INDIAN DIASPORA IN THE UNITED STATES INDIAN DIASPORA IN THE UNITED STATES Brain Drain or Gain? Anjali Sahay LEXINGTON BOOKS A division of ROWMAN & LITTLEFIELD PUBLISHERS, INC. Lanham • Boulder • New York • Toronto • Plymouth, UK LEXINGTON BOOKS A division of Rowman & Littlefield Publishers, Inc. A wholly owned subsidiary of The Rowman & Littlefield Publishing Group, Inc. 4501 Forbes Boulevard, Suite 200 Lanham, MD 20706 Estover Road Plymouth PL6 7PY United Kingdom Copyright © 2009 by Lexington Books All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of the publisher. British Library Cataloguing in Publication Information Available Library of Congress Cataloging-in-Publication Data Sahay, Anjali, 1976– Indian diaspora in the United States : brain drain or gain? / Anjali Sahay. p. cm. Includes bibliographical references and index. ISBN 978-0-7391-2106-1 (cloth : alk. paper) — ISBN 978-0-7391-3549-5 (electronic) 1. East Indians—United States. 2. Immigrants—United States. 3. East Indians— Migrations. 4. Brain drain—India. 5. India—Emigration and immigration—Political as- pects. 6. United States—Emigration and immigration—Political aspects. 7. India—Emi- gration and immigration—Economic aspects. 8. United States—Emigration and immi- gration—Economic aspects. 9. India—Relations—United States. 10. United States—Relations—India. I. Title. E184.E2S24 2009 304.8089'91411—dc22 2008052229 Printed in the United States of America ϱ™ The paper used in this publication meets the minimum requirements of American National Standard for Information Sciences—Permanence of Paper for Printed Library Materials, ANSI/NISO Z39.48–1992. Contents Preface vii Acknowledgments xi Part I: Theoretical and Historical Background 1 Introduction 3 2 Alternate Theoretical Approaches to Brain Drain 19 3 Indo-U.S. Relations: Political, Economic, and Migration Linkages 57 4 United States: Immigration Laws and the Future of Brain Drain 83 Part II: Empirical Evidence 5 Indian Diaspora and Brain Gain: Remittances, Return, and Network Approaches 121 6 Indian Diaspora in the United States: Soft Power and Brain Gain 157 7 Cultivation of the Indian Diaspora: From Statistical Analysis to Policy Formulation 195 8 Generational Effects of India’s Brain Drain and Gain: A Conclusion 217 Appendix 227 Bibliography 229 Index 245 About the Author 249 — v — Preface HE DISCUSSION OVER “BRAIN DRAIN,” stemming as far back as the 1960s, has Tundergone various phases in the last four to five decades with important implications for both source and receiving countries. Since the United States and the United Kingdom first opened their doors to skilled workers and stu- dents, they have been accused of luring the best and the brightest to the West, draining the LDCs of their educated manpower. For years the transfer of human capital from developing to the developed countries has generated a sense of despair for the LDCs with frequent alarms from various international organizations such as the United Nations. Receiving societies, on their part, have also despaired over the extent to which foreign-born professionals dis- place native workers in various professions. Altogether, concern over brain drain in the early decades had acquired a negative connotation with frequent references to the cost of emigration. The literature remains deficient in con- ceptualizing other facets of the phenomenon. In recent decades, the discourse on brain drain has shifted to include other aspects of brain drain: such as the benefits that could potentially undo the harm borne by the sending countries. Popularly termed as “brain gain,”it pri- marily looks at contributions (both monetary and knowledge) that “Western trained knowledge workers” can make to their home countries. Increasing im- portance of networks as well as monetary benefits have led to many concep- tual and empirical developments in the study of international migration of the highly skilled. Other stylized terms such as “brain exchange” and “brain circulation” have also come to the fore. Here the former refers to no net loss or gain of human capital, but movement between areas, and the latter to the — vii — viii Preface circulating immigrants who would bring back valuable experience and know- how to their local economies. This positive aspect of brain drain thus ushers in a sense of hope: both for the diaspora members in their countries of settle- ment and for their home countries. From Boston to Beijing to Bangalore, expatriates in the United States are now returning to their homelands or at least sending their investments. In some cases, the reasons behind this brain gain have been purely economic— technology professionals who have struck it rich in Silicon Valley are finding that their money goes a long way back home. The business-process outsourc- ing (BPO) has become a $200 billion industry in the case of India that with 50 million potential English speakers serves as one of the most sought after des- tinations in the world. For some, building the networks (technologically and monetarily) for their countrymen is almost a duty (as seems to be the case in China); for others, it’s the chance to be a bigger fish in a smaller pond (case study: Taiwan). Developing countries like India are in fact accelerating the mi- gration, sweetening the rewards for high-tech workers by pushing develop- ment in their technology sectors, cutting taxes, and loosening immigration laws. “Of all the NICs and developing countries, India stands out for the de- gree to which its government has intervened in the IT sector and for the com- plexity and nuance of that intervention.”1 With renewed interest in emerging global economies such as China and India, the choice of India as case study for both brain drain and brain gain is both timely and relevant. With continuing migration of human capital to the United States on one hand, and reaping the benefit of its manpower on the other, the Indian diaspora plays a significant role in bridging India and the United States, impacting the bilateral relationship between them. The Indian “Silicon Valley experience” further underscores far-reaching transformations of the relationship between immigration, trade, and economic development in the twenty-first century. Where once the main economic ties between im- migrants and their home countries were remittances sent to families left be- hind, today more and more U.S.-trained skilled immigrants eventually return home. Those who remain in America often become part of transnational communities that link the United States to the Indian economy. These new immigrant entrepreneurs thus foster economic development directly, by cre- ating new jobs and wealth, as well as indirectly, by coordinating the informa- tion flows and providing the linguistic and cultural know-how that promote trade and investment with their home country, India. Furthermore, through the 1.6 million Indo-Americans, India has created a positive image of itself that is both visible and tangible. The direct and indirect lobbying efforts of this group have resulted in political benefits for India, first during the Clinton years and now through the Bush administration. Preface ix This book looks at the topic of brain drain through a new lens. It departs from the traditional literature to include discussion on brain gain and brain circulation using Indian migration to the United States as a case study. While it cannot be denied that host countries have policies that encourage or pro- vide the necessary conditions for brain drain to take place, it must be taken into account that many source countries now benefit from out-migration of their workers and students. These are usually measured as remittances, in- vestments and savings associated with return, and network approaches that, with a connectionist approach, link expatriates with their country of origin. In addition, diaspora members, through successes and visibility in host soci- eties, further influence economic and political benefits for their home coun- tries. This type of brain gain can be considered an element of soft power for the source country in the long term. Three hypotheses are tested in this book to argue the points above. Using India as source country, the first hypothesis positively tested that benefits outweigh the cost of out-migration, with India as the highest remittance-receiving country in the world with multifaceted connections in the Silicon Valley. The second hypothesis accessed the leverage of the Indo-American community as strong in terms of wealth and education. However, the possibility of this changing the asymmetrical interdependent re- lationship between India and the United States in favor of India remains at best a possibility in the long term. The third hypothesis also positively tested that a more active role played by the state in the sending country determines the level of return and nonreturn benefits. The book also notes that while these hypotheses may be true for a country like India, where many other fac- tors play a role, it may not necessarily affect other, less developing countries in a similar vein. Additionally, third generation Indo-Americans may not neces- sarily retain the same ties as were seen by the first and second generations. Thus direct benefits in the long term may differ in result. Note 1. Jason Dedrick and Kenneth L. Kraemer, “Information Technology in India: The Quest for Self-Reliance,” Asian Survey 33, no. 5 (May 1993): 463–92. Acknowledgments HIS BOOK COULD NOT HAVE BEEN COMPLETED without the invaluable help of Ta large number of individuals to whom I am gratefully indebted. Dr. Xiushi Yang read countless drafts and revisions, and provided guidance and help at every stage, even when he was on research leave out of the country. He shaped my thoughts on brain drain in myriad ways and constantly encour- aged me to be a focused researcher, exploring current theories in international migration.