Trump is making India great again
With his tirades against immigrants, Trump is forcing entrepreneurs to return to their countries
Thank you for what you are doing for America; your successes have put India in very positive light and shown us what is possible in India” said Atal Bihari Vajpayee to me during his visit to the White House in 2000. He added that he would love to see Indian-american entrepreneurs return to build India’s tech industry. Bill Clinton and George W. Bush granted his wish with their flawed immigration policies. The US admitted thousands of foreign students and engineers on temporary visas but did not have the fortitude to expand the numbers of green cards. The result was that waiting time for permanent resident visas began to exceed 10 years for Indians and Chinese. Some began returning home.
Now with his tirades against immigrants, particularly from what he calls “shithole countries”, Donald Trump is giving many countries the greatest gift of all: causing the trickle of returning talent to become a flood.
For India, the timing could not be better. With millions of people now having access to the Internet through inexpensive phones, India is about to experience a technology boom that will transform the country. And with the influx of capital and talent, it will be able to challenge Silicon Valley—just like China. This is the irony of America’s rising nativism and protectionism.
When I met Vajpayee, I was the CEO of a technology startup in North Carolina. Later, I became an academic and started researching why Silicon Valley was the innovative place it is. I learnt that it was diversity and openness that gave Silicon Valley its global advantage; foreign-born people dominated its entrepreneurial ecosystem and fuelled innovation and job growth. My research teams at Duke, the University of California at Berkeley, New York University, and Harvard documented that between 1995 and 2005, immigrants founded 52% of Silicon Valley’s technology companies. The founders came from almost every nation in the world. Immigrants also contributed to the majority of patents filed by leading US companies in that period: 72% of the total at Qualcomm, 65% at Merck, 64% at General Electric, and 60% at Cisco Systems. Surprisingly, 40% of the international patent applications filed by the US government also had foreign-national authors.
Indians have achieved the most extraordinary success in the Valley. They have founded more start-ups than the next four immigrant groups – Britain, China, Taiwan and Japan combined. Despite being only 6% of the Valley’s population and 1% of the nations, Indians founded 15.5% of Silicon Valley startups and contributed to 14% of US global patents.
At the same time, I realised that protectionist demands were causing American leaders to advocate immigration policies that would choke innovation and economic growth. The number of H1-B visas would increase in response to the demands of businesses but never the number of green cards, which were limited to 140,000 for so-called key employment categories. The result? The queues kept increasing. I estimate that today there are around 1.5 million skilled workers and their families stuck in immigration limbo, and more than a third of these are Indians.
Meanwhile, I have witnessed a rapid change in the aspirations among international students. The norm would be for students from China and India to stay in the US because there were hardly any opportunities back home. This changed.
My engineering students began to seek short-term employment in the US to gain experience after they graduated but their ultimate goal was to return home. Human resource directors of companies in India and China increasingly reported that they were flooded with resumés from US graduates. For students, the prospect of returning home and working for a Baidu, Alibaba, Paytm, or Flipkart is far more enticing than working for an American company. You can’t blame them, especially given that delays in visa processing will lock them into a menial position for at least a decade during the most productive parts of their careers.
This has been an incredible boon for China. One measure of the globalisation of innovation is the number of technology start-ups with post-money valuations of $1 billion or higher. These companies are commonly called “unicorns”. As recently as 2000, nearly all of these were in the US; countries such as China and India could only dream of being home to a Google, Amazon, or Facebook.
Now, according to South China Morning Post, China has 98 unicorns, which is 39% of the world’s 252 . In comparison, America has 106, or 42%, and India 10, 4%. An analysis by the National Foundation for American Policy revealed that 51% of the unicorns in the US have at least one immigrant founder. It is clear how shortsighted the US has been.
With the clouds of nativism circling the White House, things will only get worse. America’s share of successful technology startups will continue to shrink and Silicon Valley will see competition like never before.
America’s loss is India’s gain.