By Charles Maggs Follow @charlesmaggs
Visas for highly skilled graduates should be easier to obtain, a think tank has urged.
Policy Exchange says Britain needs to learn lessons from California to allow digital start-ups and hi-tech firms take on the world's best young employees.
Its report, published today, says that the number of foreign students taking postgraduate courses in science, technology, engineering and maths has nearly doubled in the last ten years and there are now considerably more foreigners taking these courses than British students.
Author Chris Yiu argued that retaining these overseas students is essential if Britain is to be at the forefront of hi-tech industries.
He said: "Companies like Intel, Yahoo!, Google, eBay and YouTube were all co-founded by immigrant entrepreneurs. They are now major global businesses.
"We need to create the right conditions to ensure that the UK lives up to its potential to be a world leader in the digital economy."
The report also suggests capital gains tax relief for start-ups to encourage investment in growing businesses as well as 'opt-in' light touch employment rules.
These would involve employers giving up claims to some intellectual property for work done by employees outside their core duties in exchange for making it easier to hire and fire staff.
"Start-ups need to be able to take on the right people fast, not spend months trying to expand their technology teams," Yiu added.