A self-inflicted wound

The immigration policy undermines the economic characteristics - entrepreneurial vitality and mastery of new advanced technologies - that make the US the envy of the world. Just like Google, eBay and Yahoo, more than half of engineering and technology companies founded in Silicon Valley from 1995 to 2005 had at least one foreign-born founder, more than a third of US venture capital-backed technology firms report shifting investments and jobs outside the country due to restrictive regulation and America’s largest, most competitive companies cannot get visas for foreign high-skilled workers they want to hire.

Meanwhile, contours of the global battlefield for talent are rapidly changing. The recent proposal for an EU “Blue Card” would allow high-skilled workers from outside the EU to work in multiple EU countries, just one example of a new trend across the OECD. Affected by more rapid population ageing than the US, other OECD countries aggressively work to liberalise their high-skilled immigration laws, while simultaneously tightening regulation of low-skilled and humanitarian-based immigration. Ironically, the other nations frequently copy US policies, particularly those that attract and retain foreign students.

Equally worrisome for the US, the top countries of origin for high-skilled migrants - fast-growing China and India - offer incentives for skilled workers to return home. In 2007, China launched its “green passage” initiative, aimed at luring back tens of thousands of acclaimed overseas Chinese scientists, engineers and executives with promises of guaranteed university places for their children, exemption from household-residence registration - or hokou - requirements and tax benefits.

The US - historically the world’s country of choice for foreign high-skilled workers - has the most to lose from any change in these human-capital flows. While the rest of the rich world has caught up in welcoming high-skilled foreigners, the US could soon struggle to attract global talent.

With the skill-base of the US workforce declining at an accelerating pace relative to the rest of the world, America in the 21st century will need foreign high-skilled workers more than ever. At stake is the ability of the US economy to thrive in the global marketplace.