A new study – ‘America’s New Immigrant Entrepreneurs’ – which documents the economic and intellectual contributions of immigrant technologists in America, claims that immigrants from India are today one of America’s greatest assets.
The joint Duke University - UC Berkeley study reveals that Indian immigrants have founded more engineering and technology companies from 1995 to 2005 than immigrants from the U.K., China, Taiwan and Japan combined. The report also shows that Indians have overtaken the Chinese, albeit marginally, as the leading group of immigrant entrepreneurs in Silicon Valley.
The immigrant contributions must be viewed as part of a “U.S. global advantage” and provide a pointer to what “the U.S. must do to keep its edge,” the study says. In addition the study reveals that the patents awarded to non-citizen immigrants - typically foreign graduate students completing their PhD’s, green card holders awaiting citizenship, and employees of multinationals on temporary visas - increased from 7.8% in 1998 to 24.2% in 2006.
It’s “a report that will without doubt rock the boat,” claims Vivek Wadhwa of Duke University, the primary author of the study.
BACKGROUND TO THE STUDY
Essentially this is an expanded and updated version of UC Berkeley Prof AnnaLee Saxenian’s groundbreaking 1999 report “Silicon Valley’s New Immigrant Entrepreneurs,” which focused on the economic contributions of skilled immigrants to California’s economy. One of Saxenian’s most interesting findings was that Chinese and Indian engineers ran a growing share of Silicon Valley companies started during the 1980s and 1990s and were at the helm of 29% of the technology businesses started in the late 1990s. Saxenian concluded that these Asia-born scientists and engineers were generating new jobs and wealth for the California.
The results of the present study by Wadhwa and Saxenian, confirm that the phenomenon is not just localized to Silicon Valley, or to Califiornia, but is nationwide.
According to Wadhwa, the data on Indians is particularly surprising. Saxenian had reported in her 1999 paper that, of all Silicon Valley high-technology startups started since 1980, Chinese-run companies were at the helm of 20% and that Indians were running 9%. Wadhwa’s analysis shows that of all immigrant-led startups from 1995-2005, Indians were key founders of 25.8% and those of Chinese origin founded 24.4%.
“This reversal reflects the dramatic increase in Indian immigration to the region over the past decade” the report notes. For example, between 1990 and 2000, the population of Indian scientists and engineers (S&E) in Silicon Valley grew by 646% (while the total foreign-born S&E workforce grew by 246% and the region’s total population of S&E, both native and foreign-born, grew by only 103%).
METHODOLOGY and RESULTS
To understand the economic impact and intellectual contribution of immigrants, Vivek Wadhwa and AnnaLee Saxenian led a team of researchers to look at all engineering and technology companies founded in the last ten years by immigrant entrepreneurs and analyzed the patent applications filed in the United States.
Here are the key findings of the Wadhwa-Saxenian report.
• At least one key founder in 25.3% of the engineering and technology companies started in the U.S. from 1995 to 2005 was foreign-born, with 26% of all immigrant-founded companies having Indian founders.
• Indians have founded more engineering and technology companies in the US in the past decade than immigrants from the U.K., China, Taiwan and Japan combined.
• Nationwide, the immigrant-founded companies produced $52 billion in sales and employed 450,000 workers in 2005.
• States with an above-average rate of immigrant-founded companies include California (39%), New Jersey (38%), Georgia (30%), and Massachusetts (29%). Below average includes Washington (11%), Ohio (14%), North Carolina (14%) and Texas (18%). Indian immigrant-founders were well represented in California, Florida, Texas, and New Jersey
• Indian and U.K. entrepreneurs tend to be dispersed around the country, with Indians having sizable concentrations in California and New Jersey and the British in California and Georgia. Chinese and Taiwanese entrepreneurs strongly favor California with 49% of Chinese and 81% of Taiwanese companies located there.
• The mix of immigrants varies by state. Hispanics constitute the dominant group in Florida with immigrants from Cuba, Columbia, Brazil, Venezuela, Guatemala founding 35% of the companies. Israelis constitute the largest founding group in Massachusetts with 17%. Indians dominate New Jersey with 47% of all startups.
• Almost 80% of immigrant-founded companies in the US were within just two industry fields: software and innovation/manufacturing-related services.
