The Internationalization of Science & Engineering:
Issues of Work, Education, and Security
The Science & Engineering Workforce Project
of the National Bureau of Economic Research
Sponsored by the Sloan Foundation
Conference of 15-16 May 2003
The Earth Institute, Columbia University, New York, NY
Table of Contents
I. Economic, Political, and Demographic Contexts
1. Kofi Annan, “A Challenge to the World’s Scientists,” Science, vol. 299, 7 March 2003
2. Pete Engardio, Aaron Bernstein, and Manjeet Kripalani, “Is Your Job Next? A new round of globalization is sending upscale jobs offshore. They include chip design, engineering, basic research....,” BusinessWeek, 3 February 2003 [page 8]
Bray, “Passage to
JP Morgan Chase & Co. plans to outsource some of its stock market research to Bombay this summer, signaling possible new arenas for the trend that already has sent tens of thousands of information technology jobs abroad in recent years.
A surge in overseas hiring could result in major job losses inside the US financial services sector. Business consulting firm A.T. Kearney Inc. last week released a survey of 100 major American banks, brokerage houses, and insurance companies, projecting half a million financial services jobs will be shifted overseas in the next five years, equal to 8 percent of total employment in the sector.
The practice of outsourcing may be catching on among financial services and business consulting firms for the same reasons that computer software companies such as Microsoft Corp. and IBM Corp. are increasing their use of overseas labor. Countries like India offer sharply lower labor costs, while supplying workers with excellent technical and financial know-how. For instance, in 2001, MBA graduates from the prestigious Indian Institutes of Technology could expect to earn just $12,000, compared to an average starting salary of $102,338 for graduates of Harvard Business School.
New York-based JP Morgan said last week that the analyst research reports it prepares for stock investors will soon be prepared in part by Indian business school graduates working in Bombay. Meanwhile, A.T. Kearney said it is already having much of its research done by Indian workers.
''We're talking about very highly educated people with advanced degrees, who are very motivated,'' said A.T. Kearney managing director Andrea Bierce.
For decades, financial services companies like Citigroup and GE Capital have shifted some of their business activities overseas. But traditionally this has involved relatively low-level work, such as typing huge volumes of data into computers or handling simple bookkeeping activities. That trend has accelerated in the past five years as companies have sought to lower their costs to remain competitive.
But the move toward sending financial research abroad comes at a sensitive time for Wall Street. Last week, 10 top investment banks firms reached a $1.4 billion settlement with regulators aimed at protecting investors from biased research. It was unclear whether the settlement would speed the outsourcing of analyst work overseas.
''With the market for financial institutions not turning around, and not seeing the revenues that they'd hoped, financial institutions have had to continue to look for ways to reduce costs,'' said Bierce.
Indeed, beginning about a year ago, A.T. Kearney moved much of its own research to India. ''One [reason] was as a way to reduce our overall costs,'' said Bierce. ''But two, we could take advantage of the time change.'' Bierce said that she can e-mail a data request to an Indian colleague who's at work while she's at home. The next morning, the information is waiting in her e-mail box.
Another research firm, Deloitte Consulting, said the financial outsourcing boom isn't limited to the United States. Last month, Deloitte analyst Christopher Gentle predicted that financial firms in the major industrialized nations would move 2 million jobs to low-wage countries over the next five years, with about half the jobs going to India. Gentle estimated that the shift could save the world's 100 largest firms $138 billion a year by 2008.
JP Morgan Chase spokesman Brian Marchiony said his company isn't laying off American analysts in order to hire Indian MBAs. Instead, the Indian workers will do the heavy-duty number crunching, freeing up the Americans to focus on higher-level financial analysis, and letting them spend more time with customers. ''We will not only increase productivity for senior analysts inside the US, but lower costs for the overall department,'' Marchiony said.
It's unclear whether investors would be comfortable with financial advice based on offshore analysis. Stock analysts are presently laboring under a cloud of scandal. Charges that high-profile analysts gave investors inaccurate information to help their firms chase investment banking business led to last week's settlement between regulators and securities firms.
