international education as a pathway for immigrant entrepreneurs

While the immigration reform in the US is overcast with uncertainty, I came across a very interesting blog in the New York Times by Catherine Rampell asking “is it true that immigrants are unusually entrepreneurial?” And the data suggests, yes. The highlights are:

  • Business ownership rate is higher for immigrants than the native-born. In 2010, 10.5 percent of the immigrant work force owned a business compared with 9.3 percent of the native-born work force.
  • Immigrants are also more likely to start a business in any given month. In 2010, 620 out of every 100,000 non-business-owning immigrants started a business each month as compared to 280 for nonimmigrants.
  • “Immigrants’ entrepreneurship rates are especially high in the engineering and technology sector. About a quarter of engineering and technology companies founded between 2006 and 2012 had at least one founder who was born abroad, according to a 2012 Kauffman Foundation study. In Silicon Valley, the share was 43.9 percent.”
  • “More than half of the foreign-born founders of U.S. technology and engineering businesses initially came to the United States to study.”

Although the Kauffman Foundation report is a bit dated, it suggests a strong relationship between international students in STEM fields and prospects for entrepreneurship.

Due to the effect of recession, many American college students are heading towards “career-ready” majors like healthcare and business. As a result, share of STEM (science, technology, engineering and math) as a percentage of all bachelor’s degrees have been consistently declining over the years.  While there is demand for STEM majors by the employers, “not all college students have the interest or ability to major in a STEM field.” Consequently, there is a short-supply of American students in STEM related graduate programs.

This supply gap in the American graduate programs in STEM fields meets the demand for these programs from international students. Nearly 2/3rd of all graduate students in electrical engineering and computer science in the US are international students, according to NFAP. For some countries like India, this skew towards STEM related graduate programs is very high. Nearly 2/3rd of all Indian students are enrolled in master’s program in STEM related fields. No surprise, this is also the group most dominant in the immigrant found ventures related to engineering and technology, according to Kauffman report.

A recent report entitled “American Made 2.0: How Immigrant Entrepreneurs Continue to Contribute to the U.S. Economy ” by the National Venture Capital Association highlights the pathways, contributions and challenges of immigrant entrepreneurs. It encourages reforms that can enable innovation in the economy by facilitating global talent retention.

I hope this not so obvious connection between entrepreneurial innovation, especially in STEM related fields and international students is considered in the immigration reform.

Dr. Rahul Choudaha

5 Comments

  1. I feel like this might be true for anyone living outside of their home country.

    Perhaps the "rewiring of the brain" that happens when living abroad encourages entrepreneurship.

    For example, when living abroad and lacking language skills, one needs to find creative solutions to solve simple day-to-day problems. The thought process of an entrepreneur is quite similar.

  2. Thank you for the interesting article and link from STEM to entrepreneurship to immigration reform. From migration theory, people who take the initiative to migrate to another country are more ambitious than those left behind. They are probably also more ambitious than the majority population of the receiving country.

    I also agree with the other comment about the creative skills that lead to success when migrating. We need creative people with new ideas to innovate.

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