Who Leads in Immigrant Engineer Innovation? The Shift from Developed to Developing Countries

Abstract Many developed countries have faced labor shortages recently, intensifying competition for highly skilled immigrants. This study examines immigrant engineers and the evolving role of innovation played by those from developed and developing countries. Using original panel data for Japanese firms across ten industries between 1970 and 2019, the study employs a knowledge production function model to analyze immigrant engineers’ changing impact on innovation. The analysis reveals that in the 1970s, immigrant engineers had no significant effect on innovation output; however, after the 1980s onward, their influence became significant. Since the 2000s, the impact of engineers from developing countries has surpassed that of those from developed countries. The results show that while individuals from the USA had a positive and significant effect in the 1980s and 1990s, those from China and India have had significantly positive effects since the 2000s and 2010s, respectively. These findings suggest that for developed countries such as Japan, the origins of immigrant engineers, who significantly contribute to innovation, are shifting from developed to developing countries.