Why Global Talent Clusters Around Cities

For now, U.S. cities lead in attracting global talent, but cities across the world are coming on strong.

Students celebrate at the John F. Kennedy School of Government commencement at Harvard University in 2015. Brian Snyder/Reuters

Talent is the key factor in economic development and increasingly clusters in and around great cities. That’s the main message of the new book, The Gift of Global Talent: How Migration Shapes Business, Economy & Society, by the economist William Kerr of Harvard Business School. (I liked the book so much, I blurbed it.)

While the key to America’s innovation and economic growth has long rested on its ability to attract the best and the brightest, cities across the world have caught on and are catching up. I spoke to Kerr by phone recently about his research on global talent flows, and what it means for cities in the United States and around the world. Our conversation has been lightly edited for clarity and flow.

Stanford University Press

Why is global talent a gift to the world?

Global talent is a gift because the more we can match people with the opportunities they’re passionate about, cultivate their creativity with education and training, and then put them to practice; the more opportunity there is for everybody.

Our capacity to place people where they can best utilize and harness their talents and work to develop them is very powerful. The more we’re able to enable people to cluster together, the more powerful their work overall can become. For the United States in particular, this has been a very powerful gift. The book documents the enormously lopsided nature of our country’s talent inflows and some of the economic and societal implications and consequences.

How do you define talent?

The book looks at everything from Nobel Prize winners, college educated workforces, to the students in classrooms. I can’t say that any one of those definitions is perfect.

You write that America’s preeminence in attracting talent is in jeopardy. Why is that?

U.S. immigration policy has not been an advantage for us. You don’t have to be an economist or a business executive to look at the H1-B lottery and say, “This is not the best way that we could do it.” We’ve had a policy environment that has been stuck for more than a decade in the existing structure—small changes here and there, but nothing to really enhance the system. It’s not that the United States has received this special gift of talent because of its immigration policy, it’s more in spite of it.

The second part is, we’ve often been a first choice for where people want to go, but a lot of other countries are catching up or offering opportunities surpassing those in the U.S. Not that global development is a bad thing, but it does mean that we shouldn’t take special positions for granted. The combination of both our difficult policy environment and the improvements of other countries means that we find ourselves in a position that’s much tighter than before.

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Many blame the Trump administration for setting America back in the competition for global talent. How has it threatened incoming talent?

The bigger challenge that President Trump has brought in is just a lot of uncertainty as to what the future holds. When we think about investment, uncertainty is not your friend. A lot of migration is developed around people’s expectations of the future, like deciding which university they want to attend. My wife was H1-B and then got a green card, and then became a citizen. We’ve been through the various stages; U.S. immigration policy is definitely not user-friendly. Unfortunately, with the rhetoric and other actions of the administration, from the travel ban and similar, there’s been a lot of uncertainty. It makes me very worried that it will have an even bigger effect than whatever policy changes might’ve come about.

We hear about brain drain and brain gain. What about the concept of brain circulation?

It’s vitally important and becoming more so. The old story of brain drain meant when the best and brightest went abroad, which was a loss to the country that they were from. Brain gain is the notion of people staying in the United States. The concept of brain circulation has certainly come into the landscape, highlighted as when transportation costs decline and planes are faster—that’s how our business culture will become ever more integrated.

Why is talent the world’s most precious resource?

Some might argue for data as the world’s most precious resource, or some may say oil or water. I put talent at the frontier. The ability to have talented people who are able to absorb, learn new ideas, combine them in ways that are not expected, and figure out how to reshape business models and opportunities around that is vitally important.

What’s the connection between talent and cities?

In many traditional industries, you had to combine talented people with factories, land, machinery, and other resources. Today, you have global reach from a single place, allowing for a very powerful city-level phenomenon. Talent desires to be ever in closer proximity.

How important are universities in talent generation?

It’s very under-appreciated how enormously important universities are in the talent inflow that comes into America. Universities have a powerful effect on catalyzing local industries of opportunity and putting people at the frontier of those ideas. For older industries, it brings to life these ideas to help us think about things in new ways and new opportunities. The university really generates and sustains activity around it.

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Cities across the country and the world offer up billions of dollars worth of incentives to try to attract high-tech companies, with the idea that it will bolster their talent base. Do these things work or not?

Any time you’re providing incentives to a firm, it’s a high-risk move to get that cost-benefit right. I’m not going to say that you should never provide incentives to help out or tip the scales, but at the same time you really need to think about the alternative uses of those resources. Will the company be the good corporate sponsor that you hope that they will be?

I’m a fan of thinking about how to better activate the local talent that places already have. In the United States, you are 10 percent more likely to be an entrepreneur in your hometown than if you migrate to another place. And, locally grown entrepreneurs run stronger, better businesses. Having a strong and vibrant business community and generating opportunities is a beacon to other people deciding where to move. If you’re able to catalyze the local entrepreneurial ecosystem and find ways to bring in local talent, that’s going to be a powerful magnet for other people.

Which are the big new players in the competitions for talent? What are the places that are getting it right?

Many places are getting things right: Canada, Chile, China, Paris. I often get asked if the U.S. is going to lose out to China. I always remind people that the United States has 330-something metropolitan areas. They’re as diverse as from Miami to Seattle. There’s no other country that can deploy global talent at that scale. Yes, China and India are going to become more competitive for our talent, but I don’t think there’s going to be a single country that could take or lure talent away.

At the end of the day, are you optimistic or pessimistic about America’s ability to compete for talent in the future?

I don’t know if I’d call it optimism or pessimism. The United States has some time to start getting things better, but it needs to do it quickly. My hope is, first, that we pull back from this damaging rhetoric surrounding immigration; and second, that we can find ways to start making these adjustments with a reasonable debate and figure out how to take a bigger step forward.

This feature is written by Richard Florida & originally appeared in CityLab.

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