The Global Squeeze for Talent

President Obama's State of the Union address the other week threw into relief the stark incompatibilities inherent in globalization. He cited the growth of science and technology capacity in China and India as a threat to America's competitive edge, while also acknowledging that continued US prosperity requires greater access to the human capital originating from both countries.

These contradictory themes are both a growing source of irritation and an under-noticed opportunity for US-India bilateral relations. On the one hand, India, one of the world's top outsourcing destinations, is increasingly the object of a populist backlash as Americans come to see it as a rising economic rival. Witness, for example, the heavy India-specific fee hikes recently enacted by Congress on the H-1B temporary visa program for skilled foreign workers, as well Obama's own calls for tightening tax penalties on corporate outsourcing. These actions have stirred considerable ire in India, prompting well-known Indian technology companies to shift their focus away from the United States to other markets perceived as more welcoming.

On the other hand, the success of US enterprises engaged in the advanced technology sectors that the president identified in his address as key to "winning the future" will increasingly depend on access to the global reservoir of skilled professionals, of which India is a major contributor. The president admitted as much when he criticized the self-defeating nature of US immigration policy: "[Students] come here from abroad to study in our colleges and universities. But as soon as they obtain advanced degrees, we send them back home to compete against us. It makes no sense."

Obama's remark picks up a proposal that he made during the last presidential campaign to create a "fast track" mechanism allowing foreign students with advanced technical degrees from US institutions to receive an employment-based visa. At present, 20,000 H-1B visas are reserved for such graduates – many of whom are Indian – though demand greatly eclipses this number.

Although immigration policy remains a hotly-contested issue, the adverse consequences of limiting US access to foreign-born human capital are widely acknowledged. Indeed, the United States has been able to maintain its global preeminence in no small part due to the influx of foreign science and engineering professionals and students. High-skilled immigrants are a significant driving force of American prosperity and innovation, most famously in building the information technology industry. Research indicates, for instance, that Indian immigrant entrepreneurs play a leading role in founding some of the most dynamic high-tech companies.

Foreign-born scientific and engineering talent – particularly Indian – also is an important pillar of the faculties in America's top universities. And foreign students earn the majority of engineering doctoral degrees awarded by US universities, and of this number a large percentage opt to remain in the country at least for some period of time. Their presence, along with other high-skilled immigrants, has helped the US science and engineering workforce expand at a faster rate than the United States is graduating native-born scientists and engineers.

America's dependence on foreign-born technology professionals will shortly become all the greater. Since younger native-born workers tend to lack the skill levels of their baby boomer parents who are now nearing retirement age, the United States could face broad and substantial skill shortages in the coming decade. Thus, the US should be promoting greater access to the global talent pool. India is a good place to start.

With India a major source of high-skill professionals and the US needing to draw on foreign talent to fortify its own science and engineering workforce, both countries have a keen mutual interest in cooperating in the area of human capital, the most critical resource in the dawning global innovation economy.

To this end, Washington and New Delhi should conclude a bilateral agreement guaranteeing a set number of temporary work visas for high-skill Indian professionals. The United States has crafted bilateral agreements with a select number of other countries that could serve as a template, including the TN temporary visa program (created via the North American Free Trade Agreement) that exempts qualified Canadian and Mexican professionals from the annual quota on H-1B work permits.

Admittedly, important constituencies in both countries regard the global talent pool as a zero-sum proposition. In the United States, some argue that increased mobility of foreign high-skill workers will displace or depress wages of native professionals. The empirical evidence, however, suggests that greater numbers of talented immigrants actually supports job creation in the United States.

India likewise would stand to benefit from the increased mobility of its technology professionals. Instead of causing "brain drain," the global innovation economy is actually generating "brain circulation" or a "brain chain," in which expatriate talent returns home with acquired capital, skills and knowledge, as well as personal links to transnational entrepreneurial and technological networks.

Obviously, some of the high-skill Indians who benefit from the bilateral immigration accord will choose to remain permanently in the United States, though they would in time contribute a significant stream of remittance income and serve an important bridging function between Indian innovators and entrepreneurs and those in other countries. But others, empowered by new ideas and experiences, will return in time and play a direct role in the nation's development.

The United States and India are prime constituents in the brain circulation process. Far from seeing access to the global talent pool as a zero-sum proposition, the interdependency of their skills base requires them to act in a cooperative way. Doing so not only makes sound economic sense, but would also strengthen the foundation of US-India relations.

David J. Karl is president of the Asia Strategy Initiative, a consultancy based in Los Angeles. He recently served as project director of the Bi-national Task Force on Enhancing India-US Cooperation in the Global Innovation Economy, jointly sponsored by the Pacific Council on International Policy and the Federation of Indian Chambers of Commerce and Industry.