What Europe Owes Its Immigrants

It's one of the greatest of European paradoxes. At a time when Jorg Haider's extreme right Freedom Party is welcomed into Austria's government and bands of Spanish marauders burn down the houses of Moroccan migrant workers, immigrants are proving to be the most entrepreneurial of Europe's entrepreneurs. In Spain, the Netherlands, and Germany, immigrants are responsible for proportionately more new businesses than native-born Europeans. From Internet companies to mom-and-pop corner stores, immigrants are generating economic growth, jobs, profits, and tax revenues throughout the Continent. Unlike the U.S., where the policy debate is over how to increase immigration to fuel growth in the New Economy, European politicians remain mired in a reactionary debate over how to keep immigrants out.

How well immigrants do in Europe depends on how welcome they are made to feel. The more secure they are, the more likely they are to build businesses and create wealth. Britain's non-white immigrants create the largest number of companies per thousand in all of Europe. Why? They come mostly from the Commonwealth, and, as such, are automatically citizens. Belgium's immigrants can become citizens after only a few years. Belgium ranks second in European immigrant entrepreurship.

Germany and Austria tie for last. They have the most restrictive nationality laws and place many obstacles in the way of immigrant entrepreneurs. German law states that foreigners must reside in the country for four years before they can even start a business. Austria requires certain kinds of "diplomas" that are difficult for immigrants to earn for many service professions.

Fast economic growth in Europe, of course, would help remove many barriers to immigrants. But, then again, greater openness to foreigners would foster that growth in the first place. That's where European immigration policy should be heading.

Before it's here, it's on the Bloomberg Terminal.