— Leland Teschler, Editor

As an Executive in Residence at Duke University, Wadhwa headed an effort to examine the number of engineering graduates in the U.S., China, and India. Prompting his work were alarming reports in the media that the latter two countries graduated 12 times as many engineers as the U.S. The implication was that we were in danger of losing our technological edge.

Duke researchers found these foreign graduation rates were wildly inflated; the counts of engineers sometimes included mechanics and low-level technicians. The conclusion was the U.S. graduates about enough engineers.

But we’ve still got big problems: No one really knows what kind of engineers the U.S. should produce to remain globally competitive. “We should determine which engineering skills will give us a long-term advantage and focus on producing more of those,” Wadhwa says.

Indications are we just don’t do that. Wadhwa has a particular insight on globalism. He immigrated to the U.S. from India in 1980 and is keenly worried about an important source of U.S. competitive advantage: foreign students here to get a Ph.D.

“In the 1990s, one-quarter of all new businesses in Silicon Valley were founded by immigrants. Today, that number has climbed to 50%. U.S.-wide, it is about 25%,” he says. A lot of these entrepreneurs have U.S.-earned Ph.D.s. Lest you think immigrant Ph.D.s steal employment from Americans, consider that the number of jobs created at these companies exceeds the number of immigrants allowed in over the years they were created.

But now, more and more Ph.D.s head back to their own country instead of staying here. At GE India, for example, one-third of the R&D staff earned degrees in the U.S. At IBM India, half the Ph.D. researchers got their education here. This reverse brain-drain fuels a movement to out-source high value-add work elsewhere.

And the trend isn’t because the grass has suddenly grown greener overseas. “Ph.D.s can’t get green cards,” shrugs Wadhwa. There are now over 1 million educated foreign nationals in the U.S. waiting to immigrate. Only about a 100,000 green cards are issued annually with a limit of 8,400 per country. “Most of these people will just return home out of frustration,” he says. The irony, of course, is that there are now 12 million illegal immigrants in the U.S. who didn’t bother to wait, and more coming every day.

Nor are natural-born U.S. citizens likely to fill the Ph.D. gap. The reason has nothing to do with a lack of skills. “You have a high percentage of foreigners studying for advanced degrees partly because those degrees aren’t cost justified for Americans,” says Wadhwa. “The opportunity cost is so big that you never make back the money spent on tuition. Americans are smart and they have figured this out.”

Clearly there is no pat answer to improving our position against global competitors. But here’s a good way to start: Get beyond the rhetoric of graduating more engineers.