Friday, May 14, 2010

Foreign Direct Entrepreneurs

Unemployment lags recovery. So even a stronger than expected return to growth will not lead to an immediate, sharp fall in the live register (though there will be some reduction in the numbers unemployed). Moreover, as Will Hutton recently pointed out, Ireland will have to embark on an Innovation Revolution in order to secure the job and wealth creation that a future rise in our standard of living will require. Hutton's recipe makes a lot of sense (building an innovation 'eco-system', coupled with 'flexicurity' in the job market). But all that will take time (and face considerable resistance from the usual vested interests).

So I have a modest proposal. Speed the process up by importing entrepreneurs. A recent Kauffman Foundation report on High-Growth Firms notes that:
Immigrants have been hugely important to the United States for its entire history, but their role in new-firm creation has only recently come into specific focus. Research led by Vivek Wadhwa has found that, from 1995 to 2006, immigrants founded or co-founded roughly one quarter of all technology and engineering companies in the United States—in Silicon Valley, it was a remarkable 50 percent. These companies have created thousands of jobs for Americans—by one very rough calculation, in fact, these immigrant founded technology companies comprised only 0.3 percent of companies founded during this period but generated nearly 10 percent of jobs among existing companies.
As the authors point out, immigrant entrepreneurs are job makers rather than job takers, and cost practically nothing compared to most job creation schemes. They also recognise that immigration is a highly sensitive political issue. So they have a simple proposal: create a special category of 'entrepreneur's visa' whereby an applicant intending to set up a business in a country like Ireland - with, say, €250,000 in capital to do so - can get a 5-10 year visa, renewable thereafter.

I'd go further: I'd target Israeli entrepreneurs - especially given their success to date. Moreover, with the prospect of sharply rising taxes in Israel to fund their increasingly dysfunctional social welfare system, there might be a growing number of ambitious Israeli entrepreneurs interested in starting anew in Ireland.

Whatever it takes to spare yet another generation of Irish men and women the cruel choice of lifetime under-employment or emigration.

2 comments:

  1. This is a very good idea. Quite frankly, if we had taken the opportunity to import Jewish entrepreneurs in the 1930s, our economy would have picked up well before the 90s.

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  2. I notice that one response of Iceland to its financial collapse was to reposition itself as a 'libel-free zone', in order to attract media organisations, publishers and writers who would not feel free publishing in their home countries. It seems like an innovative response and might well work here for other service or creative industries in a similar way. The point is to attract the smaller entrepreneur in the same way we successfully atracted the big multinationals. That entails some kind of 'uniqueness' that can't be found elsewhere. In Iceland, it required legislation. Our lawmakers need to put their thinking caps on!

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