But SEC spokesman John Heine said that having part of the analysis done overseas shouldn't matter to investors, because it doesn't matter to regulators. ''If the research is being put out as a product by the investment bank, the investment bank is responsible for it,'' Heine said. ''It doesn't matter where the people putting it out work.''For now, other major financial firms don't seem in a hurry to follow JP Morgan Chase's lead. Representatives of Boston-based Fidelity Investments and Putnam Investments said that the firms have long had analysts based outside the United States, but not for purposes of reducing labor costs. Both firms say they have no plans to shift analyst work to India or other low-wage centers. Similar responses came from Merrill Lynch & Co., Solomon Smith Barney and Goldman Sachs.
4. Susan F. Martin, “Heavy Traffic: International Migration in an Era of Globalization,” Brookings Review, Fall 2001 [page 18]
5. Jagdish Bhagwati, “Borders Beyond Control,” Foreign Affairs, vol. 82, no. 1, January/February 2003 [page 22]
6. Susan Martin and B. Lindsay Lowell, “U.S. Immigration Policy, High Skilled Workers and the New Global Economy,” working paper of 2001 [page 29]
the door: Whom to let in to the richer countries and why,” The Economist,
8. “A survey of migration,” The Economist, 2 November 2002 [page 40]
9. David Wessel, “Immigration’s Attraction Lies in Its Boost to Economic Vitality,” Wall Street Journal, 27 February 2003 [page 54]
10. Joel Kotkin, “Immigrants Cushion the Economic Fall,” Wall Street Journal, 17 January 2002 [page 55]
11. Erik Eckholm and Joseph Kahn, “Asia Worries about Growth of China’s Economic Power,” New York Times, 24 November 2002 [page 56]
12. Michael S. Teitelbaum, “The U.S. Science and Engineering Workforce: An Unconventional Portrait,” prepared for GUIRR Summit, 12 November 2002 [page 58]
II. Internationalization of Education
1. Katalin Szelenyi, “Explaining the Migration and Settlement of Foreign Graduate Students: Global Integration Theory and the Theory of Cumulative Causation,” working paper of 2002 for the UCLA Center for Comparative & Global Research [page 63] http://www.international.ucla.edu/CMS/files/katipaper.doc
2. Michael G. Finn, “Stay Rates of Foreign Doctorate Recipients from U.S. Universities, 1999,” December 2001 [page 72]
3. Yugui Guo, “Graduate Education Reforms and International Mobility of Scientists and Engineers in China” from National Science Foundation, Division of Science Resources Studies, Graduate Education Reform in Europe, Asia, and the Americas and International Mobility of Scientists and Engineers: Proceedings of an NSF Workshop, NSF 00-318, Project Officer, Jean M. Johnson (Arlington, VA: NSF, 2000) [page 91]
4. Atul Wad, “Issues in Human Resources in Science and Engineering: India” from Graduate Education Reform in Europe, Asia, and the Americas and International Mobility of Scientists and Engineers: Proceedings of an NSF Workshop, NSF 00-318, Project Officer, Jean M. Johnson (Arlington, VA: NSF, 2000) [page 99]
5. Yugui Guo, “Graduate Education Reforms and International Mobility of Scientists and Engineers in Taiwan” from National Science Foundation, Division of Science Resources Studies, Graduate Education Reform in Europe, Asia, and the Americas and International Mobility of Scientists and Engineers: Proceedings of an NSF Workshop, NSF 00-318, Project Officer, Jean M. Johnson (Arlington, VA: NSF, 2000) [page 103]
6. “Education, still in demand: Arabs don’t like American policy but do like its education,” The Economist, October 26, 2002 [page 110]
7. Simon London, “The networked world changes everything: The Silicon Valley visionary [Greg Papadopoulos] says the internet will continue to bring rapid and fundamental changes in centres of research and learning,” Financial Times, 24 March 2003 [page 112]
III. The H-1B Visa Debate, and
Immigrant Science Workers in the
1. Margaret L. Usdansky and Thomas J. Espenshade, “The H-1B Visa Debate in Historical Perspective: The Evolution of U.S. Policy Toward Foreign-Born Workers,” Center for Comparative Immigration Studies, University of California-San Diego, Working Paper No. 11, May 2000 [page 113]
