Protectionism affects wealth creators: Urjit Patel in New York

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Urjit Patel

NEW YORK: The titans at the commanding heights of the tech world owe their success to talent from across the globe, according to Reserve Bank of India Governor Urjit Patel, who pointed to what could be the Achilles heel of the ‘America First’ policy that seeks to restrict H1-B visa and imports.

“Where would Apple be, where would Cisco be, where would IBM be if they were not sourcing the best products and talent from across the world,” Patel asked here on Monday, and added a warning: “If policies come in the way of that, then the big wealth creators in a country that advocates protectionism are ultimately affected.”

Last year, Apple applied for 1,354 H1-B visas, Cisco for 517, and IBM for 2,233 to bring in talent for their operations, according to a database maintained by Immihelp. (IBM applied for 13,115 H1-B visas in 2015.) H1-B visas are a scarce commodity in the tech world where companies vie for annual quota of the 85,000 visas meant for highly-skilled professionals.

Although Patel did not mention Google or Microsoft, both companies are headed by immigrants from India. The triumvirate at the top of the market capitalization roster, Apple, Google and Microsoft, all have immigrant origins or connections.

Sundar Pichai is the CEO of Google, which was co-founded by Sergey Brin who immigrated from the former Soviet Union.

The biological father of Apple’s founder, Steve Jobs, is a Syrian immigrant, Abdulfattah Jandali.

“The most efficient corporations in the world, including in the US, benefit, their share prices are where they are because of the global supply chain,” Patel said. Microsoft CEO Satya Nadella’s performance underscores his observation about market performance.

Microsoft’s share prices that were lagging around the $36 range when he took over in February 2014 closed on Monday at $67.53.

Donald Trump, who ran for President on a platforms of “Buy American, Hire American”, has called for restricting the H1-B visas for professionals to higher-level technical positions paying higher wages and for bringing back manufacturing to the US.

While answering audience questions after delivering the annual Kotak Family Distinguished Lecture at Columbia University, Patel was skeptical about the efficacy of restricting H1-B visas and imports to solve the domestic problem of equity.

He ascribed the calls for protectionism in the US to income inequality, and said they “should be addressed through domestic fiscal policies, in other words, taxation and income transfers”.

“Using trade instruments like customs duty, border tax, etc. is not the most efficient way. In fact, it could end up somewhere else.”