WSJ: With U.S. Opportunities Dim, Expats Return Home; Plus Innovation Continues to Lag

A quite troubling story in the Wall Street Journal, especially when you overlay it with this blurb in BusinessWeek that for the first time ever, non-Americans were granted more US patents than residential investors.  Oh well, we still are the world leader in financial innovation and that appears to be the only thing we as a nation care to protect and nurture.

• For the first time in 2009, non-Americans were granted more U.S. patents than resident inventors, accounting for 50.7% of new grants.
• Moreover, for only the second time in the last 25 years, patent applications fell overall in the year ended Sept. 30.  The last decline was in 1996, when new global rules on the duration of patent protection went into effect, prompting applicants to hustle and file in 1995.
• ... the inflection point troubles American tech industry advocates and other analysts. "The U.S. is losing its innovation base," says Robert D. Atkinson, founder and president of the Information Technology & Innovation Foundation (ITIF), a Washington think tank. 
• The shift reflects in part moves by U.S.-based companies to offshore research and development. Take IBM (IBM), a company that for 16 years running has ranked No. 1 in patent volume. Big Blue still owns the rights to an invention that originated in one of its Indian labs, but the Patent Office would include it in its foreign resident tally.
• Taxes are one reason more innovation is going abroad. The U.S. once boasted the most generous research and development tax credits among the 30 countries in the Organization for Economic Cooperation & Development. Now, according to the ITIF, it ranks 17th, as other nations have cut taxes to spur investments in labs and equipment. (funny how we have money for the "important" things like trying to create fake asset prices in real estate or equities, but R&D?  Not that important apparently - and if you tried to increase funding you'd be accused of being a "socialist" or "central planner" after all)

I'd worry about it, but I am told that as long as I chant "USA! USA!" enough times, these problems all fix themselves... no need to ask ourselves what a few decades of sagging K-12 education eventually brings to a country.  Or to nod blindly that it's "great" to move manufacturing offshore, because we'll keep the high value, white collar R&D jobs that generally sit right next to production... that's been working like a charm.  Or why political dogma now dominates all thought process, and public-private partnerships that focus on long run research are akin to evil because they don't bring immediate profits that are the lifeblood of "capitalism". [Sep 8, 2009: Where Have you Gone Bell Labs?]

As for those "darn foreigners", well I suppose this is one way to help lower the domestic unemployment situation.... via WSJ:

• With unemployment at 10% and prospects for finding work bleak, foreign-born professionals who came to the United States in search of better job opportunities and prosperity are now retreating.   Foreign-based companies, particularly in Asia, are using the employment picture in the U.S. as a means to lure former residents home. This comes as a welcome respite for professionals who've experienced layoffs, underemployment and visa issues.
• Vivek Wadhwa, a senior research associate at Harvard Law School who has studied these trends, says frustrations about the lack of advancement in the U.S., where salary and promotion freezes have become the norm, are a significant factor in foreign-born professionals' heading home.
• HSBC Bank International's 2009 Expat Explorer survey found that 23% of U.S.-based expats are considering returning home, compared with 15% elsewhere in the world. The most frequently cited reason was increasingly limited career prospects.
• Many home countries have made significant economic strides in the past decade, making them more appealing to expats living in the U.S.  "When people came here a decade ago from India and China, they left behind a land where the opportunities aren't nearly what they are today," says Mr. Wadhwa. He expects more than 100,000 expats to return to India in the next five years and says human-resource directors in India and China he has surveyed have noticed a tenfold increase in the number of résumés from the U.S.
• And recruiters say in most cases, salaries will be equivalent to or better than what the employees were making in the U.S., although adjusted to the living costs in the new country.

Cursory anecdotal example, and I love the use of Germany since almost every argument against production in the US says it's "too expensive", while Germany has been a continued success at "making high value things" with labor not paid much differently. 

• Regina McAnally, a native of Frankfurt, moved to the U.S. in 1985 but found herself back in Germany in 2007 after the company she worked for as an accountant faced difficulties and her opportunities for advancement became slim.
• Ms. McAnally, who never visited her home country during her 22 years in the U.S., now works as a financial analyst with an automotive company in Cologne. She uprooted her son, then 15, to Germany as well.
• Ms. McAnally says in the U.S., she was unable to find a job despite numerous applications. Not so in Germany. "Since I've been here I've had headhunters calling me at work trying to hire me away," she says, adding that her new employer paid for her overseas move.

A fascinating, ever flattening world continues.... international borders will continue to mean less and less as the decades roll on.  And we'll continue to point fingers in every direction while bewildered what is happening around us.  Count on it.

p.s. the WSJ piece has a litany of interesting comments from readers, once you get past the first handful which are the typical political dogma.