2. Rafael Alarcon, “Migrants of the Information Age: Indian and Mexican Engineers and Regional Development in Silicon Valley,” Center for Comparative Immigration Studies, University of California-San Diego, Working Paper No. 16, May 2000 [page 126]
3. Rafiq Dossani, “Chinese and Indian Networks in Silicon Valley,” a summary of a May-June 2001 survey of over 10,000 members of Silicon Valley engineering associations (2272 responses) [page 145]
4. Stuart Anderson, “Foreign-Born Engineers and Scientists Don’t Undercut Wages: They Earn More,” commentary for the Cato Institute (www.cato.org), 25 October 1996 [page 149] http://www.cato.org/dailys/10-25-96.html
5. Cindy Rodriguez, “Battle brewing over tech visas: Critics say scarce jobs should go to Americans,” Boston Globe, 9 July 2002 [page 150]
6. Rashmee Z. Ahmed, “Britain closes door on Indian IT professionals,” Sunday Times of India (Mumbai), 1 September 2002 [page 151]
7. Professional Contractors Group (U.K.), “Review of Work Permit Policy on Recruitment and Employment Agencies and Contractors” (a report compiled by Philip Ross, Stephen Hunter, and Gurdial Rai), June 2002 [page 152]
IV. The Brain Drain Thesis Revisited
bound: Do developing countries gain or lose when their brightest talents go
abroad?,” The Economist (Special report),
2. Jeffrey Mervis, “Science Indicators: NSF Report Paints a Global Picture,” Science, vol. 296, 3 May 2002 [page 171]
M. Johnson and Mark C. Regets, “International Mobility of Scientists and
Engineers in the
4. William J. Carrington and Enrica Detragiache, “How Extensive is the Brain Drain?,” Finance & Development, June 1999 [page 175]
5. Mario Cervantes and Dominique Guellec, “The brain drain: Old myths, new realities,” Observer, no. 230, January 2002 [page 179]
6. Hyaeweol Choi, “Reverse Brain Drain: Who Gains or Loses?,” International Higher Education, Winter 2000 [page 182]
G. Levin and Paula E. Stephan, “Are the Foreign Born a Source of Strength for
U.S. Science?,” Science’s Compass,
8. David Cyranoski, “Plugging the brain drain: China produces fine scientists, but too many go abroad for training and do not return,” Nature, vol. 417, 13 June 2002 [page 190]
9. David Cyranoski, “Independent’ biology institute targets China’s exiles,” Nature, 21 November 2002 [page 191]
10. Zhang Guochu and Li Wenjun, “International Mobility of China’s Resources in Science and Technology and its Impact” from International Mobility of the Highly Skilled (Paris: OECD, 2001) [page 192]
11. Timothy Roberts, “Asian techies and entrepreneurs pursue new opportunities far from Silicon Valley,” Silicon Valley/San Jose Business Journal, 7 April 2003 [page 198]
12. “Reversing the brain drain,” The Hindu [online edition of the national newspaper/ India], 20 June 2001 [page 200]
13. “Brain drain costs Asia billions,” BBC News online, 10 July 2001 [page 201]
14. “Brain drain costs developing countries billions” from CNN.com, 10 July 2001 [page 203]
15. “Vajpayee calls for reversing brain drain, cutting red tape,” Business Line [The Hindu financial daily], 4 January 2003 [page 204]
Szelenyi, “The Politics of Highly Skilled Migration: Policies in Whose
Interest?,” working paper of 2002 for the
17. B. Lindsay Lowell and Allan M. Findlay, “Migration of Highly Skilled Persons from Developing Countries: Impact and Policy Responses – Synthesis Report,” report prepared for the International Labour Office, Geneva, October 2001 [page 213]
18. “Investing in People, Sharing Skills, and Knowledge,” chapter three of Eliminating World Poverty: Making Globalisation Work for the Poor – White Paper on International Development (Cm. 5006, Presented to Parliament by the Secretary of State for International Development by Command of Her Majesty, December 2000) [page 217]
19. Uwe Hunger, “The ‘Brain Gain’ Hypothesis: Third World Elites in Industrialized Countries and Socioeconomic Development in their Home Country,” from Center for Comparative Immigration Studies, University of California-San Diego, Working Paper No. 47, January 2002 [page 232]
20. “Silicon Valley Immigrants Forging Local and Transnational Networks,” Research Brief: Public Policy Institute of California, issue #58, April 2002 [page 255]
21. Mihir A. Desai, Devesh Kapur, and John McHale, “The Fiscal Impact of High Skilled Emigration: Flows of Indians to the U.S.,” working paper of November 2002 [page 257]
