Friday, March 04, 2005

Researchers argue tight restrictions on student visas for foreign graduate students impedes US innovation

Gnanaraj Chellappa and Aditya Mattoo of the World Bank and Profesor Keith Maskus of the University of Colorado argue that tight restrictions on student visas for foreign graduate students threatens the quality of research coming from U.S. universities, thus eroding America’s global dominance in innovation.

The researchers also found that a 10 percent increase in the number of foreign graduate students in the United States would raise patent applications by 3.3 percent, while patents granted to universities would increase by 6 percent and non-university patent grants by 4 percent, all of which help fuel economic growth in the United States.

Plugging data from the U.S. Census Bureau and the National Science Foundation into a model, the researchers tested the productivity of domestic and foreign graduate students and domestic and foreign skilled workers in producing patent awards to university and private businesses.

“Our results show that foreign graduate students and immigrants under technical visas are vital when it comes to developing new technologies in the American economy,” Maskus said. “The impacts are particularly pronounced within the universities but spill over as well to non-university patenting.”

Innovation is important for economic growth because when a successful product is developed and patented, it can’t be reproduced without permission of the patent holder, meaning the profit margin will be higher until the patent expires.

Studies have shown that recent growth in the U.S. economy has been generated largely by advances in technology and these technology improvements have mostly been driven by the rate of innovation.

Annual licensing revenue from U.S. patents amounts to tens of billions of dollars, with pharmaceutical, biotechnology and informational technology industries among the leaders.

The study also found that U.S.-born graduate students have no detectable effect on patent applications or grants. Maskus explained that this is largely due to the fact that American-born students tend to study other areas outside of the sciences and engineering, which are leading areas in innovation. [!?!]

“There is still a much higher return for American students to learn to run a company or become lawyers,” Maskus said.

Currently, the United States enjoys an advantage in exporting the services of higher education, especially in training scientists and engineers, according to Maskus. But as other countries improve their graduate science programs, visa restrictions could really put U.S. institutions at a competitive disadvantage.

“This is just part of the story,” Maskus said. “The bigger element in globalization is China and India are getting their economic acts together. One thing we can do to help keep our competitive edge, though, is make sure that capable foreign graduate students can come here to study.

“I think the United States will continue to lead the world in innovation, but we will not be as dominant as we are today,” he said.

'The Contribution of Skilled Immigration and International Graduate Students to U.S. Innovation' was released by the Center for Economic Analysis, University of Colorado at Boulder. G. Chellaraj was a Consultant to the World Bank when research was undertaken for the paper. K.E. Maskus is the Chairman, Department of Economics, University of Colorado and A. Mattoo is the Lead Economist at the World Bank’s Development Economics Group.


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