Wednesday, November 14, 2007

Does Pittsburgh Need Its Diaspora?

All is not well in Pittsburgh. The chief indicator of the region's economic malaise is flagging job growth. Harold Miller tabs "uncompetitive state business climate and insufficient support for entrepreneurship" as the culprits for this problem. I bring this up as evidence for the relevance of the Burgh Diaspora to solving some of Pittsburgh's woes.

Given that most of the Burgh Diaspora is located within the United States, studies of "cross-border ethnic networks" would seem non-applicable. However, the differences in business climates between states are real enough and the internal borders within this country do matter. With this in mind, read the following abstract about the importance of the Indian Diaspora to domestic India's entrepreneurship culture:

This study explores the importance of cross-border social networks for entrepreneurship in developing countries by examining ties between the Indian expatriate community and local entrepreneurs in India's software industry. We find that entrepreneurs located outside software hubs—in cities where monitoring and information flow on prospective clients is harder—rely significantly more on diaspora networks for business leads and financing. Relying on these networks is also related to better firm performance, particularly for entrepreneurs located in weaker institutional environments. Our results provide micro-evidence consistent with a view that cross-border social networks serve an important role in helping entrepreneurs to circumvent the barriers arising from imperfect local institutions in developing countries.

In Pittsburgh's case, the barriers would be the "uncompetitive state business climate and insufficient support for entrepreneurship." The landscape for entrepreneurship in Pittsburgh is imperfect and improving it might be difficult at best. As studies point out, the diaspora can make up for these shortcomings.

There is value in Pittsburgh's cross-border social networks. At the very least, accrued social capital could attract financial capital to Pittsburgh-centric projects. Why not form a Burgh Diaspora Lending Club? Link together start-up know how and Diaspora capital with Pittsburgh ideas. Let's put the Burgh Diaspora to work.

1 comment:

Frank said...

This is an important observation, and I think you're right on. However, it's a little bit like a chicken and egg dilemma. Why would Diasporites invest in a region with such an inhospitable climate, and yet for the climate to change, the city needs Diasporites to invest.

My feeling is that there needs to be a critical mass of people currently in the city who are making things start to change, and that it will pick up momentum quickly as Diasporites take notice. A great place for this to happen is within the Universities. If the universities put more focus on incubating innovation or entrepreneurship, or if students started doing it themselves, the alumni networks could be utilized to quickly spread the word.

The Blurgh