Thursday, January 04, 2007

INDIAN Immigrant Entrepreneurs' Contribution to American Economy

jan 4th, 2007

rather impressive, not one of ram narayanan's breathless cheerleading emails. :-)

---------- Forwarded message ----------
From: Ram Narayanan

Dear Rajeev Srinivasan:

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.

The results released on January 4, 2007,
show a significant contribution by immigrants of Indian origin:

**Indian immigrants 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.

**Chinese (Mainland- and Taiwan-born) entrepreneurs are heavily concentrated in California, with 49% of Mainland Chinese and 81% of Taiwanese companies located there. Indian and U.K. entrepreneurs tend to be dispersed around the country, with Indians having sizable concentrations in California, Texas and New Jersey and the British in California and Georgia.

** While in New Jersey, the share of Indian start-ups was a whopping 47 per cent, in Texas, it stood at 25 per cent. This was followed by California with 20 per cent, Florida with 18 per cent, New York with 14 per cent and Massachusetts with 10 per cent.

**Almost 80% of immigrant-founded companies in the US were within just two industry fields: software (33%) and innovation/manufacturing-related services (46%). The software field contains computer programming services, prepackaged software, integrated system design, processing services and information retrieval companies. The innovation/manufacturing-related services field includes a variety of electronics, computer and hardware design and service companies in addition to engineering services, research and testing.

** Immigrant groups from India, UK, Mainland China and Taiwan founded innovation/manufacturing related service companies in similar proportions over the past decade (accounting for 42% to 46% of all engineering and technology companies founded by each group). Entrepreneurs from India and the U.K. gravitated as well toward the software industry, which accounted for 46% and 43%, respectively, of their startups; but they were minimally represented in hardware-oriented sectors such as semiconductors and computers/communications. Immigrant founders from China and Taiwan started companies in a broader range of industries, and were more likely to start computers/communications (with 25% and 27% respectively) and software companies (19% and 17%). In addition, they were more likely to be founders of semiconductor companies (8% and 7%) than their Indian or UK counterparts.

**Indian immigrants are the primary founders of immigrant companies in the innovation/manufacturing-related services fields. Just under a quarter of the immigrants who founded companies in this field are from India, followed at a considerable distance by Taiwan and China at 6% each. The Indian immigrant group contributes as well to the biosciences and computers/communications fields but is not a dominant force. In biosciences, India and Germany each contribute 10% of the companies founded by immigrants; the UK, France, Israel and Korea trail at 6%. In the computers/communications field, India-, Taiwan-, and China-born founders together accounted for just over 50% of all the immigrant start-ups from 1995 to 2005. India- and China-born immigrant entrepreneurs each founded 15% of the immigrant founded semiconductors companies from 1995 to 2005. These contributions were trailed by those of immigrant founders from the Philippines (10%) and Taiwan (10%). Finally,
within the software field, Indian immigrants established 34% of the immigrant founded software companies from 1995 to 2005.

**Based on an analysis of the World Intellectual Property Organization (WIPO) patent databases, the largest group of immigrant non-citizen inventors were Chinese (Mainland and Taiwan-born). Indians were second, followed by the Canadians and British.

**A comparison with Saxenian's 1999 findings shows that the percentage of firms with Indian or Chinese founders in the Silicon Valley had increased from 24% to 28%. Indian immigrants outpaced their Chinese counterparts as founders of engineering and technology companies in Silicon Valley. Saxenian reported that 17% of Silicon Valley startups from 1980-1998 had a Chinese founder and 7% had an Indian founder.
The new study found that from 1995 to 2005, Indians were key founders of 15.5% of all Silicon Valley startups, and immigrants from China and Taiwan were key founders in 12.8%. 

** In Research Triangle Park, 18.7% of startups had an immigrant as a key founder, compared with the North Carolina average of 13.9. Indians constitute the largest immigrant founding group, with 25% of startups, followed by immigrants from Germany and the U.K., each with 15%.

**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%). In short, the growth of Indian entrepreneurship reflected the influx of Indian scientists and engineers to the region.

**Silicon Valley's immigrant entrepreneurs led the nation in the 1990s by starting dynamic technology businesses that generate substantial wealth and employment in the US. Today they are contributing to the creation of new centers of technology and skill in their home countries. As these entrepreneurs collaborate with former classmates and colleagues in once peripheral economies like India and China, they are providing access to the markets and know-how that are critical to success in today's global economy.

**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. 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. Almost 26% of all immigrant-founded companies in the last ten years were founded by Indian immigrants. Immigrants from the U.K., China, and Taiwan contributed to 7.1%, 6.9% and 5.8% of all immigrant-founded businesses, respectively. These immigrant-founded businesses are unevenly located across the country. California and New Jersey represented hot spots for immigrant-founded engineering and technology business; Washington and Ohio possessed relatively low percentages of immigrant founded businesses. Some immigrant groups displayed tendencies to start businesses in a particular state. For example, 81% of businesses founded by Taiwanese immigrants were located in California.

**This research shows 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.
**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 full report can be read at


Ram Narayanan
US-India Friendship

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