Two of the most important questions now being debated in the U.S. are the effects of globalization and immigration on the nation’s economy. Globalization is accelerating and it is still not clear whether trends like outsourcing will erode U.S. competitiveness or provide long-term benefits.

The focus of the immigration debate is on the plight of millions of unskilled immigrants who have entered the U.S. illegally. Overlooked in the debate are the hundreds of thousands of skilled immigrants who annually enter the country legally.

In 1999 AnnaLee Saxenian published a groundbreaking report on the economic contributions of skilled immigrants to California’s economy. This study, entitled “Silicon Valley’s New Immigrant Entrepreneurs”, focused on the development of Silicon Valley’s regional economy and the roles of immigrant capital and labor in this process.

Saxenian’s study also went beyond a quantitative analysis to focus on the social, ethnic and economic networks of new U.S. immigrants. One of her most interesting findings was that Chinese and Indian engineers ran a growing share of Silicon Valley companies started during the 1980s and 1990s and they were at the helm of 24% of the technology businesses started from 1980 to 1998. Saxenian concluded that foreign-born scientists and engineers were generating new jobs and wealth for the California economy.

A team of student researchers in the Master of Engineering Management program of the Pratt School of Engineering at Duke University has been researching the impact of globalization on the U.S. economy and the engineering profession. The team is led by Executive in Residence Vivek Wadhwa, Research Scholar Ben Rissing, and Sociology Professor Gary Gereffi. Earlier research focused on the education and graduation rates of engineers in the U.S., China and India, and an analysis of the experiences of U.S. firms engaged in outsourcing their engineering operations.

The Duke researchers were concerned about the growing momentum in outsourcing and its impact on U.S. competitiveness—and sought to understand the sources of the U.S. global advantage as well as what the U.S. can do to keep its edge. To better understand the contributions of skilled immigrants to the competitiveness of the U.S. economy, they decided to expand and update Saxenian’s study.

The goal of this research was to document the economic and intellectual contributions of immigrant technologists and engineers at the national level. To understand the economic impact, the study looked at a large sample of all engineering and technology companies founded in the last ten years, to determine whether a key founder was an immigrant. To understand the intellectual contribution, they analyzed the World Intellectual Property Organization Patent Cooperation Treaty database for international patent applications filed in the United States.

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Summary of Results and Conclusion
This purpose of this research was to assess the contribution of skilled immigrants in the creation of engineering and technology businesses and intellectual property in the United States.

We found 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. We estimate that 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 immigrantfounded 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. These immigrant-founders were most likely to start companies in innovation/manufacturing related services, computers/communications, and semiconductors, and less in the defense/aerospace and environmental industries.

We also gathered extensive data from the World Intellectual Property Organization’s PCT database on the international patent filings of U.S. residents who are also foreign nationals. This analysis allowed us to gauge the contributions of immigrants to intellectual property that likely has high global utility.

In the period 1998 to 2006, immigrant non-citizen inventors and co-inventors appeared on 14.76% of U.S. PCT applications. The trend has been dramatic; according to our estimates the contribution of non-citizen immigrants to these international patent applications increased from 7.3% in 1998 to 24.2% in 2006.

U.S. immigrants who were named as inventors or co-inventors on PCT applications often were so named in the IPC fields of chemistry, human necessities and electricity, and are less likely to invent in the fields of building, mechanical engineering, performing operations and textiles.

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 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.

Author Biographies
Dr. Gary Gereffi
Dr. Gary Gereffi is Professor of Sociology and Director of the Center on Globalization, Governance & Competitiveness at Duke University. He holds a B.A. from the University of Notre Dame and a Ph.D. from Yale University.

He has published several books and articles on business-government relations in various parts of the world. His recent books include: The Value of Value Chains: Spreading the Gains from Globalization (special issue of the IDS Bulletin, vol. 32, no. 3, July 2001), Free Trade and Uneven Development: The North American Apparel Industry after NAFTA, (Temple University Press, 2002); and The New Offshoring of Jobs and Global Development (International Labor Organization, 2006).

Ben Rissing
Ben Rissing is a Research Scholar with Duke University’s Pratt School of Engineering and the Project Manager of Duke’s engineering outsourcing and immigration research teams. He has a Bachelor’s in Mechanical Engineering from the University of Virginia and a Masters in Engineering Management from Duke.

He has been involved in a variety of initiatives ranging from engineering design/technology commercialization to cardiovascular laboratory research and public-policy development in Washington DC. Mr. Rissing has traveled extensively, enjoys multiculturalism, and is a nationally ranked competitive fencer.

Dr. AnnaLee Saxenian
AnnaLee Saxenian has made a career of studying regional economies and the conditions under which people, ideas, and geographies combine and connect to hubs of economic activity. Her latest book, 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.

Saxenian is also the author of Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (Harvard University Press, 1994.) She is currently Dean and Professor at the U.C. Berkeley School of Information, and she has a PhD from MIT and a BA from Willams College.

Vivek Wadhwa
Vivek Wadhwa is a technology entrepreneur and an Executive in Residence/Adjunct Professor for the Pratt School of Engineering at Duke University.

He is an active mentor and advisor to various startups and is also a columnist for BusinessWeek.com. Wadhwa was named a "Leader of Tomorrow" by Forbes.com, and his company Relativity Technologies was named as one of the 25 "coolest" companies in the world by Fortune Magazine. Mr. Wadhwa holds a B.A. in Computing Studies from Canberra University in Australia and an MBA from New York University.

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