Saturday, February 5, 2011

Immigrant Entrepreneurship and the City by Arturo Ignacio Sanchez

English translation - Originally published in QueensLatino

New York is a city of immigrants and small family-based businesses. The connection between immigration and small-scale entrepreneurship is a long-standing trend that can be traced back to the late 19th century. In effect, every U.S. Census since 1880 has shown that immigrants have a higher incidence of self employment than the native-born population. This tendency for immigrants to establish small businesses is facilitated, in part, by their tendency to cluster residentially in specific neighborhoods. Geographically, this resulted in a protected market niche for co-ethnic goods and services; employment opportunities for recently arrived co-nationals; and the emergence of a highly defined sense of community that revolved around engagement in dense ethnic networks.

As we enter the second decade of the twentieth century, New York City is struggling with the socio-economic dislocations associated with the global economic crisis that erupted in 2007. In this regard, as of December 2010, the city’s unemployment rate was 8.9 percent. This dark economic situation was compounded by a deflated commercial real estate market, a dramatic upswing in residential mortgage default rates, a significant drop in municipal tax receipts, impending cutbacks in public sector employment, and retrenchment in the delivery of municipal services. And if the past is a window into the future, the quality-of-life in low-income and immigrant neighborhoods will be affected disproportionately.

In a city overwhelmingly populated by immigrants and their native-born children, any viable attempt at addressing the current economic crisis must include a well designed set of public policies that supports the small business sector and the socio-economic sustainability of local neighborhoods. It is a well documented and irrefutable fact that small-scale firms –in particular immigrant enterprises – are important generators of job growth. In addition, a wide-range of empirical studies have indicated that dense ethnic social networks - connecting immigrant firms and markets - function as important conduits for the efficient circulation of capital, goods, services, information, and labor. This so-called virtuous circle supports an economic environment amenable to small business start-ups and the expansion of local labor markets. As such, from a macro-citywide and micro-neighborhood perspective, a strong case can be made for designing an economic revitalization policy that explicitly includes a small business perspective.

Crafting public policy is not an exact science. It is a process of approximation that includes a degree of uncertainty. And in the best of circumstances it is an attempt at minimizing unintended consequences. This is especially the case when designing policy initiatives revolving around such crucial issues as immigrant incorporation, migrant entrepreneurship, and ethnic-based strategies supporting upward socio-economic mobility. 

Unfortunately, much of the discourse on immigrant issues is clouded by muddled assumptions and stereotypical perceptions that debilitate and – in some cases – undermine the viability of public policy. These poorly formulated policies increase the probability that unintended consequences will dominate the supposed outcomes. In short, what are required are public policy initiatives that are deeply informed by empirically-based research on immigrant issues.

Fortunately, there is hope for optimism. During the past two decades a vibrant body of empirical scholarship on immigrant entrepreneurship has emerged. This intellectual spadework has marshaled a host of inter-related concerns that connect in useful ways with research findings in such diverse academic disciplines as economic sociology, geography, and anthropology – to only mention a few. Examples of such research topics include : GROUP-BASED DYNAMICS & ENTREPRENEURSHIP - why certain immigrants groups have higher levels of entrepreneurship than other groups; BUSINESS NICHES - why certain ethnic groups are able to capture and dominate particular business markets; ETHNIC ENCLAVES - how certain immigrant groups are able to utilize their ethnic networks and social capital in structuring markets that are geographically defined and in which access to ownership and labor recruitment patterns are ethnically determined; BLOCKED MOBILITY & ENTREPRENEURSHIP - why certain immigrant groups engage in entrepreneurship for only one generation, while other ethnic groups encourage their children to continue in the family business; ALTERNATIVE PATHS TO ENTREPRENURSHIP - how and why different immigrant groups establish divergent entrepreneurial pathways that revolve around either formal (regulated) or informal (unregulated) business ventures.

In the final analysis, a key challenge facing elected officials, analysts, and community activists is how to successfully integrate these emerging research findings on immigrant entrepreneurship with a range of pragmatic policy initiatives that revolve around issues related to local neighborhood economic development. In an ethnically diverse city, the drafting of novel approaches in local economic development and entrepreneurship is a messy and contentious democratic process that ultimately requires collaborative engagements that bring to the proverbial table a wide-range of voices. Is New York City up to the challenge? I am cautiously optimistic. To quote the philosopher Plato: “The city is what it is because our citizens are what they are.”

Arturo Ignacio Sanchez teaches at Cornell University in Department of City and Regional Planning, and is a long-standing member of Community Board 3, Queens.