Date: Fri, 19 Apr 2002 22:33:39 -0700 (updated) From: Norm Matloff To: Norm Matloff Subject: new Saxenian report To: age discrimination/H-1B e-newletter Enclosed is an article from today's San Francisco Chronicle. A similar one appeared in the San Jose Mercury News. Professor Saxenian wrote an earlier study, also underwritten by PPIC, in which she raved about what she claimed was a high rate of entrepreneurship among immigrant programmers and engineers in Silicon Valley. I am quite critical of that study in my updated congressional testimony. (See p.86 of my law journal article, at http://heather.cs.ucdavis.edu/MichJLawReform.pdf) I point out, for example, that Saxenian's own data show that on a per-capita basis, the immigrant programmers and engineers are actually LESS entrepreneurial than the natives, etc. PPIC, it should be noted, is funded by Wm. Hewlett, co-founder of Hewlett-Packard. Moreover, much of PPIC's endowment consists of Hewlett-Packard stock. See The Role and Impact of the Public Policy Institute of California: An Operating Foundation as Think Tank, David W. Lyon, presented to the PPIC Board of Directors at its quarterly meeting, March 4, 2004. Professor Saxenian has taken a pro-industry point of view in other senses as well. For example, she objected to Defense Dept. proposals to disallow foreign nationals from working on defense projects, protesting that this would cause a labor shortage in the defense industry. (Los Angeles Times, March 7, 2002.) Needless to say, her studies on immigrant entrepreneurship have been widely cited by industry lobbyists. (Added later: Subsequently Saxenian came out with other similar studies. I have an extended critique of one at http://heather.cs.ucdavis.edu/Archive/DukeImmEntrep.txt) In this light, when I heard about the study this morning (from a radio show producer, before I had read the enclosed story), I wondered what political spin PPIC was trying to put on Saxenian's new report. After all, the topic -- how immigrants in Silicon Valley retain ties with their home countries -- didn't seem to be very newsworthy. But then when I read the enclosed article, the reason seems to be the following: Bringing business back home is typical of foreign-born professionals in Silicon Valley, according to a new University of California at Berkeley study that challenges the popular belief that immigration to the United States is nothing but a brain drain for developing nations like India and China. Ah, there it is. Those who are sympathetic to my point of view on the H-1B program say that it causes a brain drain from developing countries. My response has always been (at least as far back as 1995, when I can remember stating this at the Stanford SCIP conference) that no such brain drain is occurring. China, for instance, sends a lot of programmers and engineers to the U.S., but on a proportional basis that outflow comprises only a small portion of its workforce in those fields. So I have always felt that it is a nonissue. But for those who were worried about it, Saxenian seems to be saying, they can rest easy that the H-1B program is actually GOOD for those countries. Actually, I agree with that notion to some degree, and have cited some other reasons why the sending countries love the H-1B program. (For example, the governments hope to place "their" people in influential positions in the U.S., to get the U.S. to tilt favorably toward those countries. There are some ways in which this has occurred in the case of India.) But, given the history of PPIC and Saxenian, I can't help but get the feeling that this study is another attempt to sway public opinion in favor of the H-1B program. By the way, that some H-1B critics will be alarmed by Saxenian's findings, not assuaged by them. Saxenian's point that immigrant programmers and engineers in Silicon Valley are sharing technology with businesses in their home countries will be interpreted by some as a polite form of referring to industrial espionage. Note for example the arrest last year of two current and one former H-1Bs from China who were employed by Lucent and were "sharing" Lucent secrets with a Chinese firm. Finally, there are some severe problems with Saxenian's survey methodology. She relies on respondents from primarily entrepreneurial associations in Silicon Valley -- so it's no surprise that so many of them have invested money with firms in their home countries. The article follows below. The full PPIC report can be downloaded from www.ppic.org. Norm http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2002/04/19/BU199284.DTL Silicon Valley immigrants build ties to homelands Carrie Kirby, Chronicle Staff Writer Friday, April 19, 2002 When Rosen Sharma, the India-born chief executive and president of Sunnyvale software firm Ensim, was looking for a company to do some Windows programming for him, an Indian colleague suggested a company based in Pune, India. Sharma engaged the 18-person firm and liked its work so much that he ended up buying it and growing it into a subsidiary with 65 employees. "It's the norm (in the technology industry) to have some kind of office back in India or China or somewhere else," said Sharma, 29, adding that many Silicon Valley firms are prompted to open offices in Asia by immigrant executives who are familiar with the territory. Bringing business back home is typical of foreign-born professionals in Silicon Valley, according to a new University of California at Berkeley study that challenges the popular belief that immigration to the United States is nothing but a brain drain for developing nations like India and China. It's more like "brain circulation," said AnnaLee Saxenian, the UC Berkeley professor who wrote the report, which was to be released today. After surveying members of Silicon Valley networking groups such as the Asian American Manufacturers Association and the Indus Entrepreneurs, Saxenian found that half of those who run startup companies here have set up subsidiaries, joint ventures or other business operations in their home countries. Most respondents are from India, China and Taiwan. Whether they run their own business or not, half of foreign-born professionals travel to their homelands on business every year, the study found. More than 80 percent said they share information about technology with people back home. "The most interesting findings are the extent of the ties that these immigrants are building between Silicon Valley and their home countries, not only transferring information but advising companies, arranging contracts, investing in startups, working with governments and even starting companies in their home countries," Saxenian said. The immigrants surveyed were very entrepreneurially minded, with 62 percent saying they wanted to start their own companies, compared with 46 percent of respondents who were born in the United States. Of those who would start companies, 73 percent said they would consider locating it in their country of birth. The study was sponsored by San Francisco's Public Policy Institute of California, a nonpartisan research organization. E-mail Carrie Kirby at ckirby@sfchronicle.com. · Printer-friendly version · Email this article to a friend MORE BIZ | TECH SF Gate Business Stock quotes, portfolio, funds and more... SF Gate Technology It's a high-tech world -- we just plug you into it... _________________________________________________________________ David Lazarus: Alaska oil's supply-side follies. Crackdown on software piracy ring. Growth in auctions beats decline in ads for EBay Rising from the ashes. SBC to cut 4,000 more positions. Signs of hope for chips. U.S. yanks offer of Andersen deal. Yaaahooo yodeler cries foul. Sega to bring cell phone gaming to U.S.. Silicon Valley immigrants build ties to homelands. Microsoft operating income up. 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