Highly-skilled immigrants drive U.S. business growth overseas
It’s often thought that highly skilled immigrants help bolster U.S. economic growth, particularly through tech, science, and engineering innovations. That’s why Republicans like Mitt Romney have openly advocated for higher legal immigration, even as they’ve doubled down on illegal immigrants. Their assumption that high-skilled, legal immigrantion help our economy seems to hold true, but there’s a new twist. New research from the Harvard Business School shows how innovative immigrants specifically help U.S. multinationals that want to expand outside the U.S. In a working paper for the National Bureau of Economic Research, Harvard’s C. Fritz Foley and William R. Kerr examined the economic impact of immigrants who were granted patents from the U.S. Patent and Trademark Office between 1975 and 2008. They conclude that greater numbers of immigrant inventors will boost a US company’s performance in those immigrants’ respective native countries:
The results indicate that increases in the share of a firm’s innovation performed by inventors of a particular ethnicity are associated with increases in the share of that firm’s affiliate activity in their native countries. Ethnic innovators also appear to facilitate the disintegration of innovative activity across borders and to allow U.S. multinationals to form new affiliates abroad without the support of local joint venture partners. Thus, this paper points out that immigration can enhance the competitiveness of multinational firms...
Beyond language skills, well-educated immigrants typically possess specialized knowledge about how to conduct business in their home countries. They are likely to have a strong understanding of customer behavior there and to have insights about what kinds of products would succeed. Furthermore, high-skilled immigrants often also have relationships and are part of networks that can facilitate foreign market access.
All this helps explain why Romney has joined President Obama, the Chamber of Commerce, and others in pushing for more highly-skilled, highly educated immigrants to help our long-term economic prospects.
But the findings won’t completely assuage the perennial concern that immigrants are taking jobs away from native-born Americans — in this case, by accelerating the globalization of the U.S. economy. While immigrant-backed growth of U.S. multinationals overseas would bolster domestic growth overall, it could add to the fears that the policymakers and business leaders aren’t doing enough to create more jobs at home.