Are American Policies Shutting the Door on Economic Growth?
One of the main drivers for economic growth and, ultimately, job creation is innovation. New companies designing innovative products and technologies have always been the main drivers of economic growth. This economic growth will naturally lead to job creation. This should be the goal for every government, to stimulate and incentivize companies and people to innovate and start businesses.
America, however, seems to be going in the opposite direction. In the past, one of the biggest advantages for America has been that the nation was a magnet for talented immigrants who come to this country and build new products, innovative technologies, and, ultimately, businesses, which all results in job creation. This has been the basis of America’s success since the beginning.
An interesting fact: 40% of companies in the Fortune 500 were founded by immigrants and their children. However, America has been creating large obstacles and hurdles for talented immigrants to come to this nation and build businesses. As an example, visas for skilled workers are now at approximately 65,000 per year, down by half over the past decade. (Source: “The Chilecon Valley Challenge,” The Economist, October 13, 2012, last accessed December 15, 2012.)
An in-depth report by The Economist cited several examples of difficulties for immigrant businesspeople. One company called Fame Express, a creator of games for Facebook, Inc. (NASDAQ/FB), had a successful business, employing people within America and paying over $250,000 in taxes over two years. However, its management’s visa application was denied, and it was forced to move back to India. This is the exact opposite of job creation, taking a successful business and pushing it off our shores.
Other nations such as Australia, Canada, and even Chile are aggressively creating incentives for business people to set up shop in those nations, stimulating their domestic economic growth. In Chile, an entrepreneur can get a visa in a couple weeks. Since 2010, when Chile began its aggressive stance for pro-business entrepreneurship, approximately 500 companies, started by entrepreneurs originating from 37 countries, have set up shop in that Silicon Valley of South America.
I previously outlined how Belarus is taking a similar approach in the article “What Obama Can Learn from Belarus About Running an Economy.” Belarus has created a technology sector in which international corporations can set up shop, paying essentially no corporate taxes. There are now over 100 companies and approximately 12,500 employees working in this high-tech park.
Many of these entrepreneurs would have liked to move to America and start their businesses here. But with the process of obtaining a green card taking up to 10 years, versus 18 months in the 1980s, many businesspeople are locating in other parts of the world. This is a type of economic growth that the U.S. needs, which leads to long-term job creation. New businesses with innovative ideas are the foundation of any economy.
By closing the door on the very people America needs, we are creating economic growth opportunities for many other nations around the world. By simply creating an incentive structure, in which it is easy for an entrepreneur from anywhere around the world to open up a business in America, this type of organic economic growth will be crucial for long-term job creation.