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Will the reverse brain drain become a flood?

August 24, 2007

Researchers in America believe that their government tightening the screws on visas, green cards and citizenships is bad for their economy. Their point is this: If 25.3 percent of 2,054 engineering and technology companies surveyed (founded in the US from 1995-2005) had a key foreign born founder, this implies that a lot of potential talent is presently waiting in the wings for visas and citizenship, and this talent could be forced to go back home. And talking of founders, Indians make up a good number:

Indians have founded more engineering and technology companies in the U.S. in the past decade than immigrants from Britain, China, Taiwan, and Japan combined. Of all immigrant-founded companies, 26% have Indian founders.

And that foreigners are a significant portion of the talent even today is proved by an analysis of the World Intellectual Property Organization (WIPO) patent databases:

In 2006, 24.2% of U.S.-originated international patent applications were authored or co-authored by foreign nationals residing in the U.S. These immigrant non-citizens…are typically foreign graduate students completing their PhDs, green card holders awaiting citizenship, and employees of multinationals on temporary visas. This percentage had increased from 7.8% in 1988.

The number of patent applications by foreigners has tripled in the couple of decades…and it is believed that the pace has accelerated in recent years! Clear where the trend is heading…more and more foreigners are taking the lead. Well, immigrants are always driven to succeed, aren’t they? That was how America was built…but now the native population is becoming complacent if statistics are anything to go by.

It is believed that with the economies of China and India growing, the would be entrepreneurs might find the climate they need back home. And researchers from Harvard, Duke and New York University who have published these findings call it the reverse brain drain. After all, U.S. Department of State data suggests that more than 1 million foreign nationals were on the waiting list for permanent residency in 2006, and this included more than 500,000 highly skilled immigrants!

But when I read stories like these I wonder if the reverse brain drain is happening with any seriousness. The US immigration authorities got 300,000 applications for employment visas from foreign professional workers recently! Apparently, 300,000 is the highest number of employment applications the immigration agency has ever received. Clearly, people are still desperate to get out of the country! Guess this ‘improved’ climate in India is not something they see, although the economy is growing. Corruption is still rampant and bureaucracy still throttling industries.

The only catch is that these would be immigrants will be hampered by the annual limits on green cards and might have to wait for as long as five years. And from the looks of it, these restrictions on immigrants don’t show any signs of going, in fact they might become tighter…

Reluctant Returnees!
It’s a pity though that India has to depend on America’s visa controls to get the benefits of these brains, instead of attracting them on merit. Also, many of those who will consider coming back will do it for the sake of being close to relatives, or maybe because of patriotic feelings…but how many will come back because India’s investment climate provides equal opportunity for all and ensures success based on the merit of their idea and nothing else? As I see it India has a long long way to go before it can inspire this kind of faith in would-be entrepreneurs, and I guess that is why America is up there today. The fact that the country is trying hard to keep the brains out, but they are still falling over themselves to get in tells us a lot.

Related Reading: Non-Resident Indians want Indian citizenship but the government says no
India’s universities make it to the top 200 in the world
Pay hikes in India highest in the world in 2007
More jobs across industries in India
IIM Salaries-2007

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22 Comments leave one →
  1. Vivek Khadpekar permalink
    August 24, 2007 10:54 am

    Nita,

    It is interesting to know that 25-plus % of 2,054 engg and tech companies founded in the US between 1995-2000 were by foreigners and of ALL (??? i.e. including those before 1995 and after 2000???) such companies 26% were founded by Indians. It would be interesting to know (a) how many of them were IT companies and how many in other areas; and (b) if a large proportion were in IT, how many survived? Also (c) what was the proportion of their contribution to the total GDP of the US and (d) how many jobs were created by them in the US and, if the firms did not survive, how many jobs were lost?

    The problem is that there is as much hype in the US about jobs being lost to foreigners as there is in India about the gains of outsourcing and offshoring by the US and other developed countries. The real issues are the ones you raise later in your post, about how inspiring is the bureaucratic climate in India to inspire faith in those who want to return and set up their own enterprises.

