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Tuesday, November 20, 2007

Immigrant Entrepreneurs

The immigration debate, of course, is not just limited to the United States. Financial Times columnist Michael Skapinker talks about the United Kingdom’s point system for immigration scheduled to go into effect next year in a November 20 piece.

Will the UK plan work?

Well, Skapinker reports: “Had either the young Bill Gates or Steve Jobs decided to set up in Britain rather than the US, they would not have qualified for entry. Neither would Michael Marks, the Russian immigrant who started with a stall in Leeds market and built it into Marks and Spencer. Nor would Sir Montague Burton (originally Meshe David Osinsky), whose Burton clothing chain is now part of Sir Philip Green’s Arcadia empire. It is fortunate for Sir Philip that he was born in the UK, because he would not have qualified under the points system. Neither would other leading British-born entrepreneurs such as Sir Richard Branson and Sir Alan Sugar.”

What’s the problem? Skapinker continues: “The problem is not the people skilled-migrant programmes let in. It is the potential business creators they keep out – all those entrepreneurial types who were unsuited to university. The Home Office says its points system is based on ‘attributes which predict a migrant’s success’ but I doubt British governments are any better at picking winning immigrants than they were at picking winning car or computer companies. The Home Office says it has plans for potential entrepreneurs but cannot yet say what they are.”

Skapinker is absolutely right.

Whether it is in England or in the U.S., a close-the-borders or just-let-in-the-presumed-smart-people immigration strategy – rather than generally expanding legal avenues for immigration and then using taxpayer resources to stop the bad guys from getting in – means not only that labor demands will not be met, but also that immigrant entrepreneurs will be barred from entering.

Does this matter? Well, in May 2007, the "Kauffman Index of Entrepreneurial Activity: 1996-2006" was published by the Ewing Marion Kauffman Foundation. Regarding immigrants and entrepreneurship, it reported: "Immigrants continued to have a substantially higher rate of entrepreneurial activity than native-born individuals in 2006... The rate of entrepreneurial activity for immigrants increased slightly from 0.35 percent in 2005 to 0.37 percent in 2006, while the rate for the native-born declined slightly from 0.28 percent in 2005 to 0.27 percent in 2006." The 1996 to 2006 data from this report show the rate of entrepreneurial activity for the native-born ranging between 0.26 percent to 0.30 percent, versus a range of 0.30 percent to 0.41 percent for immigrants. In every year, the immigrant rate exceeded the native-born rate, with the differences being much wider since 2002, compared to 1996-2001.

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