Immigrant Entrepreneurs as Catalysts for Increased International Trade

By Thomas Cooney

The ever-changing demographic profile of Europe through increased levels of immigration has stimulated substantial debate in many countries in recent years. General elections in some EU countries have been subsumed by the economic and social policy implications of these new multi-racial societies and how national governments might address the flow of immigration. The rise of xenophobia amongst a small proportion of people in some countries has encouraged the growth of highly negative opinions about immigrants amongst national populations. There is progressively reduced recognition of the potential contribution that immigrants can offer once acclimatised to their new home country. Indeed, many people now view immigrants as a ‘problem issue’ that needs to be resolved as they are frequently considered a drain on the national exchequer. Unfortunately, very few people see immigrants as a wonderful opportunity to bolster local economies through the expansion of international trade.

According to Eurostat, there were an estimated 2.7 million immigrants to the EU-28 from non-member countries in 2015 (there are approximately 508 million people in the EU). In addition, 1.9 million people previously residing in one EU Member State migrated to another Member State. Entrepreneurship tends to be slightly higher among immigrants than among natives and an OECD study found that around 12.7% of migrants of working age are self-employed, compared with 12.0% among natives. Such research highlights that for a variety of reasons, immigrants are more likely to start their own business than a native person.

In addition to being more entrepreneurial, the educational profile of immigrants shows that, on average, they have progressed to higher levels of education than the native population of many countries. It is also important to note the young age profile of immigrants which means that they are in an age bracket where statistically they are more likely to start their own business than older age categories. We therefore have within our population a very large group of people who are young, well educated, highly entrepreneurial and with established networks in foreign countries, but still we do not recognise them as an asset and a wonderful opportunity to expand international trade.

When I have raised this issue in the past, the response that I normally received was that immigrant entrepreneurs are equally eligible to apply for any support programme that is available to native entrepreneurs. However, a consistent finding in academic literature on immigrant businesses is their low propensity to use mainstream business support agencies, often relying instead on self-help and informal sources of assistance. Barriers to the take-up of support include: identifying and reaching marginalized groups, the inappropriateness of product-orientated approaches, doubts over the relevance of what is offered, and a lack of trust and confidence in those delivering support.

The extent to which the support needs of immigrant businesses are distinctive in comparison with those of ‘native’ firms is also a key factor. Although many of the support needs of immigrant businesses are shared with their majority counterparts, there are also specific challenges (e.g. language, religion, age and gender aspects) and these have implications for the way business support is delivered if it is to be effective. Immigrant entrepreneurs are also confronted with challenges in respect of starting and managing a business that are peculiar to their non-EU status. These include a lack of business contacts, greater difficulty in accessing finance from institutional sources and an information deficit when it comes to negotiating the business regulatory and legal environments.

One of the new growth areas in entrepreneurship is Transnational Diaspora Entrepreneurship. This occurs when a person starts a business that trades between one’s home and host country. When engaging in international trade, immigrants have a strong competitive advantage as they already have a network of international business contacts (in their home country and possibly other countries), they know the business culture and they have access to markets that would be more difficult for an EU citizen to enter. The home governments of immigrants frequently encourage their diaspora (e.g. Israel) to engage in international trade with their home country and to help build trade links between countries. 

Immigrants should be viewed as potential catalysts for proactively expanding international trade between their host and home country. Every EU country is currently seeking to grow its export trade and yet within their borders are a group of people who can be of significant assistance but whose potential is being largely ignored. Guided by economic growth as well as by social objectives, targeted intervention to directly assist aspiring immigrant entrepreneurs is being introduced to good effect in some countries where immigrant populations are quite high.

What is required across EU member states is targeted intervention promoted through the social networks and media channels favoured by immigrants. Any such targeted intervention should recognise the distinctive challenges faced by immigrant entrepreneurs, but should also appreciate the unique advantages that they can offer through their established networks in their home countries. At a time when Europe is seeking to build its international trade across the globe, it is arguable that we have a wonderful resource on our doorstep that is not being positively utilised.

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