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«Discussion Paper 77-2013 MIGRATION AND INNOVATION – A SURVEY Sheida Rashidi Andreas Pyka Universität Hohenheim | Forschungszentrum Innovation und ...»

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Return migration is considered as knowledge transfer in a network where the country of origin benefits from skills which are gained by its emigrants in the resident countries. As the left side of figure 5 displays, the linkage which exists in the case of return migration can be directed from the country of residence towards the country of origin only. In this case not the full potential of the network connection is exploited.

Figure 5 Return and Diaspora option

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Source: Meyer (2007), p. 7 However, the linkages between country of residence and country of origin can also be bidirectional. Groups of high-skilled expatriates keeping connections with their homelands are called diaspora networks displayed on the right side of figure 5. High-skilled immigration sometimes creates large, well-educated diaspora networks, which considerably improve access to capital, information and valuable contacts for firms in the countries of origin (Kuznecov, 2006). In the literature also the notions of intellectual diaspora networks (Brown 2002), scientific diaspora (Barré et al. 2003), technological and scientific diasporas (Turner et al. 2003, Connan 2004), knowledge networks abroad (Kuzentsov 2005) and diaspora knowledge networks (Meyer and Wattiaux 2006) are used to describe the bi-directional knowledge flows in innovation networks of migrants between the countries of residence and the countries of origin. Diaspora networks therefore offer an alternative view which goes beyond the brain drain discussion. Indeed, the network approach to brain drain (Brown 2002) has massively changed the evaluation of high-skilled mobility. Instead of the traditional brain drain outflow, a brain drain skill circulation moves into the forefront which displaces the potential loss of human resources with a remote but accessible asset of expanded networks (Meyer, 2001). Migration is no longer considered as a one-way path but as a dynamic process of networking and creation of linkages (Mahroum and Guchteneire 2006, p. 27). Meyer (2007) adds that the diaspora option allows for countries of origin to access not only the human capital acquired by their expatriates in the residence country, but also the access to social, cultural, intellectual and institutional capital. The diaspora networks do not have to be formally established but often are informal which is sufficient for the exchange of knowledge (Pyka, 1997). Immigrants’ networks, formal or informal, are developing structures which enhance the flow of knowledge, in particular tacit knowledge, and support the development of new ideas and knowledge. It turned out that the networks constituted by skilled migrants are different compared to networks of low or unskilled migrants (Vertovec, 2002) where knowledge exchange is less important. Diaspora networks to exchange knowledge follow similar principles which are observed in innovation networks in general. Direct communication between heterogeneous agents is important for the transfer of tacit knowledge.

Agrawal et al. (2006) develop and test a model of knowledge spillovers that depends on the social ties between inventors. They find that social ties which facilitate knowledge transfer continue to exist even after the network members are geographically separated. A further study by Agrawal and Oettl (2008) analyzes the patterns of knowledge flows which occur when inventors move. In this study countries enjoy a competitive advantage if they are able to make use of the cross border knowledge flows (national learning-by immigration). Also the firms might benefit from the knowledge flows from the inventor’s new country (firm learning from Diaspora).

A particular role in these networks is played by transnational entrepreneurs, i.e. entrepreneurs who start a business drawing on resources from different countries: According to Drori et al.

(2009) transnational entrepreneurs use their networks to explore profit opportunities in both countries and are engaged in both countries to promote their activities. With the exploitation of cross border knowledge flows and prolific frameworks supporting transnational entrepreneurship we refer already to the broad institutional set up which characterizes countries in the organization of their innovation processes, namely National Innovation Systems.

3.3 The role of National Innovation Systems The concept of national innovation system (NIS) (Freeman (1987), Lundvall (1992), Edquist (1997) and Nelson (1993)) captures the interactions between different institutions and organizations that create and adopt innovations in a country. In a NIS large parts of the knowledge base is tacit and originates from the routines of leaning-by-doing and learning-byinteracting among firms. Chris Freeman (1987) highlights the role of innovation networks comprising private and public actors in an institutional embedding – in initiating, importing, modifying and diffusing new technologies. A NIS strongly shapes the patterns of information and knowledge flows among individuals, institutions and firms and accordingly of highskilled migrants and transnational entrepreneurs. NIS differ strongly among different countries and due to the increasing internationalization of economic activities which embeds a NISs in the global innovation system (Tomilnson 2001, pp. 32-33), NIS are also relevant for the possibilities to access international knowledge transfers. The globalizing innovation system is sketched in figure 6 which includes firms and institutions at the national level as well as institutions and organizations at the global level which all interact in the development of the different national knowledge bases.

Figure 6 The globalizing system of innovation

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Tomilnson (2001), p. 32 Besides interactions of actors in the different NIS also the movement of agents in the globalizing innovation systems is essential for the national innovation performance. How immigration of high skilled economic agents affects the countries of origin and the countries of residence depends on the designs of NISs. But not only on a national level the impact of high-skilled migration differs, but also on a regional and metropolitan level the impact varies considerably. E.g. Lee and Nathan (2010) show that high performing cities attract more highskilled immigrants and therefore create a culturally diverse workforce which again supports their innovation performance.