22. James P. Trevelyan and Sabbia Till, “Observations from a Study of Professional Engineering in Australia and Pakistan,” working paper of May 2003 [page 283]
V. Development Economics with Jeffrey Sachs, The Earth Institute, Columbia University; Science and the Role of Government/ Harold Varmus, President and CEO, Memorial Sloan-Kettering Cancer Center
1. Jeffrey Sachs, “The Global Innovation Divide” from Adam B. Jaffe, Josh Lerner, and Scott Stern, Innovation Policy and the Economy (vol. 3) (Cambridge: MIT Press, 2003)
2. Jeffrey Sachs, “Getting through the bottleneck,” Our Planet: The Magazine of the UNEP, vol. 13, no. 4, 2003 [page 308]
3. Jeffrey Sachs, “Weapons of mass salvation,” The Economist, 26 October 2002 [page 311]
4. Jeffrey D. Sachs, “A New Global Effort to Control Malaria,” Science, vol. 298, 4 October 2002 [page 313]
5. Harold Varmus, “Squeeze on Science,” Washington Post, 4 October 2000 [page 316]
6. Harold Varmus, Harvard University Commencement address, 6 June 1996 [page 317]
7. Harold Varmus, Lasker Awards Luncheon address, 21 September 2001 [page 321]
VI. Case Studies and Background from
Guoping and Li Zhengfeng, “Research and Development in
Yau, “Science and Technology in
3. David Cyranoski, “Chinese plan pins big hopes on small science,” Nature, vol. 414, 15 November 2001 [page 333]
4. Jia Hepeng, “China plans $600 million boost for high-tech projects” from SciDev.Net (11 January 2002) [page 334]
5. K.S. Jayaraman, “Indian science gets major budget boost” and T.V. Jayan, “Indian science research: in the doldrums?” from SciDev.Net (7 March 2002 and 30 December 2002) [page 335]
6. K.S. Jayaraman, “India’s scientists agonize over fall in publication rate,” Nature, vol. 419, 12 September 2002 [page 336]
7. K.S. Jayaraman, “Indian prime minister pledges to revamp science,” Nature, vol. 421, 9 January 2003 [page 337]
8. Ashok Parthasarathi, “A champion of new technologies: Despite its strengths, India needs to invest far more to retain its lead,” Nature, vol. 422, 6 March 2003 [page 338]
9. Amol Sharma, “Hard drives make inroads into rural India,” Christian Science Monitor, 1 May 2003 [page 340]
10. Jacques Gaillard, Mohamad Hassan, and Roland Waast in collaboration with Daniel Schaffer, “Africa” for the UNESCO Science Report 2002 [page 341]
A new report on the current state of science in Africa emphasises widely differing fortunes across the continent, but also underlines the opportunities for future improvement - providing governments listen to its message.
It's not unusual to hear scientists complaining that they are underpaid. Nor is it unusual to hear that declining government support for science in deference to market mechanisms has not been met by increased funding for research from other sources, in particular the private sector. But if such complaints are a familiar litany in Europe (and even occasionally the United States), the problems encountered in such countries pale in comparison to those currently being experienced in many parts of Africa.
With aid policies towards the continent now under the international spotlight, it is both useful and timely to be made aware just how bad these latter problems can be. Figures just released by the Paris-based Institut de Recherche pour la Développement (IRD) do just that. Taken from a series of reports 'Science in Africa at the Dawn of the 21st Century' commissioned by the French government and the European Commission in Brussels, the picture they paint is grim (see 'Poor pay threatens African science'). More positively, however, the reports also hint at a possible way forward, one that uses the experience of other parts of the world (particularly Europe) to develop a strategy appropriate to the massive challenges that African science now faces.
Certainly it will take a large amount of effort to eliminate the many bleak patches in the current panorama. For example, a survey of science researchers in 15 African countries carried out for the IRD reports found that in those working to Sub-Saharan Africa (apart from South Africa), more then 90 per cent complained of being underpaid. Many said they have to supplement their earning with part-time employment in other sectors, such as working in farming or running small businesses, a commitment which inevitably places severe limits on their scientific productivity.