• Immigrants were least likely to start companies in the defense/aerospace and environmental industries. They were most highly represented as founders in the semiconductor, computer, communications, and software fields.
An analysis of the patent databases revealed that “immigrant non-citizens” accounted for 14.76% of all patent filings from 1998 to 2006. Because this count does not include immigrants who became citizens before filing a patent, it represents a gross undercount, the report says. The most dramatic shift is seen in the years 1998-2006 when the patent applications of “immigrant non-citizens” increased from 7.8% in 1998 to 24.2% in 2006.
• Indian immigrants, who have contributed to the pool of immigrant founded companies, invented or co-invented 21% of all U.S. immigrant patent applications from 1998 to 2006.
• The largest group of immigrant non-citizen inventors was Chinese. Indians were second, followed by the Canadians and British.
• Immigrant non-citizens filed more theoretical, computational and practical patents than mechanical, structural or traditional engineering patents.
We (this author and Elizabeth Pothen) have already published detailed reports (at indolink.com) on patents held by Indian-Americans in defense related projects and in nanotechnology. We have concluded that Indian immigrants in America account for less than 0.75% of the U.S. population but their contribution to U.S. Department of Defense (DoD) research is more than twenty times their population base. Overall our study showed that Indian American scientists are playing key roles in transforming the US military into a smarter force for the 21st century. “This is the first time that the Indian American contribution to U.S. defense-related research has been quantified. In most instances the Indian American researchers we’ve monitored are academic scientists, with small business enterprises of their own, and utilizing the services of younger post-doctoral fellows and graduate students, also of Indian origin, for their research efforts. Working in areas ranging from homeland security to missile technology, advanced ceramics and munitions, while at the same time linking with other university-based researchers, these scientists are forging ahead in both classified as well as unclassified research to help maintain America’s superiority in military technology.” The report can be accessed: http://www.indolink.com/displayArticleS.php?id=110404091541
Earlier, a 1996 report entitled “Invented in the USA: Immigrants, Patents, and Jobs” by Philip Peters too showed that “about one patent in four (26.4%) is created by immigrants alone or by immigrants collaborating with U.S.-born co-inventors.”
STUDY CALLS FOR MORE IMMIGRANTS
By quantifying the economic contributions of immigrant entrepreneurs to the U.S. economy the Wadhwa-Saxenian study reveals not only the extant of contributions of skilled Indian immigrants in the creation of engineering and technology businesses and intellectual property in the United States but also the dramatic increase in Indian immigrant technologists to America.
“After analyzing the data, my view is that America doesn’t need more temporary workers it needs more immigrants,” concludes Wadhwa.
Executive in Residence Vivek Wadhwa, Research Scholar Ben Rissing, and Sociology Professor Gary Gereffi led the research, conducted by students in the Masters of Engineering Management program of the Pratt School of Engineering at Duke University. Indian-American students who have contributed to the research team include Ramakrishnan Balasubramanian, Pradeep Kamsali, Nishant Lingamneni, Niyanthi Reddy, and Batul Tambawalla.
Wadhwa, the founder of two software companies, Seer Technologies Inc. and Relativity Technologies, is an Adjunct Professor at Duke University where he advises students on their career choices, lectures, conducts research, and works with the faculty to better prepare “our students for the real world.” He is also the co-founder of TiE Carolinas, a networking and mentoring group. Wadhwa holds a B.A. in Computing Studies from Canberra University in Australia and an MBA from New York University. In December 2005, he published a report from Duke titled “Framing the Engineering Outsourcing Debate: Placing the U.S. on a Level Playing Field with China and India,” which showed that “some of the most cited statistics on engineering graduates are inaccurate.”
Dr. AnnaLee Saxenian, Dean of the UC Berkeley School of Information, is author of Regional Advantage: Culture and Competition in Silicon Valley and Route 128, and The New Argonauts: Regional Advantage in a Global Economy (Harvard University Press, 2006), explores how and why immigrant engineers from Silicon Valley are transferring their technology entrepreneurship to emerging regions in their home countries-China and India in particular-and launching companies far from established centers of skill and technology. The "brain drain" she argues, has now become "brain circulation"-a powerful economic force for the development of formerly peripheral regions that is sparking profound transformations in the global economy.
The study can be downloaded from: