Want to Fix the Economy? Think Immigrant Entrepreneurs

  • On March 2621, 2009

  • by Aydin Senkut

There is a plethora of ideas on how to revive the economy. To me it boils down to one simple strategy: Support the entrepreneurs, especially the immigrant ones. The stimulus grants the government is handing out to different industries remains a band-aid solution and basically just re-allocates existing resources. Supporting the entrepreneurs, on the other hand, is likely to result in new jobs, create *new* capital (ie new resources). Google is a phenomenal example with nearly $100 Billion in market capitalization created in about 7 years along with 20,000 employees. According to Economist,US is the only country in the world, where start-ups generated net employment gains after 2/4/7 years from their foundation. Again, the same report highlights that 10-35% of all US companies were founded by immigrant entrepreneurs.

Immigrant founded companies in the US created $500 Billion in market capitalization while companies started by foreign-born entrepreneurs generated nearly $ 17 Billion in sales and employ 220 thousand people in the US. That’s just the immigrant entrepreneurs.

There’s increasing sentiment in our community that supporting entrepreneurship is a much more preferable way to reviving the economy than bailing out large dinosaurs like GM which need to go into bankruptcy to reorganize so they can become viable companies again. Thomas Friedman certainly defends this perspective in this post – arguing for funds to be directed to venture capital. Don Dodge, goes a step further, and posits that just spending $1B in incubators like Y Combinator or TechStars would yield not only immediate employment but probably even more potential upside in terms of wealth to be created. He also lists several government programs like R&D or seed capital tax credits that, if applied with less strings attached and more uniformly across states, could turn into great solutions.

There’s no doubt in my mind that the writing is on the wall and the numbers tell a story. This is a country built by entrepreneurs, in fact, mostly immigrant ones. There’s no doubt that the same group is key to reviving our economy.

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