ONE of the important elements in sustaining the dynamism, competitiveness, and leadership role of the United States has been its ability and willingness to attract, absorb, and utilise talent from across the world.

It has been quite successful in channelling the energies and skills of foreign talent into productive national use, and hence in sustaining the competitive strength of its businesses.

The US has been a major beneficiary of the 'brain drain' phenomenon that induced talented, skilled individuals from less developed countries, trained under highly subsidised public education systems in their home country, to leave for 'greener pastures' owing to a variety of push and pull factors.

While such an exodus was perceived as a 'drain' on the scarce resources of the less developed countries, particularly smaller countries with a low pool of talented and skilled manpower, it worked to the advantage of the developed nations, including the US.

The advent of globalisation, and associated technological changes necessitated greater labour mobility, and hence more liberal immigration laws. According to the United Nations, an estimated 191 million people lived outside their country of origin in 2005, with one in five living in the US.

The US continues to serve as the largest magnet for international migrants, especially skilled migrants even today.

However, it appears that such a scenario may well reverse. Recent indications suggest that the US' capacity to absorb and assimilate such human capital flight from elsewhere, even on a temporary basis, is coming under considerable strain.

For the first time in history, the US faces the spectre of a reverse flow of talented, high-skilled immigrants back to their home countries due to a non-pragmatic immigration regime. A 2007 report, published by the Ewing Marion Kauffman Foundation, titled Intellectual Property, the Immigration Backlog, and a Reverse Brain Drain - America's New Immigrant Entrepreneurs Part III, with contributions from Harvard, New York, and Duke university scholars, has now documented and analysed the imminent phenomenon of 'reverse brain drain' from the United States to emerging Asian economies, primarily India and China.

Besides also looking at the immigrant contribution to the US society, the report provides some evidence to the above phenomenon.

The report attributes green card delays, and short-period visa extensions, as contributing factors to the reverse brain drain. The current waiting time for employment visas for Indian and Chinese nationals, for example, stretches from four to six years, and indications are that this may well increase.

The H-1B visa regime, in particular, has been fairly restrictive in terms of the quantity of such visas issued, country allocation, and in the terms and conditions imposed. The US currently offers a total of 65,000 H-1B visas per fiscal year. This is quite low compared to the number of applicants per year between 130,000 to 150,000. Failure to increase the quota of such visas has led to a substantial immigration lag, and subsequent frustration among applicants.

The report estimates that in 2006, around a million of such high-skilled persons were caught in (what it terms as) 'immigration limbo', far exceeding some previous estimates of 300,000.

Interestingly, while the number of applicants applying for the H-1B visa has risen at a rapid pace over the past few years, there has also been an increasing frustration among such visa holders concerning some of its binding criteria.
These visas allow US firms to employ a foreign worker up to a maximum of six years; prohibits promotion; and limits job switches. This in a way has created artificial barriers for talent to grow and assimilate.

The twin phenomenon of a substantial immigration lag, and growing frustration among the temporary visa holders concerning a delay in upgrading their status to being a Legal Permanent Resident (LPR) or a citizen have been contributing factors in triggering the current trend of a reverse brain drain.

Certain other pull factors including an emerging home economy, greater job and leadership opportunities, internationally competitive compensation packages, and personal and family reasons have also worked in tandem to trigger such a reverse brain drain.

US immigration policy, post 9/11, appears to have paid more attention to the issue of unauthorised immigrants entering the US, to the neglect of certain long-standing issues with skilled migration itself. The US has been unusually and uncomfortably rigid in reforming its immigration rules to accommodate a larger pool of talent into its shores.

The US has traditionally favoured a pro-skilled immigration policy as a key component of its innovation-and-growth strategy. However, its current approach could prove to be costly, to the effect of eroding the competitive advantage of its businesses in the medium to long-term.

The continuation of such trends will certainly hamper manpower planning and deployment of high-technology companies in the US. This in turn could lead to greater uncertainty and high transaction costs.

As the report suggests, such reverse brain drain potentially creates lose-lose outcomes for the US. The US corporations not only lose critical talent that has enabled them to innovate, compete, and hence grow, but their departure drains the resources spent on such manpower to train them to their markets, technology, and way of doing business.

Moreover, such professionals with considerable experience and knowledge of American businesses run the possibility of becoming eventual competitors in domains that have been the US' comparative advantage. Additionally, it is also important to recognise that technological advancement has now enabled even certain high-skilled jobs to be exported to countries that are abundant in human capital.

Contrary to the notion that less skilled-immigrants would mean greater job opportunities for the native skilled Americans, the native workforce may actually be worse-off in the long-run due to such reverse flow of such talent.

Implications

Corporations are rational entities, and jobs are likely to follow talent by way of offshoring and/or outsourcing.

Thus, the current trend of reverse brain drain may actually accentuate the propensity of US firms to outsource and offshore, with important political and economic implications for the country.

Thus, it is imperative for US policymakers to understand that such inflexible immigration laws and lags might eventually hamper its dynamism and leadership in the technological and economic sphere.

At the same time, the reverse brain drain phenomenon from the US bears a significant and perhaps unique opportunity for countries (and companies) competing in the global marketplace of talent.

Attracting this reverse flow of skilled manpower will be of particular importance for countries and regions that have traditionally been less welcoming of foreign talent to the detriment of their competitive edge (such as Western Europe, and Japan).

For Singapore too, it is important to use its natural advantage to good use. The reverse flow of talent, as indicated, comprises of mostly Indian and Chinese nationals. Besides locational proximity to their home countries, Singapore's advantage also lies in offering an ambient socio-cultural environment for the Indians and the Chinese. These are indeed key parameters for a relocation decision of such professionals.

Attracting a portion of such skilled manpower also fits in the broad scheme of things envisaged by the government in enlarging its labour force, and transitioning to a knowledge-based economy. In a limited way, it will also help reduce Singapore's gross imbalance in its demographic structure, which can potentially lead to acute skill-shortages for companies based in Singapore.

Therefore attracting and assimilating a part of such flows into the societal and economic mainstream could prove to be beneficial in mitigating such age-structural problems, and to discover newer areas of competitive advantages.

However, the process is not automatic. It will require effort to fulfil certain other enabling conditions for such talent to perceive Singapore as a favourable destination. The rapidly rising cost of public and private housing, for example, may well work against Singapore as a relocation destination vis-a-vis other countries (including their home country) that offer comparable compensation packages, but better opportunities to save, and grow.

Given that such issues are taken care of with a renewed sense of urgency, the reverse brain drain from the US provides a historical opportunity for Singapore to exploit to its advantage, and pursue a policy of innovation led growth.

The writer is a research scholar at the Lee Kuan Yew School of Public Policy, Singapore.