Small and medium businesses are the backbone of the US economy, and startups contribute handsomely. Interestingly, foreigners play a critical role in the US startups, and at least one founder from a foreign country in almost 55% of US startups worth at least a billion-dollar or more. Thanks to the broad participation by immigrant business owners in setting up businesses in the US that helped the country earn the tag of the most entrepreneurial country in 2021. Historically, foreign-born entrepreneurs have played a key role in creating jobs and driving innovation in North America. Their efforts have been critical in making America’s economy more resilient and robust, and the trend should continue to help the country remain the global leader in entrepreneurship.
Companies founded by immigrant business owners are crucial to the growth
Startups have been the major job creators in the private sector and, in 2020 and created more than 3 million jobs. Research shows that regions with more startups experienced higher job growth in the private sector. The rise in entrepreneurship is evident from 4.3 million business formation applications filed in 2021 to 6.7 million in 2022. America’s economy today needs strong support from small and medium businesses that thrive on entrepreneurship.
Immigrants are more likely to become entrepreneurs
Regardless of America’s economy, the spirit of entrepreneurship among immigrants will remain high, as proven historically. Some of the largest companies you see now began as startups founded by immigrants. The same applies to companies like Instacart and Zoom, whose products have been in high demand during the pandemic. Moreover, US-born entrepreneurs are far less than foreign entrepreneurs who start businesses in the US. Because of the high-spirited immigrant entrepreneurs who outnumber the native business owners heavily, America’s capitalist economy shapes the global economy. The urge to start a business is higher among immigrant entrepreneurs by almost 80%. Moreover, those businesses created 42% more jobs than native businessmen.
Unfortunately, America is no more the land that encourages entrepreneurs as it did some years ago. The immigration policies are creating high barriers and dimming the hopes of immigrant entrepreneurs contributing to the economy in a big way, as they have done for years.
The current immigration policies are a big hindrance
Despite the massive contribution by immigrant entrepreneurs, the country’s age-old immigration policies continue to create barriers for foreign-born business founders. America does not have a specific visa category for startup founders and owners at the root of the problem. Visas like the H1B are limited in number, and immigrant entrepreneurs find the odds stacked against them as they compete with thousands of people of various categories. Foreign entrepreneurs are now showing more interest in starting businesses in the UK and Singapore, where it’s easier for them to access startup visas. In the absence of major reforms to the immigration policies that could favor foreign business founders, we see the ill effects on America’s capitalist economy.
However, President Biden took a step in the right direction by reinstituting the International Entrepreneur Parole Program (IEPP) in May 2021. It will encourage the entry of foreign entrepreneurs who can prove their ability to offer significant benefits to the public. While the first step is encouraging, many improvements are still necessary, especially the visa process for international students who would become the business leaders of tomorrow.
The usual route taken by foreign entrepreneurs begins with studying in the US colleges and universities that lays the foundation for them launching some business ventures in the future. Students turning into entrepreneurs have been a recognized path to welcoming foreign entrepreneurs. But due to the current US immigration policies, international students who attend US schools cannot stay after graduating.
To encourage the entry of immigrant business owners in the US, it has become necessary to ease giving them residency. Creating immigration policies focusing on employment and providing more startup visas will help strengthen the economy.
