SAN FRANCISCO, California, April 19, 2002 – Silicon Valley’s immigrant entrepreneurs and professionals – key drivers of the U.S. high-tech industry – are taking their local experience global by building businesses and professional networks in their home countries, according to a report released today by the Public Policy Institute of California (PPIC). As a result, the “brain drain” from countries like India and China has evolved into a more complex, two-way process of “brain circulation” linking Silicon Valley to urban centers in those countries.
In the first large-scale survey ever conducted of foreign-born professionals in Silicon Valley, author AnnaLee Saxenian finds that half of the respondents who are running start-up companies in the Valley have also set up subsidiaries, joint ventures, sub-contracting, or other business operations in their homelands. Overall, the majority of Silicon Valley’s Indian (76%) and Chinese (73%) immigrant professionals reported that they would consider starting businesses in their native countries in the future.
The study, Local and Global Networks of Immigrant Professionals in Silicon Valley, surveyed engineers and scientists drawn from 17 leading immigrant professional associations in Silicon Valley. Eighty-eight percent of the nearly 2,300 survey respondents were foreign-born, primarily Chinese (Mainland and Taiwanese) and Indian.
The survey indicates that immigrant professionals have embraced Silicon Valley’s way of doing business and are putting those methods into practice in their native countries. “They have successfully adopted the unique business culture that distinguishes Silicon Valley in terms of start-ups, networking, and information exchange,” says Saxenian, a professor of regional development at the University of California, Berkeley. Indeed, 51 percent of immigrants surveyed – most of whom arrived in the United States within the last ten years – have been involved in founding or running a start-up company.
While they have adapted to Silicon Valley’s business environment, Chinese and Indian entrepreneurs have maintained extensive ties to their native countries. Forty percent of the immigrant professionals surveyed said they have helped to arrange business contracts in their native countries, 30 percent meet with their home country’s government officials, 27 percent advise or consult for companies in their countries of origin, and 18 percent have invested their own money in start-ups or venture funds in their homelands. These strong business ties are contributing to the growth of global business networks and stimulating economic change in such places as Shanghai (China) and Bangalore (India) according to Saxenian.
“This ‘brain circulation’ is likely to expand in the future with profound consequences for economic development in other countries,” says Saxenian. “In the United States, there are economic opportunities but also policy challenges. Trade, immigration, and intellectual property-rights policies all assume more limited one-way flows of skills and technology, largely within multi national corporations. There’s a new reality today.”
Other Key Findings:
Sixty-two percent of foreign-born respondents said they plan to start their own companies – despite the fact that the survey was conducted during an economic downturn.
Indian professionals overwhelmingly cited the availability of skilled labor (85%) and the low cost of labor (73%) as the major reasons for establishing business relationships in their homeland, while Chinese professionals said access to the market (75%) is the main attraction of doing business in Greater China. The biggest problems mentioned were immature market conditions in China and unreliable infrastructure in India.
Half of Silicon Valley’s foreign-born professionals report traveling to their native country for business at least yearly. Eighty-two percent say they share information about technology with colleagues in their homelands, while 80 percent pass on information about jobs and business opportunities in the United States.
Forty percent of foreign-born respondents indicate they would consider returning to their native countries to live.
The Public Policy Institute of California is a private, nonprofit organization dedicated to objective, nonpartisan research on economic, social, and political issues that affect the lives of Californians. The Institute was established in 1994 with an endowment from William R. Hewlett. David W. Lyon is President and CEO of PPIC.