Immigrant Entrepreneurs Leave for Lower Operating Costs, Growing Markets and Family Ties, but Closely Maintained U.S. Ties Create ‘Brain Circulation’
High-skilled immigrant entrepreneurs from India and China are leaving the United States by the tens of thousands each year, drawn away by better economic and professional opportunities in their home countries, according to a study released by the Ewing Marion Kauffman Foundation.
The report, “The Grass is Indeed Greener in India and China for Returnee Entrepreneurs,” is based on a survey of U.S.-educated Indian and Chinese professionals who had returned to their home countries and started businesses. These respondents cited economic opportunities, favorable conditions for starting a business and the speed of professional growth as the leading motivations for returning home. Family ties also played a significant role in attracting the entrepreneurs back to their native countries.
“At the same time the U.S. economic downturn has diminished opportunities for these high-skilled professionals, recent economic and political reforms in their home countries have expanded the appeal of entrepreneurship there,” said Robert Litan, vice president of research and policy at the Kauffman Foundation. “Individual entrepreneurs aren’t driven to maintain the broader economic environment. Instead, they will pursue opportunities where the ‘grass is greener.’ The lesson for the United States is that regions that support entrepreneurship will remain important hubs in today’s global economy.”
Over the past decade, poverty and underdevelopment — the “brain drain” factors that once drove the vast majority of U.S.-educated immigrants to remain here rather than returning home — have given way to startup-friendly business environments in India and China. Most returnees now say the entrepreneurial advantages are better in their home countries, where they can benefit from lower operating costs, heightened professional recognition, greater access to local markets and a better quality of life than they could attain in the United States.
However, the survey results also indicate that, while returnees’ migration back to their home countries produces a “reverse brain drain” in the United States, these entrepreneurs maintain close relationships with U.S.-based colleagues, family, friends and sources of business information. These data suggest a two-way “brain circulation” with potential benefit to both the United States and these emerging economies.
“Entrepreneurs who return to their native countries are in privileged positions in the world economy,” said Vivek Wadhwa, visiting scholar, School of Information, UC-Berkeley; director of research, Center for Entrepreneurship and Research Commercialization and exec-in-residence, Pratt School of Engineering, Duke University; and one of the study’s authors. “As they exploit the economic and personal advantages of building businesses in their home countries while also maintaining close ties with their contacts in the United States, both nations will benefit from the decentralized, cross-regional collaborations that support innovation in today’s global economy.”
The survey’s key findings include:
- More than 60 percent of Indian and 90 percent of Chinese respondents cited economic opportunities in their countries as a very important factor in motivating the return home.
- The returnees took pride in contributing to economic development in their home countries. More than 60 percent of Indians and 51 percent of Chinese rated this as very important.
- Fifty-six percent of Indians and 59 percent of Chinese said their quality of life back home was better or equal to what they had experienced in the United States.
- In China, 76 percent ranked access to local markets as very important. In India, 64 percent did.
- Salaries were the only advantage the respondents attributed to the United States. Sixty-four percent of the Indian respondents said their salaries were better in the United States than at home. Forty-three percent of Chinese respondents said that salaries were higher in the United States, while 20 percent stated they were about the same in the United States and China.