The Amazing Diaspora Connection

The process of outward migration from Asia to the United States and the return flow back home is an extraordinary story of migration-driven economic development.

There has never been anything like it in terms of quantitative or qualitative impact in economic history. Moreover, the patterns for China and India are parallel — but with some key differences as well.

Outward migration and diaspora communities date back centuries for both countries. A large Chinese emigration began in the 15th century, related to the brief period when China was a maritime power, which led to ethnic Chinese communities throughout Asia.

The foundation for the Chinese-American diaspora was laid by a migratory outflow to the United States in the 19th century by impoverished Chinese seeking work, including building railroads. Indian emigration surged during the British Raj to Africa, the Caribbean and England.

These earlier overseas Chinese and Indians were distinguished by outstanding performance in commerce and family values that place high priority on education.

Concerning the IT dimension, the diaspora connection is of more recent origin. For India, the emigration to the United States has been happening since the l950s — and somewhat later for China. The process in both cases was in three stages.

Stage one was the out-migration to the United States, largely for education — and mostly by members of wealthy and elite families. The U.S. university system was of the highest quality, which was especially appealing to Chinese who could afford it in the wake of the destruction of the Chinese university system during the Cultural Revolution.

Indian and Chinese students thrived on U.S. campuses — and developed a reputation for high academic achievement, especially in engineering and science.

The second stage was caused by the fact that, after graduation, a large number of those who had completed their education remained in the United States.

In addition, there was a later inflow of high technology-skilled immigrant workers.

This was the result both of poor job prospects at home — and of the rapid growth of U.S. high-tech industry in Silicon Valley and elsewhere.

In India under the socialist rule of Nehru and Indira Gandhi, there was little professional opportunity in the private sector. The basic options for college graduates were to secure a position in the government bureaucracy or seek employment abroad.

Chinese graduates faced not only low-paying jobs at home, but also political oppression culminating in the 1989 Tiananmen Square massacre.

By 2000, there were 1.4 million Chinese-born and 1.0 million Indian-born residents in the United States. This large emigration of the most highly educated young people, the “brain drain” phenomenon, was viewed negatively in both countries in terms of economic development.

In India, people who went abroad were viewed with humor as materialistic and culturally adrift — as in the recent Indian film, Bride and Prejudice. Meanwhile in China, graduates staying abroad were harshly denigrated in political terms.

The only positive result for India and China was the remittance payments from the diaspora, which by 2005 had risen to $9-10 billion a year from the United States to each country.

Within the United States, the Indian and Chinese engineers and scientists quickly rose to prominence in the private sector and on university faculties. The Indians took the lead in the private sector, reflecting their more market-oriented culture and English-language capability.

From 1995 to 2005, 25% of start-up engineering and technology companies in the United States had at least one foreign-born founder — and India was far ahead with 26% of the total foreigners. It was followed by China and the United Kingdom with 7% each, and Taiwan with 6%.

Foreign-born founders were especially prominent in California, as participants in 39% of all start-up companies, 80% of which were in software and innovation/manufacturing-related services.

The large Indian role in Silicon Valley, in fact, dates to the 1970s — with such founding innovators as Pallab Chatterjee of Texas Instruments and Tom Kailath at Stanford University. Chinese engineers and scientists were more prominent in research and on university faculties.

For innovation, as measured by patent applications, Indians were close to the combined level for China and Taiwan. From 1998 to 2006, foreign born Indians accounted for about 11,000 such applications — compared with about 14,000 by Chinese and Taiwanese.

These management and innovation roles by Indians and Chinese in U.S. companies and universities paved the way for the third stage of the diaspora story, the growing reflow back home.

That wave began in the late 1990s — and was triggered by rapid growth in advanced technology industries in both countries, which created relatively high-paying jobs in companies as well as opportunities to start up new companies.

The combination of U.S. university training and job experience put Indian and Chinese returnees at a premium in the job market. Better yet, both countries’ governments now welcomed the returnees, offering financial and other incentives.

The annual conference for non-resident Indians, or “NRIs,” in New Delhi in January 2007, was attended by 1,200 NRIs to hear an optimistic speech by Prime Minister Singh about the new knowledge-based Indian economy. Attendees also received achievement awards from President Kalam — and were welcomed by a plethora of state and company recruiting stands throughout the fairgrounds.

The annual number returning to China rose from 9,000 in 2000 to 30,000 in 2006, for a cumulative total of about 170,000 — including 60,000 in Shanghai alone. Comparable figures are not available for India, but the reflow is likely to be of similar magnitude.

The entire three-stage diaspora experience, as described above, has been an enormous success story in terms of economic development. It affected the two largest developing countries that together comprise almost half of the developing world.

Quality education and work experience in the United States and elsewhere produced hundreds of thousands of entrepreneurs, engineers and innovators, who are now among the most productive people throughout the economic power structure in both countries.

Moreover, the returnees retain close personal and corporate ties with those who stayed behind in the American diaspora. They thus constitute an important linkage for the continued growth in trade and investment across the Pacific. And best of all, the story continues, with tens of thousands of student emigrants and graduate returnees crossing the Pacific in both directions each year.

Editor’s Note: This excerpt is adapted from Ernest Preeg’s book, “India and China.” Printed by the permission of the author and publisher.