Dominic TakeDominic’s Perspective: Rebuilding the U.S. Innovation Economy

By Dominic Ng

Sep 28, 2020

Dominic Ng, chief executive officer of East West Bank, said that with recent steps to reduce US access to global talent to protect US jobs, the US needs more openness to the world, no less.

The United States must face the risks of foreign investment while maintaining openness to restore its reputation as a hotbed of international talent, said Dominic Ng, CEO of East West Bank.

On the night of July 6, students around the world gathered around their phones, frantically texting their friends and rethinking their plans. Earlier today, the United States announced a ban on international students from entering the United States to study if their schools decide to hold distance learning courses. Just two weeks earlier, the White House had decided to prevent foreigners from looking for work in the United States for the rest of the year, even those who are just returning home to renew their visas. As these students and workers scrambled to resolve the immediate issues of canceled flights and abandoned apartments, many began to grapple with a deeper question: Do I have a future in the United States?

While much of the Trump administration’s anger has been directed at Chinese students and researchers, these measures have reduced U.S. access to global talent in general, apparently to protect U.S. jobs at the aftermath of the pandemic. But this point of view has the thought backwards. With the prospect of a post-pandemic recovery, the United States needs more openness to the world, not less.

Economic engine of immigrant talent

Openness to talent and foreign investment has been a critical ingredient in the US innovation economy. Half of all unicorn startups in the United States have at least one immigrant founder. These companies employ tens of thousands of Americans and provide products and services that strengthen the economy. Think of the small financial services company Stripe, whose co-founder is Irish. Or the video conferencing company Zoom (Chinese), or the data analytics company Sisense (Israeli). Without the presence of corporate minds from around the world, Silicon Valley loses its magic.

The United States’ response and recovery from the COVID-19 shock hinges on openness to immigrants. More than 2.5 million immigrants are employed as health workers, including 1.5 million as doctors, nurses and pharmacists. A quarter of doctoral students in biological sciences and biomedicine are here on temporary visas.

Foreign capital is also important for the recovery. Many companies in the United States working on a coronavirus vaccine are partially or completely foreign, such as AstraZenica and GSK, and since 2000, more than a third of venture capital fundraising in the US biotech industry have involved at least one foreign investor.

The key to a manufacturing revival in the United States

Donald Trump and Joe Biden both share a vision to bring high-tech manufacturing back to the United States in the wake of the pandemic, but that cannot be done if we close our doors to the world.

Foreign companies provide more than 20 percent of manufacturing jobs in the United States, and they will be critical to building the manufacturing industries of the future. Take electric vehicles, for example. The Gigafactory is the largest electric vehicle battery factory in the United States, built through a partnership between Tesla (an American company founded by Elon Musk, himself an immigrant) and Panasonic, a Japanese company. The plant cost nearly $ 5 billion and employs more than 7,500 people.

Position of foreign direct investment in the US manufacturing sector

To stay on the cutting edge of technology, companies like Tesla need access to the world’s best scientists and engineers. Consider that half of master’s students and two-thirds of engineering postdoctoral fellows in the United States were foreign born. These students have the crucial and in-demand skills needed to support high-tech manufacturing, not only in electric vehicles, but also in robotics, semiconductors, biotechnology, and countless other growing industries. And if we tell foreign-born students in high-demand fields that they are not welcome here, they will go elsewhere: to Canada, Germany and other countries that recognize the importance of researching and retain global talent.

Return to the American virtue of openness

The pandemic recovery is not a reason to close the door to foreigners but an opportunity to redouble our efforts on the American virtue of openness. The Trump administration has rightly taken steps to ease the ban on H1-B visas in recent weeks, but it should go further and reverse the order in its entirety. Many foreign workers in American companies are still stranded abroad, disrupting the recovery. Getting businesses back up and running must be a top priority.

Second, the United States must establish clearly defined rules governing what activities are permitted for foreign students and researchers. These rules should follow the principle of “small court, high fence”, applying strict restrictions only to the most sensitive areas of research. This approach preserves openness and focuses efforts on what matters.

Once those rules are established, they should be administered fairly. According to a study, 21% of economic espionage cases involving defendants with Chinese names are never convicted, compared to 11% of defendants with Western names. In short, anti-Chinese sentiment and racial profiling has led Chinese and Chinese Americans to be more likely to be unfairly accused of stealing trade secrets than others.

Third, we must reassure foreign workers and students that they are welcome in this country. Years of hostile rhetoric and nativist policies have damaged America’s reputation as a home of the world’s best and brightest. It won’t be easy to solve, but we can do it if we make openness and inclusion a cornerstone of our stimulus package.

The United States has long benefited from foreign talent and capital. As we prepare to recover from the pandemic, we need their ingenuity and diligence more than ever. By reaffirming our commitment to openness today, we can show the next generation of scientists, inventors and entrepreneurs around the world that they have a future here.

This editorial first appeared on Forbes China.

Read more about Dominic’s Take on US-China business


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