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In 1993 an Indian immigrant with a bachelor’s degree in metallurgy arrived in California. Twenty-two years later he was the CEO of Google. Sundar Pichai’s story encapsulates why the global war for talent matters, and why Europe is losing this war. European thought leaders gathering in Davos likely disagree. Are they correct, or are they missing an important point that will put their nations at a disadvantage?
The Swiss-based IMD World Competitiveness Center recently launched its 30th yearbook ranking the competitiveness of countries. This edition included the World Talent Ranking, which lists countries based on their ability to develop and attract talent. IMD concludes that Western Europe is “dominating” the international workforce landscape.
European heads of state and company leaders may take comfort in IMD’s conclusions. However, companies seeking to attract the best talent have reasons to remain skeptical. While IMD has based its ranking on inputs such as a country’s public expenditure on education and quality of life, the results, as I interpret them, tell a different story.
The success of the U.S. in attracting immigrants and in putting their talents to use can perhaps be most clearly shown by the fact that household names such as Google, Microsoft, Clorox, Coca-Cola, PepsiCo, McDonald’s, Pfizer and Tesla all have foreign-born CEOs. But what does the data say?
Reviewing The Data
The OECD compiles data on all the immigrants who have come to 23 OECD countries, including their education levels. Using available OECD data for the past five years, I analyzed the immigration patterns of highly educated immigrants. While IMD’s report outlines which countries should, in theory, attract the most qualified talent, the OECD data shows which countries are able to do so in reality. The data does not paint a rosy picture for Europe.
I found that the U.S., a country with about 4% of the global population, is attracting roughly 54% of all highly educated immigrants to the OECD countries. European OECD countries with available data, collectively boasting roughly a third more population than the U.S., attracted half as many highly educated immigrants, or 27% of the total share.
Why Does This Matter?
Companies are increasingly trying to gain a competitive edge by following the talent, which I believe is becoming the main differentiator in today’s knowledge-based economy. This trend is so prevalent that companies like Talent Neuron, now a Gartner subsidiary, are making it their full-time job to help other companies understand in which geographies they can find better talent.
The Brookings Institute noted that “for Amazon, [the] HQ2 location decision was about talent, talent, talent.” The ability of cities and countries to stay competitive in attracting employers is therefore directly related to their ability to produce and attract the best talent globally.
Why Is The U.S. Winning The War For Highly Educated Immigrants?
Countries can increase their attractiveness to highly educated immigrants through immigration policies and other efforts. However, the U.S.’s status as a talent magnet can be attributed to a number of other factors:
1. The appeal of a large economy, which leads to more opportunities.
2. A higher GDP per capita, which leads to better-paying opportunities.
3. English as a primary language.
4. A diverse population. The religious, ethnic and cultural diversity in the U.S. is likely to create a more welcoming environment for immigrants.
5. The high regard many global talents have for U.S. universities and companies. Google’s Sundar Pichai, for instance, came to the U.S. to pursue a graduate degree at Stanford. Indra Nooyi, PepsiCo’s former CEO, immigrated to the U.S. to pursue a graduate degree at Yale.
European thought leaders gathering in Davos are likely unable to change the five factors above. However, it may be helpful for them to go into the discussions with their eyes wide open and realize that they are losing ground in the global war for talent. The movement of highly educated immigrants does not only have a historical impact, but it will also help businesses gain a competitive edge moving forward. Corporate leaders who are thinking about where future headquarters, research labs and other critical knowledge-based parts of their operations should be located will be wise to look at the availability of talent in those geographies.
January 30, 2019 at 07:52AM
Forbes – Entrepreneurs