    Probably unlike you, I mean “bureaucratic climate” at the level of corrupt babus seeking to make a quick buck just because they have the power to control and prevent things happening; I do NOT mean at the level of policy. That which is made ultimately by our elected representatives who, I daresay, despite all their rottenness and corruption, have a more holistic perception of what India needs than the classes that clamour for a more liberal industrial policy (read “unbridled freedom to hire and fire, minimum or no taxes, special privileges beyond the laws of the land” etc.; for making Mumbai into Shanghai; for steering retail trade away from the small businessman to the megamall; for denotifying sanctuaries and national parks to be able to exploit natural resources; for flyovers in cities to benefit the 5% who use personal vehicles rather than the 95% who need better public transport.

    These are also the prescriptive aspirations of the middle class that acts as a buffer between the haves and the have-nots. Nothing wrong with looking up, but let us not forget that there is an even larger group further down the pyramid which also aspires to its share in the development pie. Deny it and — as a contributor one of the other threads in this blog has remarked — we will have a civil war on our hands, in which the middle class, licking the boots of those above and kicking those below, will be the one to get crushed.

  2. August 24, 2007 11:45 am

    When I was doing Engineering (1995-1999 batch)- My dream was to go to USA – that was to make better career & make good money for my living and to fulfill my dream of entrepreneurship. And same as me this was dream of most of my batch mates too.

    There were many reasons which use to de-motivate students community here:

    And two important reasons were:

    1. We were totally unsure of getting better job here in India
    2. We had brilliant project ideas and None of Corporate that we approached supported us. First of all getting appointment was like inventing something “new”.

    Unlike USA – Indian Govt. & Corporate rarely involve student community in R&D, which in-fact costs free to them.

    I have seen many companies in USA, UK & even China, who come up with top selling products thru R&D by student community. That is great isn’t it?

    Now, I think India needs super bridge b/w Colleges & Corporate.. Which can benefit everyone and our Country as well.

    I run a education consultancy and My education counselors who attend many students everyday.. they say: Nowadays Indian students mentality changed alot as there are many jobs available here itself. The prime reason they go abroad is to get International exposure & some for involving top notch R&D.

    Nita, Very good post…

  3. August 24, 2007 11:46 am

    Vivek, I am sure that a percentage of those companies are not doing well, but the fact that they took this survey in 2004-2005, I think means that a large percentage of those survived for several years. About your question, whether its all companies or just those in that particular period, I too was a litte unsure but finally decided it meant all, although that line which I have quoted does appear in the results of that particular survey. The link is in the first line of the post.
    And yes, I agree. Our policies at least seem to be heading in the right direction but looking at what happened in UP yesterday (Reliance Retail being banned), on the heels of what has happened in some other states (even TN!), I wonder if it is too much too soon.

  4. Phantom permalink
    August 24, 2007 12:32 pm

    Fact of the matter is that the number of NRi’s returning back to India has definitely increased over the past 3 years or so. I don’t have statistical data to present, but am quoting this more from anecdotal exprrience. From a segmentation perspective, what is interesting, and logical, is that out of the returning NRI’s , the proportion of white collar professionals has increased, owing to the much improved corporate oportunitues present in the indian market. And of course, as Vivek K put it, in the “south vs North India” discussion, many of these returnign professional NRI’s are sttracted by the high purchasing power parity offered by current compensation packages and also the social standing afforded to them as returnign NRI’s as well as being part of the upwardly mobile corporates.

    I get a sense that a fair number of entrepreneurs are returning too, seeing tremendous opportunity in the Indian market. I myself represent a breed of NRI’s who, while not re-locating to India, are keen to do business with and in India, to leverage the far greater commercial opportunitues offered by a growing market, as opposed to the mature saturated markets in the west. From my perspective, I also see it as a sort of personal quest, an attempt to be a valid component of the economic boom that is propelling the country forward.

