Policies to Support Immigrant Entrepreneurship

Policymakers in top migrant-receiving countries increasingly recognize the well-documented benefits of immigrant entrepreneurship. Immigrants are more likely to start businesses than their native-born peers, despite increased obstacles. In countries with a strong entrepreneurial culture, like Australia, Canada, and the United States, policymakers look to migrant entrepreneurship to foster competitiveness and innovation. Immigrant-run businesses can also be a boon to economic growth and social inclusion for cities and regions, thus attracting new residents.

This report examines the obstacles that prevent immigrant entrepreneurs from realizing the full potential of their enterprises to contribute to the socioeconomic welfare and competitiveness of host countries. While a lack of start-up funding is a challenge for many entrepreneurs, credit constraints tend to be greater for immigrants than for the native born, given their shorter credit histories in their host countries and higher tendency to lack collateral such as home ownership. Immigrants, and especially new arrivals, also often lack full mastery of their new country's language as well as the country-specific human capital and networks that the native born can rely on to navigate complex bureaucratic regulations and procedures.

The report also outlines the policy tools available to help immigrant entrepreneurship thrive, including mainstream and targeted business-support programs as well as structural policies that promote an environment that is conducive to entrepreneurship and innovation. While business-support programs are typically designed and implemented at the local level, allowing for the tailoring of services to the unique economic needs of each locality, structural policy reforms in areas such as taxes, labor market regulation, and education are generally the responsibility of the national government. In this context, cooperation between national and local policymakers is particularly important in developing complementary policy strategies that strengthen immigrant entrepreneurship.

This report comes from the eleventh plenary meeting of MPI's Transatlantic Council on Migration, which focused on how cities and regions can more fully reap the benefits of immigration.