GMF - The German Marshall Fund of the United States - Strengthening Transatlantic Cooperation

Beleaguered by growing competition from goods made in China and services produced in India, the United States now has a new worry: the global competition for talent. Americans have long assumed that the world’s best and brightest naturally want to come to the U.S. to study and to work. But today, just when the U.S. needs the best talent to reignite its industrial engine, all that is changing.

In a global economy, predicted Robert Hamilton a research scientist at the NASA Goddard Space Flight Center, in remarks at the Brookings Institution last February, “the best and brightest of the world’s science and engineering students from emerging-market nations like China, India, Russia and Turkey will become an increasingly prized human resource, to be recruited and competed over by developed nations with lower birth rates and decreasing pools of talented young people.”

If the United States is to continue to attract and keep the smartest, most innovative scientists and engineers, it must change its outmoded immigration policies and curb a rising antipathy toward immigrants. The future health of the U.S. economy may be at stake.

America’s dilemma is both an opportunity and a challenge for China, India, South Korea and other emerging market economies. Their students now predominate in advanced science and engineering education in the United States. Experience suggests they will choose to return home in increasing numbers if the standard of living continues to improve in their native lands, enhancing the competitiveness of their national economies. But Australia, Canada and the United Kingdom are already offering these foreign-born scientists and engineers new enticements to stay in the West. And many in the U.S. business community, particularly the computer and IT industries, are clamoring for the Obama administration to do the same.

A new race to the top has begun. The country with the most brains will win. And that is no longer necessarily the United States.

For many, America is still the promised land. Two decades ago 27 percent of the PhDs in science and engineering awarded by U.S. institutions of higher learning were earned by foreign students. By 2009, that proportion had grown to 37 percent. In 2009, for the first time, more students on temporary visas got U.S. engineering doctorates than did native-born students. That year, among all recipients of a doctorate in science or engineering, 4,100 came from China, 2,263 from India and 1,525 from South Korea. Those three nations alone accounted for over half of the total number of such PhDs awarded to foreigners in 2009. As a result, more than a third of the current U.S. science and engineering workforce that has a doctorate was born outside the United States.

These highly-skilled immigrants make huge contributions to the U.S. economy. Intel was founded by a Hungarian immigrant. Google was co-founded by a Russian émigré.

Jennifer Hunt, an economics professor at McGill University in Montreal, has found that immigrants to the United States were far more likely to have published an academic article or to have commercialized a patent than a native-born American.

But now such contributions may be fleeting. Gallup surveyed people in 148 nations between 2007 and 2009, asking those who said they would like to leave their native country permanently about a preference for emigration. Only 9 percent of those with at least four years of post-secondary education worldwide preferred the United States. By comparison, 19 percent would opt for Canada.

Already a not-insignificant portion of foreign-born scientists and engineers trained in the United States eventually go home or elsewhere to pursue their careers. Among the temporary foreign residents who received their doctorates in the physical sciences in the United States in 2002, 22 percent left the country immediately and another 8 percent left by 2007. And for those who earned their PhDs in all types of engineering, 29 percent left after receiving their diplomas and 37 percent were gone by 2007.

In addition, returning to China or to other emerging markets after completing studies in the United States is bound to get ever more attractive. Patrick Gaule, a post-doctoral research fellow at Massachusetts Institute of Technology, has shown that a $1,000 increase in per capita income in the native country increases the odds of a person returning home by about 20 percent. China’s per capita income of $7,600 has increased by $4,000 in the last decade from $3,600 in 2000. With the median pay for software engineers in China having risen by 67 percent in the last four years and with the Chinese economy growing four times faster than that of the United States, the allure of an American salary may no longer outweigh the benefits of going home for many young, bright Chinese. In fact, this may already be seen in the behavior of Korean-born, U.S.-trained scientists and engineers. They are far more likely to return home than are their Chinese and Indian counterparts.Moreover, this reversal of the brain drain may soon accelerate. China is on a crash course to build world-class universities. And, while today it is actually much harder to win a coveted place at Peking University than it is to get into MIT, that capacity constraint may ease over time. More of China’s most promising scientists and engineers may soon wish to stay home for education and work.

This new reluctance among the best educated to come to the United States and stay may, in part, reflect an appreciation of just how hard Washington makes it to establish residency.

Only about one in seven legal permanent entrants into the United States receive a green card for economic reasons, and about half of those are for their family members. By comparison, two-thirds of Australia’s immigrants and two-fifths of immigrants to the United Kingdom are admitted for economic reasons.

A number of other industrial countries now have immigration policies specifically designed to attract and keep skilled immigrants.And, while America attracts far more foreign students than any other country, these numbers are deceptive. The United States has more institutions of higher education than other nations. When measured relative to the size of its own student-aged population, the U.S. attracts only 2.8 foreigners per 100, while the United Kingdom attracts three times as many foreign students per capita and Australia more than five times as many as the United States.

Australia has favored skilled migration with a points system since 1999. Even after a tightening of the criteria in the wake of the global economic downturn, immigrants are still given preference if they have skills in short supply, if that short supply imposes a cost on the economy or if their skills take a long time to learn. Canada has also recently curtailed its admissions practices, but still maintains a list of 29 occupations with a skill shortage, and each year up to 1,000 immigrants per occupation are given preference up to a total of 20,000 people.

A nation can never have too much talent. But in a global economy the best and the brightest are increasingly mobile. The first real competition for such skilled workers is about to begin. And the United States faces the real prospect that it could lose that contest.

Bruce Stokes is a transatlantic fellow at the German Marshall Fund of the United States.

This essay can be read here in its original form.

Image by MadeInChina.