Two-Way Brain Drain

By Rowen, Henry S. | The International Economy, July 2001 | Go to article overview

Two-Way Brain Drain


Rowen, Henry S., The International Economy


I recently attended a dinner organized by KIN, the Korean IT Network, a new association of ethnic Korean entrepreneurs in Silicon Valley. The chairman urged the audience to emulate the Indians and Chinese, who have long had associations in which experienced hands coach newcomers and sometimes invest in their ventures.

Ethnic associations are an old phenomenon in America. What is new: the remarkable achievements of recent immigrants in high tech companies. The flow of talent, especially from Asia, has been extraordinary. For example, about one-third of the graduates of China's Tsinghua University (usually described as its MIT) come here. So do many graduates of the elite Indian Institutes of Technology (IITs).

Their successes are legendary. Professor Anna Lee Saxenian of the University of California at Berkeley estimates that the share of startup companies in Silicon Valley headed by ethic Chinese and Indians, many of them immigrants, went from 12 percent in the early 1980's to 29 percent in the late 1990's.

This "brain drain" story is not new. Less familiar is the role of some of these brains back home. The Taiwanese started it in the early 1980's. They decided to build an information technology industry, created a science-based industrial park at Hsinchu near Taipei, and began recruiting Chinese in the United States with years of experience at such companies as Honeywell, AT&T, and IBM, offering them key jobs in startup firms, good housing and bilingual schools. The strategy worked marvelously well. Thanks to this initiative and their native entrepreneurial skills, Taiwan soon became a computer-manufacturing powerhouse. Now there is a dense two-way flow of professionals between Silicon Valley and Taiwan.

China, too, recognizes the value of its emigres and is encouraging them to return and apply their acquired know-how. To make the scene more interesting there is also a large and rapidly growing high-tech linkage between Taiwan and the mainland. This all adds up to a network dubbed the "Golden Triangle." The Valley (more broadly the United States) contributes graduate education, new technologies, a market, and global market know-how; Taiwanese firms are very good at making things and responding quickly to market changes; the mainland has a rapidly growing domestic market and a huge pool of (so far mostly inexperienced) talent.

India is a different but also fascinating place. …

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