Furthermore, as the report points out, a significant reduction in government support for science in many African countries over the past two decades — the results of a variety of political and economic pressures — has left deep scars. This has been particularly true in countries such as Nigeria which, as a result the lack of apparent interest of a series of regimes in either higher education or long-term economic growth (an approach now being reversed), has seen a 50 per cent decline its output of scientific literature during the 1990s.
A chapter in the forthcoming Unesco Science Report 2002, written partly by the two main authors of the IRD reports, puts the situation succinctly. It points out that a number of recent surveys of scientific publishing among African countries lead to the same conclusion: that during the first half of the 1990s, a time when research budgets in the North were climbing steadily, "Africa has lost 20 - 25 per cent of its relative capacity to make contributions to world science" — and that was already from a low base.
But the picture in Africa is not all gloomy. The IRD report points out, for example, that for all the country's current economic uncertainty, science in South Africa continues to be productive, even if (as in Egypt) at a static level. Indeed, in some countries the progress has been impressive. This is particularly true of the countries such as Morocco, Algeria and Tunisa that lie along Africa's Northern coast, known collectively as The Maghreb, which saw an increase in scientific production — measured in terms of scientific publications — of 60 per cent over the 1990s.
What are the lessons that can be learnt from this? As the authors of the IRD report indicate, one is the need for a sustained political commitment on the part of governments to provide not only adequate financial support for research laboratories, but also an active encouragement for science as a tool of social policy, integrating it into political and economic decision-making at all levels. It is this approach that has been partly responsible for the success of the Maghreb, a success which now needs to be repeated elsewhere.
Secondly, it seems clear that those African countries whose science is prospering most are the ones that have been able to adapt to what has been called the 'new mode of scientific production'. This is an approach which recognised that the old distinctions between basic and applied research are no longer valid, and that the key to a viable and self-sustaining scientific community is to be able to link its projects and goals to locally-determined priorities, but in a way that 'frames' research programmes rather than rigidly dictates them.
The final lesson is that regional and international cooperation can be highly beneficial, if not essential, and that funding (including foreign assistance) can be most effective when it is not fragmented, but supports integrated regional efforts. The IRD report points to the way in which the European Commission's Framework programme has successfully achieved such collaboration, helping to boost scientific publications by almost 50 per cent over a period in which African publications have only grown by 6.5 per cent. Perhaps it is time for Africa to take a leaf out of Europe's book.
11. Lee Branstetter and Yoshiaki Nakamura, “Is Japan’s Innovative Capacity in Decline?,” National Bureau of Economic Research Working Paper 9438, January 2003 [page 362]
12. Arthur Kornberg, “Whither Biotechnology in Japan? Why biotechnology hasn’t yet taken off,” Harvard Asia Pacific Review, vol. 6, no. 2, Fall 2002 [page 384]
13. Raymond Feddema, “South Korea plans its biotechnology future,” Biotechnology and Development Monitor, no. 50, March 2003 [page 388]
14. Michael Bond, “Where progress is a lost cause,” New Scientist, 26 April 2003 [page 394]
15. Ehsan Masood, “Blooms in the desert: The Arab world has a proud history of scholarship, but in recent decades it has neglected science,” Nature, vol. 416, 14 March 2002 [page 395]
16. Servio P. Ribeiro, et. al., “Brazil has the talent: just let us get on with the job,” letter to Nature, vol. 413, 6 September 2001 [page 398]
