Rich rewards: Silicon Valley has benefited greatly from immigrant entrepreneurs such as Sabeer Bhatia. Credit: LIAISON

A study called Silicon Valley's New Immigrant Entrepreneurs suggests that, rather than simply displacing native-borne workers, as is sometimes argued, many highly skilled immigrants make significant contributions to the economic development of the region.

The study, conducted for the Public Policy Institute of California by AnnaLee Saxenian of the department of city and regional planning at the University of California, Berkeley, showed that foreign-born workers account for about a third of the skilled scientific and engineering workforce in Silicon Valley, with Indians and Chinese predominating. Moreover, Saxenian found that in 1998, Chinese and Indian immigrants were running a quarter of the high-tech businesses in Silicon Valley, collectively accounting for more than $16.8 billion in sales and over 58,000 jobs.

The primary motivating force for many of these immigrants to start companies “was the experience of a glass ceiling in established companies”, says Saxenian. Gaining access to venture capital has historically been a problem for these groups, she explains. But that's changed a lot, she says, with the formation of a host of highly organized ethnic networks and associations. High-visibility business successes by the likes of Jerry Yang of Yahoo and Sabeer Bhatia of Hotmail have also “alerted the mainstream”.

Saxenian says her research underscores important changes in the relationship between immigration, trade and economic development. She now feels that the immigration debate needs to be broadened to reflect the role of highly skilled immigrants in generating jobs, wealth for regional economies, as well as economic links back to their countries of origin.