    And of course, because of this exodus of NRI’s back to India, a whole spate of service and product providers have spruing up, to offer these NRI’s a sort of parallel lifestyle, to cushion the impact of returning to a developing country. This is most prevalent in Bangalore, where because of the large numbers of returnign NRI’s (mostly in the IT and BPO sectors), entire residential complexes have sprung up that offer the kind of properties and designs not unlike what one might see in LA or a townhouse in London. Similarly, many International schools have come up, which offer a cosmopolitan student bpdy and curriculum, where almost every third or fourth student is the child of a returned NRI.

    Of course, there is also another segment of returnign NRI – the blue collar or lesser qualified professional.

    What is however missing is returning academics, scientists…..and we will never see serious numbers in thsi category coming back to India unless industry and govt creates suitable eomplyment and research opportunities for them. The MNC and top Indian corporates attract their share of scientists and research staff though.

  5. Ramesh Natarajan permalink
    August 24, 2007 1:43 pm

    Nita,

    Very interesting subject for discussion!

    I would say, the tax rates in India are much higher and the citizens who pay tax don’t seem to get any benefit out of it (they all are mostly mismanaged and spent by politicians). When I mean benefits to citizens, I mean the European countries where they pay taxes slightly higher than India (40 to 50%) but they get all the benefits from the Government – including Health, Education and better infrastructure at free of cost.

    Though the salary levels have increased in India, they are much lower compared with US, UK & middle east (A recent survey revealed that the highest salaries are paid in Dubai & few other middle east countries – Qatar, Saudi Arabia).

    We need more Business Leaders like Ratan Tata, Ambanis, Vijay Mallya to accelerate the growth of Indian Economy.

    Regards,
    Ramesh Natarajan, Dubai
    Global Indian

  6. August 24, 2007 5:32 pm

    Bharath, thanks for sharing with us your personal experience.

    Phantom, true, NRI’s are returning and as you said social status is something they crave for and get over here as they automatically become the elite. Well, lets hope that more people come back…!

    Ramesh, like you said the reasons why NRI’s often suffer here is because of the lack of infrastructure. Even if they live in posh colonies they finally have to brave it on the roads like the rest of us ordinary citizens. The heat, the dust, the crowds…! We are used to it, but they aren’t! I think only someone with a strong motivation will stick on.

  7. August 24, 2007 6:17 pm

    well we need to kill corruption first..and its not like USA has amazing living conditions…is it?? i can’t understand why people want to be living in a place where they don’t get respect..

  8. Anonymous permalink
    August 24, 2007 7:03 pm

    Hi,

    I am an ardent fan of your writings. I have always been silently reading your articles and commending them in my mind.
    I am also an NRI right now and we are planning to return to India and the reason is – you guessed it – my husband’s parents! Well, I do want my parents and sister nearby, but you know how the patriarchal mindset is especially that of the husband’s family!
    We were talking about the pros and cons about returning to India especially for our children. The cons would be traffic congestion, pollution, unhygienic surroundings (which I noticed even I was growing up in India) and many more!
    The pros would be that the kids would be able to learn their mother tongue and grow up (mainly with their cousins on the father’s side) with their cousins and ofcourse get the love of their relatives and learn our culture.
    My reason for returning to India is of course the above and also to hopefully better my neighbourhood after what I have seen and learnt here.
    Unless India learns to clean up and grown in all facets of life just like developed countries and provide basic facilities to all, there won’t be a complete reverse brain drain. If India becomes attractive with clean surroundings and beautiful parks, playgrounds, affordable quality medical care, with very little corruption -well all this is a beautiful dream – no one would think twice before going to India.

  9. August 24, 2007 7:58 pm

    Hey Anonymous! Welcome back to India in advance.🙂 We need you out here!! All those reasons you give for wanting to come back seem sound to me, and true you might have to pay a price in terms of physical comfort but in my view your soul will be happy. I don’t know how to explain it, but when I stand on my earth, in my country and think of my generations of my ancestors having stood on this same earth, when I thnk of my countrymen and women by my side…I feel something. I know I am explaining this very poorly but I am the kind of person who would have felt hollow living forever in a foreign country…I need to feel connected and I feel this connection here, in this place! ts a connection with me and the universe which I can feel only here. Because I belong here..thats all I can say.
    And I think that people like you, with the breadth of vision that you have after living for years outside have a lot to give to India. There are so many ways to contribute and so many organisations working for the betterment of the environment and social upliftment but they need more people. More people who have a vision for India, like you do.

