How Trump is making China and India great again
“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 in a one-on-one meeting during his visit to the White House in September 2000. He added that he would love to see Indian-American entrepreneurs return home to help build India’s nascent technology industry.
Bill Clinton and George W. Bush granted him his wish with their flawed immigration policies. The U.S. admitted hundreds of 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 the waiting time for permanent resident visas began to exceed 10 years for Indian and Chinese immigrants. Some began returning home.
Now with his constant 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 hundreds of millions of people now gaining access to the Internet through inexpensive smartphones, India is about to experience a technology boom that will transform the country itself. And with the influx of capital and talent, it will be able to challenge Silicon Valley—just as China is doing.
This is the irony of America’s rising nativism and protectionism.
When I met Prime Minister 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 most innovative place on this planet.
I learnt that it was diversity and openness that gave Silicon Valley its global advantage; foreign-born people were dominating its entrepreneurial ecosystem and fueling 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: Australia to Zimbabwe. 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 Silicon Valley. They have founded more start-ups than the next four immigrant groups, from Britain, China, Taiwan, and Japan, combined. Despite comprising 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 also realised that protectionist demands by nativists were causing American political leaders to advocate immigration policies that were (and are) choking US innovation and economic growth. The government would constantly expand the number of H1-B visas in response to the demands of businesses but never the number of green cards, which were limited to 140,000 for the 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 that 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 permanently 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 to their families and friends. 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 hot company such as Baidu, Alibaba, Paytm, or Flipkart is far more enticing than working for an American company. You cannot 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 unicorns. In comparison, America has 106, or 42%, and India has 10 unicorns, 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 government 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.
Vivek Wadhwa is a Distinguished Fellow at Carnegie Mellon University at Silicon Valley and author of The Driver in the Driverless Car: How Our Technology Choices Will Create the Future.
The views expressed are personal