The Changing Face of American Innovation

Chinese and Indian scientists and engineers have made an unexpectedly large contribution to U.S. technology formation over the last 30 years, according to new research by HBS professor William R. Kerr. But that trend may be ebbing, with potentially harmful effects on future growth in American innovation. Key concepts include:
  • Chinese contributions to U.S. innovation as recorded in patent and trademark data increased from under 2 percent of U.S. domestic inventors in 1975 to over 8 percent today.
  • In the same period, Indian inventors also rose, to almost 5 percent of the total in 2000.
  • Since 2000, Chinese scientists' contributions have leveled off, and Indian contributions have declined slightly. Will American innovation suffer?
by Sarah Jane Gilbert

The contributions made by immigrant scientists and engineers for developing new U.S. technologies have been formidable—but not always well described.

What we do know: While the foreign-born account for just over 10 percent of the U.S. working population, they represent 25 percent of the U.S. science and engineering workforce and nearly 50 percent of those with science and engineering doctorates. And at the Ph.D. level, ethnic researchers make an exceptional contribution to science as measured by Nobel Prizes, election to the National Academy of Sciences, patent citation counts, and so on.

Now new research based on patent and trademark data by Harvard Business School professor William Kerr drills down to further identify the probable ethnic composition of U.S. inventors, the industries they influence, and the geographies they work in.

But the paper, "The Ethnic Composition of U.S. Inventors," also documents a significant transformation in ethnic composition of U.S. scientists and engineers over the last 30 years, as Chinese and Indian inventors grew in importance as drivers of U.S. innovation.

“The most striking trend is the strong growth in Chinese contributions to U.S. innovation.”

Since 2000, however, the contributions of Chinese scientists have leveled off, while Indian contributions showed a slight decline. This may be raising a red flag about America's capability to innovate in the future.

Says Kerr: "The magnitude of these ethnic contributions raises many research and policy questions on issues such as the appropriate quota for H1-B temporary visas, the possible crowding out of native students from the science and engineering fields, the brain-drain or brain-circulation effect on sending countries, and the future prospects for U.S. technology leadership."

We asked him to discuss his findings and where his work is heading next.

Sarah Jane Gilbert: What led to your interest in this area?

William Kerr: In the late 1990s, I worked with a large Korean chaebol on a spin-off venture to commercialize a wireless telecom technology invented by a Korean entrepreneur living in Silicon Valley. I was impressed during this project with both the importance of foreign-born scientists and entrepreneurs for U.S. technology formation, and the close ties that some of these expatriates maintained with their home countries.

For the Korean inventor, his home country was clearly his default choice when looking for a partner. As Silicon Valley is a special place on many dimensions, I sought to characterize how well this case study generalized to other cities, industries, and ethnic groups.

Q: Your study used a unique name-matching technique to identify ethnic patterns. Why did you choose this methodology?

A: This project employs the names on U.S. patents to determine probable ethnicities of the inventors. For example, inventors with the surnames Wang and Ming are more likely Chinese than Hispanic.

The central advantage of this approach is that the ethnic assignment is at the individual patent level. There are over 7 million inventors associated with U.S. patents since 1975. This micro-level assignment allows us to characterize ethnic contributions at levels of detail not otherwise possible: For example, the annual Chinese percentage of U.S. inventors can be refined down to the 1992 Chinese share of IBM's inventors in Silicon Valley working in semiconductors.

This exceptional detail, especially within individual firms and schools, allows us to answer many more questions than previous data sources.

Q: What trends did your findings reveal?

A: The most striking trend is the strong growth in Chinese contributions to U.S. innovation, building from under 2 percent of U.S. domestic inventors in 1975 to over 8 percent today.

Indian inventors also rose dramatically during this 30-year period, to almost 5 percent in 2000, before slightly declining thereafter.

During this period, English and European contributions declined somewhat in magnitude.

“Recent trends may be a warning flag.”

The increased contribution by Asian ethnicities is evident within many institutions, especially public corporations and universities. Ethnic inventors are also becoming more concentrated geographically—for example, Chinese inventors in San Francisco—and appear to play an important role for shifts in the spatial distributions of U.S. innovation.

Q: Is there a direct or indirect impact on the U.S. workforce or economy?

A: Immigrants are a strong impetus for U.S. technology development through their quantity and quality. They account for nearly 50 percent of our science and engineering doctorates, while being just over 10 percent of the overall U.S. workforce.

In terms of quality, immigrants have made exceptional contributions at the very top, for example, in terms of Nobel Prizes. These contributions are an overall boon to U.S. innovation, but more research is required to characterize the details and mechanisms, including important issues such as the impact for native scientists and engineers.

Q: Which industries are the patents focused on? Are they concentrated in a specific industry or business type?

A: Inventors can file for patents in many technology fields, ranging from chemicals and drugs to computer software to agricultural machinery. Immigrant contributions are especially strong in high-tech fields compared with more traditional applications like mechanical patents.

Quantifying these technology differences is very important for business managers and public policymakers, but these differences also provide researchers an empirical foothold for disentangling the role of immigrant inventor contributions from other factors. A better understanding of these deeper relationships is the most important outcome of this work.

Q: Your data shows the ethnic composition of U.S. scientists and engineers undergoing a significant transformation, with contributions of Chinese and Indian scientists to U.S. technology formation leveling off after 2000 and, in the case of India, declining. What accounts for this trend, and what are the potential ramifications for U.S. technology formation in the future?

A: Explaining these trends and their long-term implications will be a central theme of my future research. A couple of factors are likely to play important roles in the post-2000 leveling off.

The first is recent U.S. immigration restrictions following 9/11 and the reduction in the number of H1-B visas available for temporary, high-skilled workers. Second, both India and China have become more attractive places for technology development and entrepreneurship, leading to less initial migration to the United States and greater return migration.

More mechanical explanations may also exist—for example, stronger relative growth of innovation in technology fields that did not employ as many Chinese or Indian inventors.

Only with a complete characterization of these mechanisms can we begin to forecast future implications with accuracy. We can nevertheless agree that attracting and retaining these ethnic researchers is an important facet for maintaining U.S. technology leadership, and recent trends may be a warning flag.

Q: What are you working on next?

A: This paper is a presentation of the methodology and a collection of descriptive statistics. I also have a series of papers that return to the case study of the Korean entrepreneur, characterizing how ethnic inventors in the United States aid the technology development and manufacturing growth of their home countries. The most recent work here, with my HBS colleague Fritz Foley, studies how U.S. ethnic inventors aid the FDI and foreign R&D sourcing of U.S. multinationals in their home countries. A second set of projects returns to the immigrants' role for U.S. technology development, specifically evaluating the impact of recent H1-B visa reforms on the pace of U.S. innovation.

About the Author

Sarah Jane Gilbert is a content developer at Baker Library.