WHILE THE OPENING days of the Republican National Convention featured lots of anti-immigrant red meat, and heard Wednesday night from GOP vice presidential pick – and Yale Law School grad – J.D. Vance, who has made hay taking big swings at US higher education, a new paper from a Boston-based free-market-oriented think tank takes a very different tack on the two issues, arguing that smarter, more welcoming policies on international students could unlock billions of dollars in new economic activity and create hundreds of thousands of jobs in the US.
The paper from the Pioneer Institute says the US has made little change to its policies governing foreign students in recent decades, while competitor countries that also host lots of foreign students have adopted changes aimed at easing the path for those with entrepreneurial goals to remain after their studies and set up businesses there.
“From an economic standpoint, international students are a tremendous resource, and we’re not doing all we can to attract them and retain them,” said Aidan Enright, a co-author of the paper.
The paper says visa processing for would-be foreign students takes twice as long in the US as in other countries. In 2001, the US educated 28 percent of the world’s foreign students, but that number fell to 21 percent by 2021. In a 2019 survey of 500 US colleges and universities, the Pioneer paper says, 87 percent cited visa delays and denials as part of the reason for the decline.
For those international students accepted to study in the US, the report says, current policies hinder their ability to remain and work here after getting their degree. A cap on H1-B visas – the main path for US employment of foreign nationals – means 80 percent of those applying for work permission are rejected in a lottery for the slots before even having their petition reviewed.
There are other pathways into the work world for international students, but they often have rules that also stymie entrepreneurial aspirations, the report says. For example, a program known as Optional Practical Training allows STEM graduates to remain and work in the US. Like the H1-B visa, however, it has requirements that they have an employer sponsor, which means they have to work for the employer and may not have the time to pursue a startup idea.
All told, the paper estimates that US visa restrictions and processing delays held back creation of 150,000 incorporated businesses and 580,000 US jobs between 2013 and 2021.
International students are disproportionately concentrated in STEM fields – science, technology, engineering, and math – that give rise to high-growth business development. What’s more, studies show immigrants across all levels of educational attainment are twice as likely as their US-born peers to start new businesses. The result, according to the paper: International students are responsible for nearly a quarter of all current billion-dollar private
startups in the US. Those 143 companies have created nearly 1,000 jobs each and more than $591 billion in value.
Nearly 1 in 5 of the international students behind billion-dollar startups were educated in Massachusetts, underscoring the outsized potential for the Bay State to benefit from policy changes that streamline the path for international studies from higher education to business formation.
Massachusetts has taken advantage of a provision of 2000 federal legislation that essentially created a workaround to the H1-B visa cap to promote business development. Congress created an exemption from the H1-B visa caps for higher education institutions and nonprofits. In 2014, Massachusetts became the first state to create a Global Entrepreneur in Residence program, under which immigrants with advanced STEM degrees are given part-time jobs as mentors in public higher education institutions, which leaves them time to also pursue startup ideas.
The report says Massachsetts state government has invested $3 million in the effort, which has generated over $1 billion in investment and created more than 1,600 new jobs. “But it’s not a long-term solution,” Enright said of the program.
The report urges the US to adopt much more aggressive, targeted policies aimed at retaining international students who start businesses. Canada and the UK, for example, have developed entrepreneur-specific visas.
“Canada has made it particularly easy compared to the US for international students to remain and work there or open up businesses,” said Joshua Bedi, a co-author of the Pioneer report. He said Canadian firms have gone so far as to advertise that fact in places in the US chock-full of STEM graduates. “We have seen Canadian companies paying for billboards in places like Silicon Valley saying, ‘H1-B visa problems? Come to Canada,’” he said.
“Without reform, the US will continue to depress high-value firm creation by international students and cease to be the primary destination of global talent,” the report says. “Given an aging population and labor shortages, the US needs to take full advantage of this opportunity. Increasing globalization, characterized by unprecedented mobility and interconnectedness, indicates that international student flows will likely increase. Countries that recognize the value of that source of talent and capitalize on it will reap the benefits for years to come.”
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