Richard Florida
by Richard Florida
Fri Mar 12th 2010 at 2:00pm UTC

Is the U.S. Facing a Brain Drain?

BrainWorldMapEarth

Here’s my interview with BusinessWeek’s Michelle Conlin:

Richard Florida: The U.S. Is Facing a ‘Talent Shift’

The bestselling author worries about the consequences of so many American-educated MBAs starting their careers in Asia

Richard Florida, the author of the bestselling books The Rise of the Creative Class and The Flight of the Creative Class, is a preeminent thinker about human capital and its importance for business. His new book, The Great Reset, due out in April, argues that a true recovery will require a complete break from the consumption lifestyle and a move towards a new economic model that is actually sustainable.

Florida is the director of the Martin Prosperity Institute and a professor of business and creativity at the University of Toronto’s Rotman School of Management. Bloomberg BusinessWeek talked with Florida about how many American-educated MBAs are no longer beginning the Grand Tour of their careers in the U.S.

Bloomberg BusinessWeek: Some of the best and brightest American-educated kids are seeing their future—in Asia. Does this worry you?

Richard Florida: From the beginning, I’ve been worried about this talent shift. Two things are happening. Countries such as Canada, Australia, and New Zealand are going after our best and brightest. In China and India, the best and the brightest are staying. One of the biggest tools foreign companies have is our business schools. All these great companies are coming to recruit. This shift is happening in real time right in front of our eyes. I see it in the Rotman School where I teach.

What are you seeing there?

I did the commencement address this year. I was blown away. In enormous numbers, the students were going to China, to India, to the Middle East. To a person, they said they found much more opportunity and possibility for career advancement over there. My jaw dropped. I literally could not believe how many kids.

The trend looks pervasive to you. Yet there’s radio silence from policymakers.

People in Washington are brain dead about this.

How to save Detroit, how to stimulate the mortgage industry. This flight of talent out of this country is actually a much more fundamental problem than anything talked about in Washington. Keeping top talent here as well as attracting top talent to our shores is a fundamental economic advantage. I don’t think most people want to admit what’s happening. They don’t want to see it.

Why the denial?

I think we in the U.S. have taken this for granted for so long. When I see the figures that 50% of all patented innovation in the U.S. comes from foreign-born inventors, I think that the important core of American ingenuity is not American ingenuity. It’s the ability to attract the world’s best people. That’s part of what made Hollywood great—European directors.

How do you see this playing out?

I don’t think any one country will dominate us. But if China picks up its share of global talent, and then India, and then Australia—you add up those percentages, and they create an enormous structural disadvantage for us. It erodes our competitive advantage. The U.S. always used to benefit from these big crises. In the 1870s, we got a lot of immigrant skills. In the 1930s, a lot of Europeans poured in. Now look what’s happening. I mean, imagine Silicon Valley without Andy Grove.

17 Responses to “Is the U.S. Facing a Brain Drain?”

  1. Bruce Says:

    In the short term, I suspect a big part of the explanation is that China nearly avoided the Great Recession (certainly it did better than the US on any measure I can think of). Given a choice between sitting around unemployed as a fresh MBA in the US and getting some work experience in Shanghai or Hong Kong, the better choice is clear to me.

    On the topic of saving dying (automotive) or unproductive (mortgage/residential housing) industries, I agree that most US policymakers are fixated on this. Isn’t there a general psychological principle (loss adversion) that states the most people are more motivated by loss than gain?

  2. Wendy Says:

    Isn’t there an axiom that army generals design strategies to win the previous war.

    Seems policy makers are worrying about how to stimulate an old economy, rather than how to position the country to win in the new economic era.

  3. Wendy Says:

    On Bruce’s comment. It’s worth adding that in the past, many Canadians (including Rotman grads I’m sure) wanted to head to the US after graduating from university. In whatever field you were in, it’s a bigger fish pond that in the past had more opportunities. In the 1990s, I remember the US as the happening place, in a global context — almost everyone wanted to go there. Today it’s not.

    Today, Asia and the middle east offer those intriguing once-in-a-lifetime career growth opportunities.

  4. thelady Says:

    A friend of mine is doing an MBA and he interned last summer in Shanghai. He had a good experience and is considering going back after he graduates this spring and staying 3 years.

  5. Bruce Says:

    An interesting counterpoint, Wendy. In my mind, I would think that language barriers would be an issue for Americans working in places like China and the Middle East* unless they are working for multinationals that operate in English? For my profession and all my friends, the USA is still bounds and leaps more attractive than China despite all the problems that America has.

