Reference no: EM13854220

Visas for entrepreneurs

Where creators are welcome

Australia, Canada and even Chile are more open than America

Jun 9th 2012 | from the print edition

MOST governments say they want to encourage entrepreneurs. Yet when foreigners with ideas come knocking, they slam doors in their faces. America, surprisingly, is one of the worst offenders. It has no specific visa for foreigners who wish to create new companies. It does offer a visa for investors, but the requirements are so stiff—usually an initial investment of $1m, or half that if the firm is in a depressed neighbourhood—that the annual quota of 10,000 visas is seldom filled.

Other countries are more open (see table). Singapore offers visas to people who invest $40,000; for some, the government provides additional investment. Britain gives visas to entrepreneurs who meet certain conditions and attract £50,000 ($77,000) of venture funding. New Zealand has no specific capital requirement but offers residency to entrepreneurs whose firms are deemed to benefit the country. Chile is wildly generous: its government gives selected start-ups $40,000 without taking any equity in return. All these schemes have been introduced or expanded since 2008.

Where an entrepreneurial visa is not available, other routes may be. Australia and Canada use a points system that emphasises youth and skills. Since 2007 Australia has curbed the total number of permanent-residency visas it issues, but expanded the number of visas for skilled workers and their dependents from 103,000 to 126,000 a year. That is nearly as many as America (140,000), though America’s population is 14 times larger.

A similar side door let Mohamed Alborno into Canada. The young Egyptian-born entrepreneur incorporated his company, Crowdsway, in Delaware. He had done well in a contest for budding entrepreneurs. But getting a visa to live in America is slow, confusing and unpredictable.

In the end he went to Canada instead, where setting up a company is just as easy as in America, but the visa process is much more straightforward. He now says he is very happy to have settled in Vancouver. His firm, which connects online video-makers with clients, has just launched a beta service.

America’s scorn for skills is extraordinary. The share of permanent visas granted for economic reasons (as opposed to kinship) fell from 18% to 13% between 1991 and 2011. In Canada it rose from 18% to 67%. The Partnership for a New American Economy, a pro-immigration group, warns that America is “falling behind in the global race for talent.” China, meanwhile, offers some highly skilled returners not only free homes but also cash to buy furniture.

a. Does the situation portrayed in the article cause a change in supply or a change in demand of entrepreneurs in United States? Why?

b. Does your answer in a. imply a change quantity demanded or a change in quantity supplied in the market of entrepreneurs in United States? Explain.

c. What happens to the equilibrium price and the equilibrium quantity for entrepreneurs, ceteris paribus, in United States, based on your previously described changes in the market for entrepreneurs in a. and b.?