engineering
Management Program was led by Wadhwa, research scholar Ben Rissing
and Gary Gereffi, director of the Center for Globalization, Governance
& Competitiveness and a professor of sociology at Duke. The
team was assisted by Dean and Professor AnnaLee Saxenian of the
University of California, Berkeley. The study builds on research
Saxenian published in 1999 that focused on the development of
Silicon Valley's regional economy and the roles of immigrant capital
and labor in this process.
The team contacted thousands of engineering and technology companies
founded between 1995 and 2005 to determine if the CEO or lead
technologist was an immigrant, and to determine that person's
national origin. More than 2,050 companies participated in the
The researchers found there was at least one immigrant key founder
in 25.3 percent of these companies. Together, the study report
says, this pool of immigrant-founded companies was responsible
for generating an estimated $52 billion in 2005 sales and creating
just under 450,000 jobs as of 2005.
Almost 26 percent of all immigrant-founded companies in the past
10 years were founded by Indian immigrants. Immigrants from the
United Kingdom, China and Taiwan contributed to 7.1 percent, 6.9
percent and 5.8 percent of all immigrant-founded businesses, respectively.
These immigrant-founded businesses were unevenly located across
the country. California and New Jersey represented hot spots for
immigrant-founded engineering and technology businesses; Washington
and Ohio possessed relatively low percentages of immigrant-founded
Some immigrant groups displayed tendencies to start businesses
in a particular state. For example, 81 percent of businesses founded
by immigrants from Taiwan were located in California.
The Duke team also did a special analysis of two tech centers
-- Silicon Valley, Calif., and Research Triangle Park, N.C.
The researchers found that over half (52.4 percent) of Silicon
Valley startups had one or more immigrants as a key founder, compared
with the California average of 38.8 percent. A comparison with
Saxenian's 1999 findings shows that the percentage of firms with
Indian or Chinese founders had increased from 24 percent to 28
percent by 2006. Indian immigrants had also outpaced their Chinese
counterparts as founders of engineering and technology companies
in Silicon Valley.
In Research Triangle Park, 18.7 percent of startups surveyed had
an immigrant as a key founder, compared with the North Carolina
average of 13.9 percent. Indians constitute the largest immigrant
founding group, with 25 percent of startups, followed by immigrants
from Germany and the United Kingdom, each with 15 percent.
"In places like Silicon Valley we see the compounding impacts
of immigrant social and technical networks," Saxenian said.
"As foreign-born engineers start businesses, they collaborate
with former classmates and colleagues from their home countries
-- sharing the business contacts and know-how as well as market
information that support entrepreneurial success. Successful entrepreneurs
not only contribute to the regional economy, but also become powerful
role models and mentors, attracting subsequent generations of
immigrants to the area."
To understand the intellectual contribution of skilled immigrants,
the Duke team analyzed the World Intellectual Property Organization
Patent Cooperation Treaty database for international patent applications
filed in the United States.
The researchers estimated that foreign nationals residing in the
United States were named as inventors or co-inventors in 24.2
percent of such international patent applications in 2006. This
percentage increased dramatically from 7.3 percent in 1998. This
count does not include immigrants who became U.S. citizens before
filing a patent application. The largest group of contributors
was of Chinese origin. They were followed by Indians, Canadians
"The contributions immigrants and foreign national residents
are making to our economy -- and particularly to science and technology
-- are well recognized and this report is a start at documenting
the statistics of those contributions," said Kristina Johnson,
dean of Duke's Pratt School of Engineering. "The United States
has a long history of welcoming international students and entrepreneurs
-- and has benefited greatly as a result.
"Looking at this research from the perspective of the U.S.
educational system, the study continues to reveal challenges facing
our K-12 educational program," Johnson said. "As the
economies of other nations improve, more immigrant non-citizens
living in the United States may choose to repatriate. Given the
large percentage of high-tech companies started by these individuals,
the nation may be forced to look more and more to domestic students
for continued innovation. Without dramatically improving our pre-college
science and technology preparation, the United States risks losing
its competitiveness in the future global economy."
The Master of Engineering Management team led by Wadhwa has been
researching the impact of globalization on the engineering profession
and U.S. competitiveness. In December 2005, the team published
a study that countered the assertion that India and China were
graduating 12 times the number of engineers as the United States.
A subsequent study published in 2006 analyzed the experiences
of companies engaged in outsourcing and found that the key factors
in outsourcing were cost and proximity to markets -- not a skills
shortage in the United States.