Thursday, April 19, 2007

Immigrants as Entrepreneurs: creating jobs, enhancing prosperity

The immigration debate over the last few months has been focused on illegal immigration, the burdens it places on local economies and the plight of illegal immigrants. What has got sidelined is the continued contribution of legal immigrants in creating jobs and enhancing prosperity. Immigrants have been and continue to be the lifeblood of the US economy. By their entrepreneurial zeal and work ethic they have contributed to the unparalleled stature of the US as a colossus in the global economy.

A recent study report (released January 7, 2007) by a team of student researchers in the Master of Engineering Management program of the Pratt School of Engineering at Duke University led by Executive in Residence/Adjunct Professor Vivek Wadhwa, Research Scholar Ben Rissing, and Sociology Professor Gary Gereffi, has documented the economic and intellectual contributions of immigrant technologists and engineers to US competitiveness -- to understand the sources of US global advantage as well as what the US can do to keep its edge.

A key finding of the study was that there was at least one immigrant key founder in 25.3% of all engineering and technology companies established in the U.S. between 1995 and 2005 inclusive. Together, this pool of immigrant-founded companies was responsible for generating more than $52 billion in 2005 sales and creating just under 450,000 jobs as of 2005. The researchers also estimated, based on an analysis of the World Intellectual Property Organization (WIPO) patent databases, that foreign nationals residing in the U.S. were named as inventors or co-inventors in 24.2% of international patent applications filed from the U.S. in 2006. These immigrants come to the U.S. from all over the world to take advantage of the business, technology and economic opportunities in the country.

An interesting finding was that these immigrant-founded businesses are unevenly located across the country. California and New Jersey represented hot spots for immigrant-founded engineering and technology business; Surprisingly, New York despite being the state with the second highest percentage of the population being foreign-born (19.6% vs. 24.9% for California in 2000), only had nearly 25% of its companies established by immigrant key founders (vs. 38.8% for California, 37.6% New Jersey, Michigan 32.8%, even Georgia, Virginia, Massachusetts, Illinois and Arizona fared better). New York (5.2%) also featured third after California (34%) and New Jersey (7.3%) in a breakdown of states where immigrant founded engineering and technology companies are based. California with Silicon Valley appears to be the hotbed of creativity and entrepreneurism. New York has significant catching up to do. Some food for thought for the state's economic policy czars.

I was pleased to learn that immigrants from my country of origin (India) have founded more engineering and technology companies in the US in the past decade (1995-2005) than immigrants from the U.K., China, Taiwan and Japan combined. Of all immigrant-founded companies, 26% have Indian founders. Locally, in Rochester, Indian origin entrepreneurs like IC Shah (ICS Telecom) ,Dilip Vellodi (Sutherland group),Bal Dixit (Fireproof materials) ,Bhoopinder Mehta (Indus Group- hotels and restaurants),Ram Shrivastava( Larson Engineers),Makhan Singh (Restauranteur) have created hundreds of jobs and contributed significantly to the local economy. As they have worked hard to realize their "American Dream", they have enhanced the prosperity of their adopted land.

This research showed that immigrants have become a significant driving force in the creation of new businesses and intellectual property in the U.S. — and that their contributions have increased over the past decade. It also established that the key to maintaining US competitiveness in a global economy is to understand America’s strengths and to effectively leverage these. Skilled immigrants are one of America’s greatest advantages- the US has the unique advantage of having amongst its citizenry people from all parts of the globe. This “integrated diversity” is not yet fully utilized by corporations to its full potential. No other country operating in the global arena has this advantage. You may not find a Fijian or an Icelander in China or India but you would very well do in the US. And that’s a strength which needs to be leveraged.

Let us celebrate the "integrated diversity" of US and the pursuit of the "American Dream". Both of which contribute to the continued growth and prosperity of the US in a global economy.

Link to the Report :


Speedmaster said...

Legal immigration is a wonderful thing for reasons related to both freedom and economics. The problems arise from open border and the welfare state, which are incompatible.

Leglal immigrants have for many many years made wonderful contributions to the country and continue to. Off the top of my head: Einstein, the founder of Intel, etc.


Deepak Seth said...

Also Sergei Brin founder of Google, Pierre Omdiyar founder of eBay.

If we add up the Market Capitaliaztion of all immigrant founded companies it will be a gargantuan number - bigger I am sure than the GDP's of the countries they came from.

C K Jaidev said...

I live in Dubai which too is a melting pot of nationalities. For eg. my daughter's school would have no less than 50 nationalities studying there. However, this city in particular and the Gulf in general, have not leveraged itself even to a fraction of what the US has done. The Arab, in the name of preserving his heritage & Islam, has denied himself of valuable intellectual input from around the world by denying some significant contributors to the local economies, rights such as citizenship etc. Instead, the region has made mercenaries of its expatriates by attracting them with attractive tax-free salaries, perks etc. The natural consequence of such action is that mercenaries, when they have no stake in the local scheme of things, will milk the place for their individual benefit only without thought for their organisations or the economy. That is so evident when you see how the region is shaping up. The local Arab (though otherwise smart) lags rather seriously in terms of education, will to work and equip himself with experience etc. But these are time of plenty for the oil rich nations of the Gulf. But I fear that these problems will come home to roost, when oil prices dip and when the economies in the region start to fall apart, and with disastrous consequences.

Deepak Seth said...


Well said. Countries like US, Canada, Australia have done a great job of assimilating immigrants and benefiting from what they bring to the table. European and Arab countries lag far behind. Asia and Africa are pretty insular too.

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Anonymous said...

I wonder what Chris has to say about this!!

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