  10. August 24, 2007 8:07 pm

    Vishesh, I know what you mean, I used to feel exactly like you do. But so many of my relatives are there and after talking to them I realised that they see something else….they don’t see what we do.
    Some of them develop a hatred for India and they hold on to it because it gives them a reason to stay away, it alleviates their guilt. I believe that those NRI’s who show the maximum hatred for India love it the most.🙂
    But I think most Indians there are very happy, and as I said, they see something else. Each to his own. Every person has a right to seek happiness.

  11. Phantom permalink
    August 26, 2007 5:31 am

    Nita – I hardly think that mst NRI’s have a hatred of India. After all, it is their country, and once can never lose the feeling of “apnapan” with one’s own country. U shoun’t confuse negative opinions made by NRI’s about inherent defeciencies that still exist within India, with an innate sense of dislike for the country. As an NRI I too get offended when another NRI forms a judgement about India based on thsoe areas fio defeciency (traffic, pollution, corruption, poverty etc)…but in my experience (and I’ve had interactions with NRI’s from USA, Camada, AUS, NZ, UK) theres only a small minority of NRI’s who truly have formed a totally negative opinion of the country. However, even I am am critical about the defeciencies that plague our country…..just that I choose to be objective about it…its doesn;t dilute the love I have for my country etc. And I suspect the majority of NRI’s are in this basket.

  12. August 26, 2007 7:39 am

    Phantom I did not say that most NRI’s have a hatred of India! I really cannot say ‘most’ as I have no idea how many! But yes I have seen some who have a genuine hatred, and see nothing good in India. This not about being critical, I am critical too. A critical faculty to my mind is good! I am talking of unbridled hatred, and yes I have not met anyone living in India permanantly to feel that.
    What I find strange is that these people who see no good in India are in no way responsible for the better quality of life they are experiencing in the developed countires. They are not responsible and nor are their ancestors! Those countries have not been built by Indians. Today if India is what it is, all Indians have contributed, even if it is because they chose not to vote.

  13. August 27, 2007 4:33 am

    This is more or less an aside, but I think it is nearly suicidal for the United States to discourage immigration. Not only does it bring immense economic benefits, but also cultural benefits. I am dismayed that the current Administration has placed such stringent restrictions on it.

  14. August 29, 2007 10:19 am

    Paul, well its good to hear that you feel this way, being an American. I always wonder what the general population in the US feels, and somehow one gets the feeling that the american people are not keen abt immigration.
    btw, your comment had gone into spam and just recovered it!

  15. anon permalink
    September 17, 2007 10:34 pm

    Will the reverse brain drain turn into a flood?

    Ummm,…. I don’t think so!

    http://www.livemint.com/2007/09/14005444/Return-of-the-native.html

  16. lita suerte felipe permalink
    October 11, 2007 9:53 am

    For third world countries like the Philippines, human capital flight will further exacerbate economics woes of the country unless the government would sincerely address this issue by reversing the flow . Example is concerted effort of developing the country as a medical tourism capital, upgrading medical facilities, providing greater incentives for private health investors, etc.

  17. Aleksandr permalink
    April 3, 2009 3:42 pm

    Despite the economic growth of India (or even China for that matter) in figures, India is still far behind the developed world. While a GDP growth of ~ 7.5% impressive to put on world forums, it is not such a big deal because on a per capita basis, Indian economy is miniscule to begin with. India has a trillion dollar economy because it has a billion human population. Divide the total GDP by population, and the incomes of the average Indian is outdone by even the Libyans and Nigerians.

    If we ignore statistics for a while, it is easier to find oppotunities in the US or Europe for personal and financial growth as compared to India. Living in India entails finding your way through corruption, low purchasing power, high price consumer goods and a unmutating obsession with culture that tends to strifle creativity and enterpreneurship.

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