Immigration Policy’s Role in Bolstering the U.S. Technology Edge

In a December 2022 speech to MIT, Secretary of Commerce Gina Raimondo addressed one of the greatest strengths of the United States’ technological innovation ecosystem: the ability to attract and retain some of the world’s best STEM talent. The remarks coincided with the 50th anniversary of the opening of relations between the People’s Republic of China and the United States and as both countries enter an era of strategic competition anchored by economic rivalry. As the United States seeks to maintain an economic edge over its main competitor, the Biden administration recognizes that the country should remain at the forefront of global innovation during this era of technological change and competition. One of the cornerstones of promoting U.S. innovation lies in the country’s ability to continue attracting global talent to drive research and development efforts.

Q1: What is immigration’s effect on the U.S. innovation landscape?

A1: Many bodies of research affirm that a nation’s openness to migration enhances overall income per capita by increasing the range of skills and ideas in the host country. Beyond general economic opportunities, however, immigrants are particularly effective at bolstering their adoptive country’s enterprise landscape. The United States has indeed benefited from that trend. The Mercatus Center’s Robert Krol, who specializes on immigration and international trade issues, compiled a summary of evidence about immigration to the United States that illustrates how it increases innovation, firm startups, and general economic dynamism. The main causes of immigrants’ penchant for fostering innovation can be explained by a heightened tolerance to making high-risk/high-reward decisions, a growing percentage of degrees in STEM fields, a higher likelihood of collaborating with foreign inventors, and a more in-depth understanding of international markets. A 2022 working paper from the National Bureau of Economic Research finds that immigrants “make up 16 percent of all US inventors, but produced 23 percent of total innovation output, as measured by number of patents, patent citations, and the economic value of these patents.” Their study also shows how these immigrant entrepreneurs have an innovation dividend, making U.S.-born individuals more inventive. All in all, immigrants are responsible for 36 percent of aggregate innovation, much of which is linked to their interactions and contribution to the work of U.S.-born peers.  

Q2: How does the technology sector benefit from immigration?

A2: In the technology sector, immigration’s effect on innovation is even more pronounced. The NBER researchers found that around 34 percent of engineering and technology companies were founded by immigrants between 1995 and 2005—and 52 percent of Silicon Valley startups. In addition, immigrants have founded or acted as key managers of 55 percent of Silicon Valley’s startups valued above $1 billion. Immigrants are also essential in academic research of critical technologies. Immigrants make up a large majority of graduate students in artificial intelligence (AI)-related fields such as computer science and electrical engineering. A 2014 working paper from the National Bureau of Economic Research finds that H-1B-driven increases in scientists, technology professionals, engineers, and mathematicians are responsible for between 30 to 50 percent of the aggregate growth in U.S. output between 1990 and 2010. The Council on Foreign Relations’ Laura Taylor-Kale recently highlighted immigration’s contribution to technological advances in light of the passage of the Inflation Reduction Act, the CHIPS and Science Act, and the Infrastructure and Jobs Act.

Q3: How has the Biden administration framed the role of innovation in its policy goals?

A3: The Biden administration’s senior officials have emphasized the essential role of innovation in achieving U.S. foreign policy objectives. Secretary Raimondo’s remarks noted that the foundational element of the U.S. strategy to combat systemic Chinese challenges to the global rules-based order is to make transformational investments in U.S. innovation. At the Global Emerging Technologies Summit, National Security Advisor Jake Sullivan described how the United States is “pursuing a modern industrial and innovation strategy to invest in our sources of strength at home, which also powers our strength around the world.” One of the main pillars of this strategy, according to Sullivan, is nurturing top STEM talent. National Economic Council director Brian Deese reinforced that idea as he laid out plans for a Modern American Industrial Strategy, in which technological innovation based on encouraging the development of a talented and diverse workforce keeps the United States on the cutting edge.

In addition, much of the U.S. national security apparatus depends on maintaining the country’s technological edge. A report by James Manyika and Admiral William H. McRaven assessed that the Defense Department and the intelligence community will fall behind without access to more technologies and talent. To that end, several specific areas of innovation are the forefront of the national security discussion. Sullivan and Raimondo both pointed to computing-related technologies (such as quantum information systems and AI), biotechnology, and clean energy. Deese stressed the importance of a connected, digital economy through the expansion of high-speed internet access. The White House has released several iterations of a Critical and Emerging Technologies List that summarizes a subset of novel technologies that would chart new pathways in innovation and further national security objectives. All in all, it comprises 18 categories, from advanced computing to space technologies and systems, that will shape tomorrow’s innovation landscape. The clear bottom line of these remarks and findings is that “advancements in science and technology are poised to define the geopolitical landscape of the 21st century.” Creating an environment that promotes innovation is therefore an imperative for the United States to achieve its foreign policy objectives.

Q4: How can the United States improve its immigration policies to bolster its technological advancements?

A4: Experts have identified several avenues of improvement within U.S. immigration policy to boost economic activity and innovation. Harvard Business School’s William R. Kerr and Sari Pekkala Kerr show the most evident path is to remove caps on employment-based permanent resident status, as that system is the most broadly accessible channel for employment-related immigration. The corollary to that suggestion would be to ensure that the United States Citizenship and Immigration Services distribute all the green cards allotted by Congress. Large U.S. tech players, such as Amazon, have decried how the agency fails to meet that allotment: in 2021, over 65,000 employment-based green cards were not used. Their research also finds that another avenue could be to increase the number of H-1B visas: while the annual cap for FY 2023 was 85,000, some proposals aim to increase that number by 50 percent. Likewise, the Optional Practical Training system could be improved by increasing eligible years of work for graduates, removing burdensome demands for foreign graduates’ work to be related to their specific field, and exempting participants from the H-1B lottery process. Lastly, a dedicated startup visa program for foreign entrepreneurs, which was present in an earlier version of the CHIPS Act, would also benefit U.S. innovation in critical technologies.

William A. Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Thibault Denamiel is an intern with the Scholl Chair at CSIS.

Thibault Denamiel

Intern, Scholl Chair in International Business