Too much globalization, or not enough?

Skilled immigrants start scads of new companies that hire lots of workers, says a new report.

By Andrew Leonard
Published January 4, 2007 8:38PM (EST)

Twenty-five percent of the technology and engineering companies started in the United States between 1995 and 2005 had at least one key co-founder who was an immigrant, reports a new study from researchers at the Pratt School of Engineering at Duke University. The researchers estimate that these companies generated $52 billion in sales and employed 450,000 workers. Immigrant non-citizens were also responsible for 24 percent of all international patent applications filed from the U.S. in 2006. Indians alone started more engineering and technology companies in the U.S. in the last 10 years than Chinese, Taiwanese and Japanese combined.

The authors of the study justifiably feel that this is an important data point for understanding the impact of globalization and immigration upon the United States. (Incidentally, the names of the student researchers on the team constitute their own mini-primer on globalization: Ramakrishnan Balasubramanian, Pradeep Kamsali, Nishanth Lingamneni, Chris Morecroft, Niyanthi Reddy, George Robinson, Batul Tambawalla, Mark Weaver and Zhenyu Yang.) Following up on the research of Berkeley professor AnnaLee Saxenian, they demonstrate that skilled immigrants play a significant role in the U.S. economy, creating jobs and valuable intellectual property. Their conclusion: "The key to maintaining U.S. competitiveness in a global economy is to understand our strengths and to effectively leverage these. Skilled immigrants are one of our greatest advantages."

The implication, although never stated explicitly, is clear: Those who focus only on the wage pressure exerted on native-born Americans by immigrants (legal or illegal) are not appreciating the whole picture.

But the report, while adding some interesting numbers, won't do much to change minds on the anti-immigration front. Critics are likely to argue, as they have with previous such reports, that the underlying argument -- we should encourage more skilled immigration because these immigrants are great entrepreneurs and start lots of companies -- only holds true if immigrants are likely to start more companies per capita than natives do. But that's simply not so, say such critics as U.C. Davis' Norm Matloff. Sure, lots of immigrants to California start new companies. But 25 percent of all Californians in 2000 were foreign-born. According to Matloff's crunching of the data, on a per capita basis, immigrants start fewer companies than natives.

Then again, consider Ohio. The Duke report breaks down the numbers, state by state. California, unsurprisingly, is at the top -- 39 percent of its new tech companies had an immigrant co-founder. Another big winner is New Jersey, which boasts a big cluster of Indian-founded companies. Ohio, however, has a below-average share of immigrant-founded technology companies: only 14 percent.

Is it a coincidence that in last year's midterm congressional elections, Democratic candidates in Ohio were among the most vocal critics of globalization? And could that be because while Ohio's workers suffer the consequences of globalization -- downward pressure on wages, manufacturing industry flight, the loss of union power -- they are also missing out on the advantages of being part of an integrated global economy: the job creation and economic growth that accrues from a thriving, diverse international community of motivated immigrants? Yes, that's an oversimplification of a complicated question, and yes, geography plays a huge part in determining such things, but still... Maybe what Ohio needs is more globalization, not less.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Globalization How The World Works Immigration