More foreign cogs in the US
engine By Sudha Ramachandran
BANGALORE - A report on the participation
of immigrants in the US economy has trashed
several myths regarding foreign workers in the US.
The study reveals that the brain power and
enterprising nature of immigrants, especially
those from India, are an important driving force
behind the US economy. Almost a quarter of all
technology and engineering companies launched over
the past decade in the US were founded by
immigrants.
The study, "Silicon Valley's
New Immigrant Entrepreneurs", was conducted in
2006 by researchers at the Pratt School of
Engineering at Duke
University, and the University of California,
Berkeley. It covered 28,766 firms with annual
sales of over US$1 million and employing 20 or
more people.
The study says that
immigrants founded 52% of Silicon Valley companies
and 39% of Californian start-ups in the 1995-2005
period. And Indian immigrants are leading the
entrepreneurial pack.
"Silicon Valley's
New Immigrant Entrepreneurs" built on another
study conducted in 1999 by AnnaLee Saxenian of the
University of California, Berkeley, which revealed
that 25% of Silicon Valley tech companies set up
between 1980 to 1998 were founded by immigrants,
with Chinese immigrants leading the pack.
The 2006 study indicates that not only has
the role of immigrants in founding technology
companies in Silicon Valley doubled since the 1999
study but that Indian immigrants have surged ahead
of the Chinese in the US entrepreneurial race.
Of an estimated 7,300 tech startups
created by immigrants, 26% have Indian founders,
chief executive officers, presidents or head
researchers. "Indians have beaten the Chinese in
start-up hotbeds like Silicon Valley with a share
of 15.5%, up from 7% between 1980 and 1998."
Indian immigrants founded more companies than
Chinese, Taiwanese and British immigrants put
together.
Almost 25% of the immigrants who
founded companies in the
innovation/manufacturing-related services field
are from India, followed at a distance by Taiwan
and China at 6% each. Within the software field,
Indian immigrants established 34% of the software
companies founded by immigrants from 1995 to 2005.
"This study shows the tremendous
contribution immigrants in general and Indians in
particular are making to the US economy and global
competitiveness," said Vivek Wadhwa, the study's
lead researcher, who is an Indian immigrant
himself and founder of two tech startups in North
Carolina.
The contribution of immigrants
to the US economy is highlighted in another study,
"American Made: The Impact of Immigrant
Entrepreneurs and Professionals on US
Competitiveness" released last November by the
National Venture Capital Association. This study
found that 47% of venture-backed start-ups in the
US were started by foreign-born entrepreneurs.
This study also found that Indians were at the
forefront in founding companies among immigrants.
The rise in the profile of the Indian
immigrant in the US has been spectacular.
Indian immigration to the US began in the
1790s, but it was a trickle up to the 20th
century. According to the census of 1900, there
were only 2,050 people of Indian origin in the US.
It was in the 1960s that Indian immigration to the
US witnessed a dramatic increase. And unlike the
earlier immigrants who were usually poor farmers
from the Indian state of Punjab or indentured
labor, the post-1960 Indian immigrants to the US
were educated and skilled. Although right
through the 1980s it was as cabbies and motel
owners that Indian immigrants were most visible, a
significant change in profile was quietly taking
place. Indian students were flooding engineering
departments in universities and increasingly, it
was as doctors and engineers with which the Indian
community was being associated. And then the boom
in Silicon Valley happened. Since then there has
been no looking back.
The influx to
Silicon Valley between 1990 and 2000 was dominated
by Indian scientists and engineers. While the
total workforce in Silicon Valley grew by only
103%, the Indian immigrant population in the US
increased by 646% and that of other foreign born
by 246%.
Today, people of Indian origin
(Asian Indians) constitute the fastest-growing and
most affluent ethnic group in the US, with a
median annual household income of $66,000, almost
50% higher than the national average. Their annual
buying power is said to exceed $50 billion.
And they are looked on as a model
community. Their children study hard. Educational
achievements of Indians in the US are highest of
all ethnic groups, including whites. Almost 67% of
all Indians have a bachelor's or higher degree
(compared to 28% nationally). Almost 40% of all
Indians have a master's, doctorate or other
professional degree, which is five times the
national average.
While education has
facilitated the rise of Indian immigrants as
entrepreneurs, the role of organizations like the
Silicon Valley Indian Professionals Association
and The Indus Entrepreneurs (TiE) in providing
investment and mentoring has been significant.
Many of Silicon Valley's most successful
entrepreneurs turned to TiE for support. While
they did plug into mainstream technology and
business networks, they admit to having drawn on
the resources of TiE. The organization's vision of
helping "diamonds in the rough" has played a huge
role in providing a push to immigrants with skills
to realize their dream of becoming entrepreneurs
in the US.
Far from taking away jobs from
Americans, immigrants in the US are entrepreneurs
creating more opportunities. The myth that
immigrants are a burden on the US economy has been
shattered by the findings of the "Silicon Valley's
New Immigrant Entrepreneurs" study.
Immigrants' initiatives have in fact
created jobs for Americans. According to the
study, companies founded by immigrants employed
450,000 workers and generated $52 billion in sales
in 2005.
The study also reveals the
contribution of immigrants to innovation. In 1998,
foreign-born inventors living in the US without
citizenship accounted for 7.3% of patent filings
to the Patent Cooperation Treaty of the
Geneva-based World Intellectual Property
Organization. In 2006, this figure shot up to
24.2% of patents filed.
The findings of
these studies are likely to be used by
corporations to lobby the US government to lift
restrictions on skilled immigrants from countries
like India and China. The US will have to accept
that with Americans lagging behind in tech skills,
its economy doesn't just need immigrant brain
power, it is dependent on it.
Sudha
Ramachandran is an independent
journalist/researcher based in Bangalore.
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