The Effects of Highly-Educated Immigrants on Innovation in Three Developed European Countries

Abstract

In the current globalized world, migration represents a topic of great interest, generating advantages and downsides as well, both for the people and the communities implicated. Highly-educated migrants represent a key factor in fostering innovation, productivity and economic growth, and promote knowledge diffusion/distribution in both directions, from origin to destination country and vice versa. This research investigates the effects of highly-educated immigrants on the number of patents (a good proxy for measuring innovation activities), in the case of Austria, Finland and Sweden, between 2011 and 2017. For the empirical analysis of the study case, we used panel data and developed a multiple linear regression model estimated through the ordinary least squares method (OLS), at the country-level. In line with the vast existing literature, the main finding of this paper is that highly-educated immigrants, representing external factors of innovation, have a positive and significant impact on the number of patent applications in all three receiving countries. Moreover, financial support in R&D (in different sectors) and investments in human capital (from diverse fields) serve as internal factors of innovation and also contribute vastly to the enhancement of innovation.