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    South Asia
     Jan 12, 2007
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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