IMMIGRANTS benefit America because they study and work hard. That is the standard argument in favour of immigration, and it is correct. Leaving your homeland is a big deal. By definition, it takes get-up-and-go to get up and go, which is why immigrants are abnormally entrepreneurial. But there is another, less obvious benefit of immigration. Because they maintain links with the places they came from, immigrants help America plug into a vast web of global networks.
Many people have observed how the networks of overseas Chinese and Indians benefit their respective motherlands. Diasporas speed the flow of information: an ethnic Chinese trader in Indonesia who spots a commercial opportunity will quickly alert his cousin who runs a factory in Guangdong. And ties of kin, clan or dialect ensure a high level of trust. This allows decisions to be made swiftly: multimillion-dollar deals can sometimes be sealed with a single phone call. America is linked to the world in a different way. It does not have much of a diaspora, since native-born Americans seldom emigrate permanently. But it has by far the world’s largest stock of immigrants, including significant numbers from just about every country on earth. Most assimilate quickly, but few sever all ties with their former homelands.
Consider Andres Ruzo, an entrepreneur who describes himself as “Peruvian by birth; Texan by choice”. He moved to America when he was 19. After studying engineering, he founded a telecoms firm near Dallas. It prospered, and before long he was looking to expand into Latin America. He needed a partner. He stumbled on one through a priest, who introduced him to another devout IT entrepreneur, Vladimir Vargas Esquivel, who was based in Costa Rica and looking to expand northward. It was a perfect fit. And because of the way they were introduced—by a priest they both respected—they felt they could trust each other. Their firm now operates in ten countries and generates tens of millions of dollars in annual sales. Mr Ruzo wants the firm, which is called ITS Infocom, to go global. So although he and Mr Vargas Esquivel natter to each other in Spanish, they insist that the firm’s official language must be English.
Trust matters. Modern technology allows instant, cheap communication. Yet although anyone can place a long-distance call, not everyone knows whom to call, or whom to trust. Ethnic networks can address this problem. For example, Sanjaya Kumar, an Indian doctor, arrived in America in 1992. He developed an interest in software that helps to prevent medical errors. This is not a small problem. Perhaps 100,000 Americans die each year because of preventable medical mistakes, according to the Institute of Medicine. Dr Kumar needed cash and business advice to commercialise his ideas, so he turned to a network of ethnic Indian entrepreneurs called Tie. He met, and was backed by, an Indian-American venture capitalist, Vish Mishra. His firm, Quantros, now sells its services to 2,300 American hospitals. And it is starting to expand into India, having linked up with a software firm there which is run by an old school chum of one of Dr Kumar’s Indian-American executives.
Ethnic networks have drawbacks. If they are a means of excluding outsiders, they can be stultifying. But they accelerate the flow of information. Nicaraguan-Americans put buyers in Miami in touch with sellers in Managua. Indian-American employees help American consulting firms scout for talent in Bangalore. The benefits are hard to measure, but William Kerr of the Harvard Business School has found some suggestive evidence. He looked at the names on patent records, reasoning that an inventor called Wang was probably of Chinese origin, while some called Martinez was probably Hispanic. He found that foreign researchers cite American-based researchers of their own ethnicity 30-50% more often than you would expect if ethnic ties made no difference. It is not just that a Chinese boffin in Beijing reads papers written by Chinese boffins in America. A Chinese boffin in America may alert his old classmate in Beijing to cool research being done at the lab across the road.
In Silicon Valley more than half of Chinese and Indian immigrant scientists and engineers report sharing information about technology or business opportunities with people in their home countries, according to AnnaLee Saxenian of the University of California, Berkeley. Some Americans fret that China and India are using American know-how to out-compete America. But knowledge flows both ways. As people in emerging markets innovate—which they are already doing at a prodigious clip—America will find it ever more useful to have so many citizens who can tap into the latest brainwaves from Mumbai and Shanghai. Immigrants can also help their American employers do business in their homelands. Firms that employ many ethnic Chinese scientists, for example, are more likely to invest in China and more likely to do so through a wholly owned subsidiary, rather than seeking the crutch of a joint venture, finds Mr Kerr. In other words, local knowledge reduces the cost of doing business.
Immigration provides America with legions of unofficial ambassadors, deal-brokers, recruiters and boosters. Immigrants not only bring the best ideas from around the world to American shores; they are also a conduit for spreading American ideas and ideals back to their homelands, thus increasing their adoptive country’s soft power.
All of which makes the task of fixing America’s cumbersome immigration rules rather urgent. Alas, Barack Obama has done little to fulfil his campaign pledge to do so. With unemployment still at nearly 10%, few politicians are brave enough to be seen encouraging foreigners to compete for American jobs.