PDF: 2962 pages, 5.2 MB - Bay Area Council Economic Institute

Findings
expertise, and market scale. That shift will not necessarily come at the expense of the United
States, Europe, and Japan, but it will almost certainly result in a more globally distributed economy
where functions once primarily performed in places like Silicon Valley will now be performed
in a range of global centers, including India.
The Bay Area and Silicon Valley have been emulated throughout the world but never quite duplicated.
With a deep capacity for fundamental (blue-sky) research, a diverse and highly educated
workforce drawn from throughout the world, and a culture that rewards entrepreneurship and
risk-taking, the region has been a consistent source of cutting-edge technology, product innovation,
and wealth creation. Complacency would be a mistake, however. Cross-border collaboration
and growth opportunities in India, China, and elsewhere have drawn talent and investment
to those markets at an accelerating rate. Significantly, this includes Chinese and Indian entrepreneurs
who have honed their skills in Silicon Valley.
Roughly 60% of doctoral students in engineering and 40% of masters degree students in the
United States are foreign nationals. According to the National Science Foundation, 42% of combined
science and engineering PhD graduates in the U.S. today are foreign born. Carrying this into
the economy, UC Berkeley visiting scholar Vivek Wadhwa also finds that one-quarter of all technology
and engineering startups between 1995 and 2005 were created by immigrants. In Silicon
Valley, the number was 52%. Another recent study by the U.S. Small business Administration
found that 16% of high-tech companies surveyed had at least one foreign born founder, with the
largest proportion coming from India. While the U.S. and the Bay Area have benefited from this
inflow for decades, its continuity is imperiled.
In a recent survey of 1,000 Indian and Chinese foreign students and 1,000 returnees, researchers
at UC Berkeley, Duke University, and Harvard found that for most, opportunities to start a business
or for professional advancement were considered better at home, and fewer students now in
the United States want to stay permanently. Concerns were expressed about the ability to find
jobs and the availability of work visas. Students and entrepreneurs such as these have historically
made powerful contributions to the region’s economy and cannot easily be replaced.
And while India is not currently a source of world-leading technology or innovation, it has
shown the capacity to innovate in other ways by leveraging its deep pool of educated workers.
While the Bay Area should for the foreseeable future retain its role as the world’s leading center
for technology innovation, India’s growing prowess in process innovation is redefining its role as
a global partner. The evolution of its relationship with India in turn raises important issues
concerning the Bay Area’s economic future:
• A troubled primary and secondary education system is not attracting qualified teachers
or producing a critical mass of students in grounded in science, math, technology, and
business.
• U.S. visa policy is not designed to attract top foreign students and researchers and
discourages them from staying after they complete their studies.
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