    *On the topic of the Middle East, I was surprised to see this region mentioned as an economically dynamic area. There’s Israel (many many technology start up companies) and some intereting things happenin in the United Arab Emirates (e.g. massive investment in higher education). But what about the majority of countries in the region (Egypt, Saudi Arabia, Syria, Iran, Iraq, Kuwait, Lebanon etc)? There are many ways to describe those countries but I struggle to see the attraction of these places. Laying aside the oppressive way many of these countries treat women, many of these places are dictatorships or authoritarian regimes.

    In Thomas Friedman’s book, “The World is Flat,” he describes the lack of innovation in the region by referring to the 2003 Arab Human Development Report. It found that: “Arab countries produced 171 international patents between 1980 and 1999. South Korea alone during the same period registered 16,328 patents.” (Chapter 15: The Unflat World). Richard Florida’s books tend to use patents as a proxy measure of innovation and by that measure, this region is performing very weakly. Though there might be a big change in the region since 2000, I doubt it.

  6. Saket Jamkar Says:

    Doesn’t this need to be substantiated with figures? What percentage of the graduating class in Rotman is headed to China for instance?!

    Equally I see reports in the media that China has extremely high levels of unemployment for their recent graduates. NYTimes article here:
    http://roomfordebate.blogs.nytimes.com/2010/03/07/educated-and-fearing-the-future-in-china/

    I agree it is possible for both more MBAs to find jobs in China, while Chinese colleges graduates to suffer high levels of unemployment, but it seems improbable.

  7. Saket Jamkar Says:

    Oh well the other Businessweek article on the topic does have some numbers.

    http://www.businessweek.com/magazine/content/10_12/b4171086653619.htm

  8. Fred Says:

    I’m in agreement that we have a significant problem that fewer Americans are filling the science and engineering slots in graduate school. As a consequence, the majority of the benefit in our investment in technical education appears to be heading overseas. However, I think this phenomena should not be labeled “brain drain” but Instead “lame brain” due to the unwillingness and unpreparedness of too many American youth to undertake rigorous scientific work.
    As to the fleeing of MBA’s to chase their fortunes overseas, perhaps they will do the same things for Chinese banks they did for US banks, perhaps they will also find ways to eliminate Chinese jobs by outsourcing to poorer countries. I’m not convinced that most MBAs contribute to the creation of a sustainable economy.

  9. Wil Says:

    A huge percentage of young Americans are brain dead, cell phone worshipping, junk food eating zombies, so in the future there will be fewer scientists coming from the US. These days the young need apps to do even the most simple functions that people a generation ago used to do in their heads, without computer support. Since virtually nothing is made in the USA anymore, the few intelligent graduates are choosing to go where they can use their talents, which, currently, is in other countries. However, it would be a positive benefit to have all of the MBAs going abroad, because it will slow down development in other countries,and give the US a chance (sure to be wasted)to somehow do better with the next generation.

  10. LVM Says:

    Are Richard Florida et al. worried about brain drain from Canada or the United States, or both? Is this a regional protectionist concern? Since Florida is stationed in Canada (Rotman) but speaking about the US, it is unclear who he is actually concerned for. Moreover, one wonders if there are ethnocentrist undertones to Florida’s statements. Why shouldn’t we want the best graduates to go where their talents will be best recognized and recompensed? Are we more concerned about the region/state, or the students themselves? Would we rather that exceptional students ’stay home’ and be under-utilized? Is this issue even REALLY about student recruitment? Or does it stem from bigger problems resulting from government interference in education (ie, interference with market signals)?

  11. Wendy Says:

    Bruce,

    The United Arab Emirites are where Dubai and Abu Dhabi are. These cities have been growing rapidly and borrowing the talent from North America and Western Europe to manage the process — and the labour from Bangledesh (but we’ll leave that issue aside for now).

    Point being, I actually know and know of a large number of people who are doing or have done a few years in the middle east. Incredible experience.

    English is the language of business there, so Americans are not at a disadvantage.

    I know various people who don’t speak Chinese who do business in China and have a regular translator who travels around with them while they are chatting with suppliers and factories.

    The United States just doesn’t have the monopoly on great professional opportunities the way it once did.

  12. Michael Wells Says:

    Check out this article about American companies building research facilities in China.
    http://www.nytimes.com/2010/03/18/business/global/18research.html?ref=business

  13. Heath Arensen Says:

    Not only are American’s leaving for better jobs overseas but they are also finding it easier to set up businesses abroad. Countries are increasingly creating investment incentives for companies in strategic industries. I would say setting up a software services business in Amman, Jordan was as easy or easier than setting it up in the states. This is a trend that will continue as the world becomes increasingly globalized.

  14. Nik Says:

    Well it looks like US is no longer the best! Wait for 10 more years and we Americans will be forced to look for jobs in India and China. Competing with those guys wont be easy given that our education system is also bearing the brunt of this recession while India and China are moving ahead with some of the best schools in the world. Its time to wake up and draw down on our excesses.

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