The late scholar Julian Simon once argued that “the ultimate resource is people—skilled, spirited and hopeful people who will exert their wills and imaginations for their own benefit, and inevitably they will benefit not only themselves but the rest of us as well”.
For decades, the US has been a magnet for these ultimate resources—men and women from around the world drawn to a country that let them realize their talents for their own benefit. It turned out for America’s benefit, too.
Today that may be changing. Over the last several years, according to new research led by Duke University’s Vivek Wadhwa, “a substantial number of highly skilled immigrants have started returning to their home countries, including persons from low-income countries like China and India who have historically tended to stay in the United States.”
The public response in the West to their findings has been marked by anxiety. The US is suffering a “brain drain” it is said, one that is “undermining the nation’s future”. Working as I do in the US capital, I am not happy to see these talented men and women leave. It is to be hoped that the US can make itself as attractive as possible a place for entrepreneurs to come work and build businesses.
Wadhwa and his team surveyed at least 1,000 returnees to find out why they went home. And there is some good news implicit in the findings.
Among the biggest reasons for this return migration trend is that the opportunities available to these returnees in their home countries are comparable with—or exceed—those available to them in the US.
According to Wadhwa and his team, the factors explaining a return include improved quality of life available at home; growing demand for their skills in their home countries; rapid professional growth opportunities at home; attractive compensation; and, perhaps most importantly, expanded capacities to start their own businesses. Wadhwa reports that the majority of returnees “believed that their best opportunities for entrepreneurship were at home”.
The US has long prided itself as the land of opportunity, and in many ways it still is. But now it seems the US must make room for other lands of opportunity as well—including India.
To get a sense of how historic the shift is under way, it is useful to remember just how important free migration has been to raising individual welfare. Harvard researcher Lant Pritchett has spent the last several years documenting the striking wage gains realized from labour mobility, when developing nation residents cross borders into developed nations. These massive wage gains explain a lot of the pressure to migrate from one country to another “because (wage rates) are not primarily explained by differences in the characteristics of people,” Pritchett writes in his book Let Their People Come. Instead, “wage rates are predominantly characteristics of places”.
This explains why millions of immigrants flood to the US, a country that offers the intangible institutional and cultural mix necessary to maximize a person’s entrepreneurial and commercial talents. Given the powerful welfare gains possible under this kind of residence arbitrage, the decision of so many talented Indians to return to the subcontinent is striking.
Make no mistake—India is still an extraordinarily poor country in many respects, with enormous challenges. Wadhwa reports that many returnees reported it was initially difficult to resettle back at home. The reasons? “Traffic and congestion, lack of infrastructure, excessive bureaucracy and pollution.”
But these challenges must now be seen in a new context of a country growing so rapidly, generating so much opportunity and raising living standards so profoundly that it is attracting its talented sons and daughters back home.
To the extent that this state of affairs came about because of improving opportunities in India— as opposed to a paucity of opportunities in the US—this is good news. Even if it gives Americans like me pause. The growth miracle that has swept South Asia in recent years is one of the great humanitarian achievements in history, worthy of celebration, not fear. While I wish Indian engineers and scientists were increasingly planting roots in the US—and while I hope American policymakers take steps to make the US more attractive for newcomers—that so many Indians feel they can now realize their dreams in India is a giant achievement.
Nick Schulz is DeWitt Wallace Fellow at the American Enterprise Institute and a co-author of From Poverty to Prosperity: Intangible Assets, Hidden Liabilities and the Lasting Triumph Over Scarcity (forthcoming from Encounter Books). Comments are welcome at email@example.com