17. Hebe Vessuri, “Mobility Programs for Scientists and Engineers in Latin America” from National Science Foundation, Division of Science Resources Studies, Graduate Education Reform in Europe, Asia, and the Americas and International Mobility of Scientists and Engineers: Proceedings of an NSF Workshop, NSF 00-318, Project Officer, Jean M. Johnson (Arlington, VA: NSF, 2000) [page 399]
18. Valeria Roman, “Argentina drops scheme for young researchers” and “Argentina’s scientists want more expatriate support” from SciDev.Net (9 March 2002 and 15 January 2003) [page 402]
19. Hector Ciapuscio, “What does the future hold for Argentine science?” and Esther Orozco, “The self-help challenges for Mexican science” from SciDev.Net (13 January 2002 and 22 April 2002) [page 403]
20. Jose Goldemberg, “What is the Role of Science in Developing Countries” from Science magazine online [page 404]
VII. Security Issues and Post-9/11 Fallouts
1. John H. Marburger, Director, Office of Science and Technology Policy, statement before the Committee on Science, U.S. House of Representatives, 10 October 2002 [page 407]
2. David Malakoff, “Security and Science: Researchers See Progress in Finding the Right Balance,” Science, vol. 298, 18 October 2002 [page 412] http://www.sciencemag.org/cgi/reprint/298/5593/529.pdf
3. Marjorie Valbrun, “U.S. Web System Unveiled to Track Foreign Students,” Wall Street Journal, 13 May 2002 [page 413]
4. Ronald M. Atlas, “National Security and the Biological Research Community,” Science, vol. 298, 25 October 2002 [page 414] http://www.sciencemag.org/cgi/reprint/298/5594/753.pdf
5. Geoff Brumfield, “Researchers rage at tightened restrictions on U.S. immigration,” Nature, vol. 422, 4 April 2003 [page 416]
6. “Scientists criticise research restrictions,” BBC News online, 18 February 2002 [page 418]
7. Martin Enserink, “USDA Closes Lab Doors to Foreign Scientists,” Science, vol. 296, 10 May 2002 [page 420]
8. Richard Stone, “U.S. Visa Crackdown Disrupts Meetings,” Science, vol. 297, 23 August 2002 [page 421]
9. “Visa restrictions hamper research,” San Jose Mercury online, posted at www.bayarea.com, 10 March 2003 [page 422]
10. Chronicle of Higher Education, special supplements on homeland security and U.S. universities, 11 April 2003 [page 423]
11. Amitai Etzioni, “Patriot Act is needed, but so are revisions,” Christian Science Monitor, 2 May 2003 [page 444]
12. Mark Clayton, “Higher Espionage: The CIA finds a warmer welcome on campus since 9/11....,” Christian Science Monitor, 29 April 2003 [page 445]
13. Alice P. Gast, “The Impact of Restricting information Access on Science and Technology,” statement and policy recommendations of 2003 [page 448]
14. Charles M. Vest, “Response and Responsibility: Balancing Security and Openness in Research and Education,” statement of September 2002 for the Massachusetts Institute of Technology Report of the President for the Academic Year 2001-2002 [page 455]
15. Haim Baruh, “Terrorism Hysteria Blocks Foreign Students’ Entry,” letter to the Wall Street Journal, 28 January 2003 [page 463]
16. Scott Atran,
“Who Wants to be a Martyr?,” New York Times,
17. David S. Cloud and Jacob M. Schlesinger, “U.S. Pursues Leads Recovered in Capture of al Qaeda Official,” Wall Street Journal, 4 March 2003 [page 466]
18. Kelly Greene and Chad Terhune, “Before al Qaeda, Studies in the U.S.,” Wall Street Journal, 4 March 2003 [page 467]
19. R. Adam Moody, “Reexamining Brain Drain from the former Soviet Union,” The Nonproliferation Review, Spring-Summer 1996 [page 468]
20. Paula E. Stephan, Grant C. Black, James D. Adams, and Sharon G. Levin, “Survey of Foreign Recipients of U.S. Ph.D.’s,” Science, vol. 295, 22 March 2002 [page 474] http://www.sciencemag.org/cgi/content/summary/295/5563/2211a
21. Ann Davis, “Plan to Fingerprint Visitors to U.S. Raises Many Doubts,” Wall Street Journal, 31 July 2002 [page 477]
22. Betty Liu, “War turns employers against foreign workers,” Financial Times, 12 December 2001 [page 478]
23. Norihiko Shirouzu, “Signs of an Ethnic Backlash Put Arab Americans on Defensive,” Wall Street Journal, 14 September 2001 [page 479]
24. Michael Barbaro, “Biodefense Plan Greeted with Caution: Drug Firms Want Better Guarantees,” Washington Post, 2 May 2003 [page 480]
25. Cory F. Coll, “Why Los Alamos and Lawrence Livermore Require Foreign National Participation in their Research and Development Programs,” paper of March 2003 [page 482]