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Wake up, America: The alarming realities of today's reverse brain drain

By David Heenan
web posted September 12, 2005

"Give me your tired, your poor,
your huddled masses yearning to breathe free …"
--Emma Lazarus

Forget terrorism. Forget weapons of mass destruction. The next global war will be fought over human capital. For years, immigrants provided a constant pipeline of brainpower to the United States. From Alfred Hitchcock to Albert Einstein, a steady stream of energetic and highly skilled newcomers yearning to breathe free propelled America's ascendancy.

Today, the country continues to benefit enormously by being a magnet for inventive and ambitious people who stimulate the economy, create wealth and improve overall living standards. Chinese and Indian immigrants run nearly a quarter of Silicon Valley's high-tech firms. Eight of the 11 Americans who shared Nobel prizes in physics and chemistry in the past three years were born elsewhere. Nearly 40 percent of MIT graduate students are from abroad. More than half of all PhDs working here are foreign-born, as are 45 percent of physicists, computer scientists and mathematicians. One-third of all physics teachers and one-quarter of all women doctors immigrated to this country.

However, the United States can no longer live off of its transplanted foreigners. Beginning in the 1990s, a giant sucking sound could be heard as their native countries improved economically and politically. Many of America's best and brightest began hotfooting it home in search of another promised land.

A decade ago, Edward Tian said goodbye to Lubbock, Texas, his pickup truck, horseback riding and seven years of studying brown snakeweed to return to Beijing. He took home a Texas Tech doctorate in ecology and a small Internet software company he co-founded in Dallas. That business, Nasdag-listed AsiaInfo, went on to become China's premier systems-integration company, creating as much as 70 percent of China's Internet infrastructure. "I wanted to do something to change people's lives in the next five years, not the next 200 years," says the 41-year-old entrepreneur. (On the heels of AsiaInfo's success, Tian went off to found telecom giant China Netcom, where he serves as chief executive.)

After centuries of importing brainpower, the United States is now a net exporter. In the past few years, nearly 200,000 foreign-born Americans -- many of them, like Dr. Tian, highly talented techies -- have returned to their motherland every year. This reverse brain drain, or "flight capital," stimulated in part by lucrative government incentives, has spawned flourishing new scientific havens from South Asia to Scandinavia.

Given the departure of Tian and many others, it was perhaps inevitable that the land of opportunity would turn its back on newcomers. In the aftermath of the Sept. 11, 2001, terrorist attacks, more and more Americans have sought to pull up the drawbridge. U.S. Citizenship and Immigration Services has issued fewer temporary H1 B work and student visas and applied much stiffer requirements for newcomers. The anti-immigrant sentiment could not have come at a worse time. Survey after survey reveals that the United States faces a massive labor shortage, particularly for knowledge-oriented workers. The same is true for Germany, Japan and the other industrial powers. But while many countries are extending the welcome mat to gifted outsiders, the United States is taking the opposite tact. On its present course, our nation of immigrants could become a nation of emigrants.

Credit Taiwan for inciting the exodus. With the creation of its Hsinchu Science-Based Industrial Park in the 1980s, the Republic of China began cashing in on the knowledge-economy sweepstakes, recruiting hundreds of Taiwan-born engineers and scientists from the United States with valuable skills, experience and contacts. Located near top universities and government research institutes and offering low-cost land, green vistas and a minimum of bureaucracy, the Silicon Valley-style technology park helped spur a high-tech gold rush, building a critical mass of repatriated "brainiacs." Roughly one-third of its companies were founded by returnees from America. One of the first recruits was Stanford-educated Miin Wu, who, in turn, enticed a group of 28 Taiwanese homeboys to launch Macronix International Co., Ltd., in Hsinchu. "When I was at Intel, I dreamed of starting my own company," recalls Wu. "Here we mix a U.S. technology base with Taiwanese manufacturing technology." Today, the manufacturer of high-end computer chips boasts a stock market capitalization of $2 billion.

Following the footsteps of the Taiwanese, Singapore also is rolling out the red carpet to foreign scientists and entrepreneurs. One highly prized globetrotter is Hong Kong-born Edison Liu, former director of clinical sciences at the U.S. National Cancer Institute, who was wooed to head the glitzy Singapore Genome Institute. "It's a little like surfing -- you see a great wave and you paddle like crazy to catch it," says Liu of his new employer. "What they have done in coordinating investment, immigration, education, infrastructure and medical systems have been masterful. It's the most astounding social engineering I've seen in my life."

Even Vietnam is trying to clone its transplanted talent. For years, its nearly 2.7 million emigrants -- a community half the size of Ho Chi Minh City -- were called Viet Kieu, or "overseas Vietnamese." More than half -- 1.5 million -- live in the United States. In the early 1990s, they started to trickle back to check out the new, more liberalized Vietnam. Now, the trickle has become a flood, with up to 300,000 a year, many of them returning permanently.