4. Empirical Studies on Innovation and Migration – A survey Empirical research on the relationship between high-skilled migration and innovation is rare and predominantly focusses on North America and some other traditional immigration countries. The United States are a striking example of how immigrant scientists have contributed to the national innovation performance. Hunt and Gauthier-Loiselle (2009) list the outstanding successes of high-skilled immigration to the U.S.: 26% of U.S. based Nobel Prize winners in the 1990s are immigrants, 25% of founders of public venture-backed U.S.

companies in the years 1990-2005 are immigrants and 25% of new high-tech companies with more than one million dollars in sales in 2006 were founded by immigrants. Further, more than 50% of the engineers and scientists employed in Silicon Valley are immigrants. This high innovation performance of the immigrants is related to their participation in national and regional innovation networks combined with their bounder spanning diaspora networks; e.g.

Saxenian et al. (2002) found that Taiwanese and Indian engineers have built networks in Silicon Valley which connect them with their homeland technology community and which are used for intense knowledge and information traffic.

The main topics investigated in the empirical literature are the crowd-out and/or crowd-in effects, scale-effects, entrepreneurship and the role of diversity. As a measure for innovation mainly patent per capita data are used. Kerr and Lincoln (2008) investigate the influence of fluctuations of H-1B visas 3 and their influence on the rate of patenting by ethnic Indian and Chinese in the United States. The authors find that there is a significant correlation between the fluctuations of H-1B visa recipients and the rate of patenting. They also conclude that “total invention increases with higher admission levels primarily through the direct contributions of immigrant inventors” (Kerr and Lincoln 2008, p. 30).

Related to the effects of students’ mobility, Stuen et al. (2010) studied the contribution of foreign science and engineering students to the creation of new knowledge in science and technology in the U.S. Stuen et al. (2010) study panel data of 2,300 science and engineering departments at 100 large American universities from 1973 to 1998. Their results indicate that foreign doctoral students significantly and positively influence publications and citations produced by U.S. academic departments. Moreover, increased diversity seems to be the primary mechanism by which the foreign students improve research outcomes. By adding foreigners to the team, diversity within the teams is increased. Team members would bring in complementary skills. “Diversity of the student body can generate positive spillovers from the exchange and mixing of ideas, training and methods if students from different regions bring complementary and heterogeneous skills” (Stuen et al. 2010, p. 5).

Zucker and Darby (2007) study the geographic movements of star scientists which are ranked high in science and technology and find a relationship between star scientists’ movements and their innovative activities in receiving countries. Star scientists are likely to cluster in regions endowed with high-tech firms. In their study they follow the careers of 5401 star scientists between 1981 and 2004. Zucker and Dary found that the physical presence of star scientists is a catalyst for economic improvements. It is not only the immediate contribution of immigrants to research activities but also the spillover effect from the foreign star scientists on natives that boosts innovation in the host country.

Hunt & Gauthier-Loiselle (2009) conclude that “a college graduate immigrant contributes at least twice as much to patenting than his or her native counterpart (Hunt and GauthierLoiselle (2009), p. 20).” To assess the impact of immigration on innovation Hunt and Gauthier-Loiselle (2009) study individual patenting behavior as well as state-level H-1B visa is a visa program which allows the American employer to seek short-term help from skilled foreigners in “specialty occupations”. Science, engineering and computer-related occupations make up to 60% of successful visa application. Between 2000 and 2005, 40% of H-1B recipients were form India and 10%came from China (Kerr&Lincoln (2008), p. 12). The visa is issued for three years with allowance for a single three-year renewal.

determinants of patenting. They measure the impact of highly-skilled immigrants (Hunt and Gauthier-Loiselle 2009, p. 5) on the US patent per capita between 1940 and 2000. If immigrants contribute in innovation activities and consequently increase patenting, then they should also have a positive impact on output per capita. Hunt & Gauthier-Loiselle empirically tested this for U.S. data on the individual and the country level. On the individual level, the authors define three categories of highly-skilled migrants; college graduates, holders of a post-college degree and those working as scientists and engineers. They show that immigrants were granted patents twice more compared to natives. 1.9% immigrants were granted patents compared to 0.9% of natives. Patent per capita for immigrants was 0.057 compared to 0.028 for natives. Then using this data they estimated the direct effect of immigration on patenting, while ignoring the spillover or crowd-out effect. A one percent increase in population made up of immigrants with college degree would increase patent per capita by 6 percent. Due to positive spillovers, the benefit to patenting per capita could be as high as 9-15 percent. They also found that immigrants who are scientists and engineers or who have post-college education boost patents per capita more than immigrant college graduates (Hunt & GauthierLoiselle 2009, p. 5). In a study with a similar methodology, Chellaraj et al. (2005) test the contribution of foreign born graduates to US innovation and technological change. They use US time-series data to show that a raise in foreign students increases patent applications more than an increase in skilled immigration do.

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