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Recent Research: The key role of immigrants in the U.S. innovation ecosystem

May 25, 2023

As the U.S. seeks to maintain its competitive edge in the global economy, it is important to acknowledge the contributions of immigrant innovators toward U.S. growth and competitiveness. Despite making up only 16% of the population, immigrant inventors are responsible for approximately 36% of the U.S. innovative output since 1990, and have founded some of the most successful companies in the nation. This article draws on a variety of recent reports and studies to provide insights into the many ways immigrant innovators are essential to our robust innovation ecosystem, including their role in U.S.-based startups, contributions to patents, and more.

According to a 2021 U.S. Census Bureau release, foreign-born immigration into the U.S. has slowed considerably since 2016 to its lowest levels in decades, dropping from 1.471 million to just over 500,000 in 2021. The Census Bureau attributes much of the downward trend in recent years to the COVID-19 pandemic and changes in immigration policies.

The following studies are just a small sample of works that highlight the importance of immigrant innovators to the U.S. With immigration numbers having shrunk considerably over the past several years, the innovative output of future generations may be impacted, further affecting U.S. global competitiveness.

Immigrants' role in startups

Immigrants have played a crucial role in founding and nurturing innovative startups, according to recent studies by the National Foundation for American Policy (NFAP) and the Center for American Entrepreneurship (CAE). NFAP analyzed all 87 U.S.-based startups valued at $1 billion or more, finding that 44 (51%) were founded by immigrants — 20 of which entered the U.S. as international students. Additionally, 71% of these startups had at least one immigrant in a critical leadership position, such as CEO or CTO, and created 760 jobs on average, with the majority of the positions being located in the U.S.

CAE found that 43% of 2017’s Fortune 500 companies were established or co-founded by first or second-generation immigrants, accounting for 52% of the top 25 Fortune 500 firms, and generated $5.3 trillion in global revenue in 2017. These immigrant-founded companies are headquartered in 33 states, supporting local economies and creating jobs.

Immigrants' contributions to patents and market share

Immigrants make significant contributions to patents and market share in the U.S., according to a 2022 working paper by the National Bureau of Economic Research (NBER). Despite accounting for just 16% of all U.S.-based inventors, immigrant inventors produced approximately 23% of all patents, 25% of the top 10% of patents, and accounted for over 25% of the total patent market value. Overall, the study found immigrants to be responsible for 36% of the total U.S. innovative output since 1990, making them an important force in driving innovation and economic growth in the U.S.

A separate 2017 NBER working paper found that immigrant inventors were more willing to switch sectors to improve their innovative output, which had a direct impact on over 25% of the innovative output in newer sectors such as computers, communications, electronics, and medical fields. In contrast, they accounted for a relatively smaller 15% of the innovative output in older technologies, indicating that they are more adaptable and able to innovate in rapidly changing sectors.

Demography of innovative immigrants

A 2016 Information Technology and Innovation Foundation (ITIF) report found immigrants play a crucial role in U.S. innovation, representing 35.5% of innovators who developed notable technological innovations between 2011 and 2015 despite making up just 13.5% of the U.S. population as a whole. These immigrant innovators came from a variety of regions, including Europe (35.4%), Southeast Asia/India (26.6%) and East Asia/China (20.3%), with more than two-thirds holding doctorates in a STEM subject.

A 2023 NBER working paper supports many of the above findings, with data indicating that not only do foreign born inventors (patent creators) account for over 30% of all U.S. inventors, but that they are an aging population. The share of young foreign-born inventors (defined as those under the age of 36) has decreased nearly every year since 2009 until the end of the study period in 2016 (see below figure).

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immigration entrepreneurs, startups