One prodigal son is David Thai, a 29-year-old Californian who left his homeland in 1972. After graduating from the University of Washington, he revisited Vietnam with $700 to look for an opportunity. Today, Thai runs a successful string of coffee shops in Hanoi and has investments in a coffee plantation and a coffee-export business. With its darker years behind it, the Communist-controlled government is pulling out all stops to make other Viet Kieu feel welcome, including posting jobs on VietnamExpress and VietnamWorks, Web sites directed at overseas Vietnamese. Vietnam is even making a major push to turn itself into an outsourcing powerhouse. One wonders: What would Ho Chi Minh think?

Many of these well-trained fugitives are more turned off by America's values than its vexing, heavy-handed immigration policies. Single-parent families, bare midriffs, drugs and public vulgarity -- the dumbing down of the U.S.A. -- are especially troublesome. Second-rate schools focus more on metal detectors than mathematics. Others paint the country in darker hues, complaining about the national obsession with power and money. "A culture with no culture," is how one disenchanted scientist puts it. Three years ago, Kwume M. Botsu, vice president for Rising Data Solutions, an Internet call company based in Gaithersburg, Md., returned to Ghana to set up a 100-employee operation. The 20-year IBM veteran traded in his white button-down for a dashiki, the colorful African-print shirt of his homeland -- largely to reconnect with his core values.

Sensing these attitudinal shifts, many countries also are intensifying their courtship of homegrown Americans. One Yankee joining the wanderlust is Norman Prouty. The 60-ish executive arrived in Bangalore in 1992 to provide venture capital to high-tech entrepreneurs in India's "Silicon Plateau." The Yale graduate worked for 35 years in senior financial jobs at Citibank and Lazard Frères. Rather than retire, he brought a lifetime of powerful contacts and business acumen to the capital-starved country. Why India? It houses the world's largest English-speaking population outside the United States. Since most software engineering is done in English, this is a major advantage. In addition, the world's second-most populous nation has 4 million scientific and technical professionals, including thousands who hold American doctorates.

Already Prouty's company, ICF Ventures, has done dozens of deals to fund Indian start-ups. "Our funds come from some of the United States' most successful investment bankers, venture capitalists and institutions," says the transplanted expat. "These people have ridden some very fast horses in the U.S., and in India they see the opportunity to ride even faster ones."

For Sandra "Sam" Gershenfield, a slower, not faster, pace was the watchword. When terrorists flew two airplanes right into the place she was working as a top business consultant, she headed straight for the safest spot she could think of: New Zealand. "The U.S. had just become so unsafe and scary," she says from her new digs north of Auckland. "I'm so incredibly grateful to be here. If I had to describe this experience in one sentence, it's this: I found peace."

For many years, the United States benefited from minimal competition in stockpiling talent. But in the ebb and flow of globalization, attractive alternatives are available elsewhere. "We are losing our lead every day," warns Andrew S. Grove, the Hungarian émigré who co-founded Intel and made Silicon Valley all but synonymous with the entrepreneurial spirit that drives the Innovation Economy. "The distance between us and the rest of the world is eroding every day, because knowledge doesn't stay confined and people don't stay confined."

The United States is between Scylla and Charybdis. It has two choices: Develop more home-grown talent or import more talented workers from abroad. The first option is unlikely to produce results, at least in the short term. Therefore, the nation will have to attract and retain more immigrants, while holding on to its existing pool of native- and foreign-born brainpower. Simply put, America can no longer afford to see its human capital voluntarily abandon ship.

Of course, any serious effort to break the reverse brain drain is not a cure-all for the nation's burgeoning talent deficit. However, spurring immigration reform, extending the welcome mat, and targeting high-potential foreigners can help strengthen America's knowledge-oriented workforce. But attracting and retaining imported brainpower is only half the loaf; the other half is upgrading the quantity and quality of our native-born sons and daughters. Therefore, the United States must place equal attention on thorny problems, such as reforming public education, upgrading universities, stimulating science and technology -- and a good deal more.

America cannot afford to equivocate. For centuries, our leaders have responded to similar challenges. Yet, history offers many examples of other great countries that came to catastrophic ends because of their unwillingness to respond to change. Nothing short of meeting this threat will safeguard America's talent base and shape the kind of society in which our children and their children will prosper. The time to act is now.

David Heenan is a leading expert on globalization and author of Flight Capital: The Alarming Exodus of America's Best and Brightest (Davies-Black, $24.95). His career in business and academia has taken him from Citigroup and Jardine Matheson to the B-schools at Wharton and Columbia. Today he serves as a trustee for the Estate of James Campbell, one of the nation's largest landowners with assets of more than $2 billion. Contact him at www.flight-capital.com.

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