For this purpose, we employed key concepts of network theory (i.e. re-wiring, small world networks, and multi-level networks) as an analytical framework. A large number of H1-B visa holders, such as competent students, professionals, and technical experts, emigrate from many countries to the US (re-wiring). They then join US multinational firms or start their own businesses, consequently creating greater cross-border business networks with their home countries (small-world networks). Finally, these networks trigger growth in service trade between their countries and the US at the macroeconomic level (multi-level networks).
Based on this analytical framework, we first conducted a panel data analysis covering 31 countries available from 1999 to 2008, the decade in which offshore outsourcing began to take off worldwide. The study used data for each country’s service exports to the US, number of H-1B visa holders, gross national income (GNI) per-capita, network readiness index, and an English proficiency dummy variable. We then conducted a graphical modeling analysis to illustrate the trajectory and interaction among these factors.
These analyses yield two observations. First, per-capita income and the number of H-1B visa holders have the most direct and positive effect on service exports to the US. Second, individuals in lower-income countries tend to desire H-1B visas and create intensive high-skilled human networks with the US. This is the path through which developing countries such as India expanded their service exports to the US. Traditionally, higher-income economies had more robust service trade with the US. The significance of our research results lies in the fact that it traced a clear path of how these trade links changed via re-wiring in the form of labor movements from developing countries.