Standing on the Shoulders of Foreign Giants: How Global Ideas Drive American Innovation

 When Isaac Newton famously observed that he had seen further by "standing on the shoulders of Giants," he was referring to the cumulative nature of human progress. But in the modern global economy, a critical question emerges: Whose shoulders are we standing on, and how do those ideas make their way across borders?

A groundbreaking NBER Working Paper by Tarek Alexander Hassan, Thomas Y. Mroz, Nickolas P. O. Mokski, and Aakash Patel—titled "Foreign Giants’ Broad Shoulders: The Causal Effect of Foreign Ideas on U.S. Innovation" (NBER Working Paper No. 35900)—provides the first comprehensive, long-run causal evidence answering these questions.

Spanning nearly 140 years of technological history (1887–2024), the authors construct an unprecedented global "genealogy" of technologies. Their findings deliver a powerful message for economists, business leaders, and policymakers alike: Foreign ideas are not just passive benchmarks; they are indispensable catalysts for domestic invention, localized employment, and economic growth.

1. A 140-Year Map of Human Invention

To trace how inventions build on each other, the authors developed a novel classification system using modern Large Language Models (LLMs). By processing millions of Wikipedia entries, patent records, and historical documents, they mapped out parent-child relationships across global technologies since 1887.

For example:

• Polyvinyl Chloride (PVC)—born in Germany in 1931—served as a parent technology to 24 American "child" innovations, ranging from synthetic leather to specialized piping.

• CRISPR (2009), Deep Learning (2013), and Generative Adversarial Networks (2014) represent modern foreign and global parents spawning hundreds of secondary applications.

  [ Foreign Parent Technology ] 
       (e.g., German PVC, 1931)
                 │
                 ▼
  ┌─────────────────────────────┐
  │ Local Absorption via Diaspora│
  └──────────────┬──────────────┘
                 │
                 ▼
 ┌─────────────────────────────────────────┐
 │  U.S. "Child" Innovations & Inventions  │
 │  (e.g., Synthetic Leather, Piping, etc.)│
 └─────────────────────────────────────────┘

The study reveals that foreign technologies are exceptionally fertile ground for American inventors. On average, American technologies built on foreign parent ideas demonstrate higher impact, longer lifespans, and broader commercial adoption.

2. The Channel: Co-Ethnicity and the Diaspora Conduit

How do complex foreign ideas actually cross the ocean and land in specific U.S. communities?

The paper establishes that diaspora networks and local co-ethnicity act as primary conduits. Tacit knowledge—the unwritten, intuitive know-how required to turn a technical paper or patent into a working prototype—travels best through social, linguistic, and cultural ties.

Using a shift-share instrumental variable strategy based on historical migration patterns (dating back to 1880 census data), the authors prove that:

1. Targeted Knowledge Flow: U.S. counties with higher proportions of residents sharing ancestry with a technology's country of origin absorb those specific foreign ideas significantly faster.

2. Beyond General Aptitude: A German-heritage community in the Midwest, for instance, isn't just generally better at inventing; it is specifically more effective at absorbing German chemical and engineering innovations.

3. The Causal Effect: Transforming Foreign Ideas into American Jobs

Absorbing foreign ideas isn't just an academic exercise—it drives local industrial development. The paper measures the downstream impact of foreign idea absorption on U.S. labor markets using online job postings and economic census data.

Key empirical findings include:

Metric	Estimated Impact
Increase in Local U.S. Inventions	A 1% increase in the local stock of absorbed foreign ideas leads to a statistically significant increase in subsequent U.S. patenting and technology founding.
High-Skill Job Growth	Absorbing foreign ideas drives a strong increase in postings for R&D, engineering, and managerial roles.
Broad Labor Market Benefits	The economic spillover extends to blue-collar and service jobs, demonstrating that foreign tech transfer expands local economic capacity.

4. Local Idea Stocks and Directed Technical Change

One of the paper's most fascinating contributions is showing how local availability of foreign "inputs" determines where groundbreaking industries get founded.

To invent a complex technology—like EV-DO mobile communications or next-generation gene sequencing—inventors require multiple foundational inputs. The authors show that when a U.S. county possesses all the required foreign input building blocks locally, the probability that the county becomes the birthplace of that new industry skyrockets.

• Historical Case Study: The geographic clustering of synthetic cling wrap (Polyvinylidene Chloride) and early wireless communications (EV-DO) aligned directly with regions where the necessary foreign parent technologies had been absorbed decades prior.

5. Policy Implications: Why Openness is a Superpower

In an era increasingly marked by technological nationalism, supply chain reshoring, and tighter immigration controls, NBER WP 35900 offers crucial evidence for policymakers:

1. Immigration as an Innovation Engine: Immigrants do not merely add to the labor supply; they bring tacit knowledge bridges that connect domestic firms to global frontiers.

2. The Risk of Isolationism: Restricting high-skilled immigration or global scientific collaboration doesn't just block foreign workers—it starves domestic inventors of the foreign "parent" ideas needed to invent the next generation of technology.

3. Supply-Side Growth: Economic growth models have long emphasized domestic R&D tax credits and capital investments. This research proves that access to global knowledge stocks is an equally critical supply-side input for long-term prosperity.

Conclusion

The story of American innovation has never been one of isolation; it is a story of global synthesis. By building a genealogy of human technology over 140 years, Hassan, Mroz, Mokski, and Patel demonstrate that foreign ideas provide the very foundation upon which domestic progress is built.

To remain at the cutting edge of science and industry, nations must maintain open channels—through migration, trade, and intellectual exchange—to ensure they can continue standing on the broad shoulders of foreign giants.

Source: Hassan, T. A., Mroz, T. Y., Mokski, N. P. O., & Patel, A. (2026). "Foreign Giants' Broad Shoulders: The Causal Effect of Foreign Ideas on U.S. Innovation." NBER Working Paper No. 35900.