August 27, 2003

This briefing on "Immigrant Entrepreneurship and the Tourist Industry in Europe" was part of MPI's series on "Migration Policy, Politics and Processes in the EU" sponsored by the Delegation of the European Commission in Washington, D.C. Dr. Jan Rath, Co-director of the Institute for Migration and Ethnic Studies at the University of Amsterdam and Dr. Ching Ling Pang of the University of Leuven, Belgium made a joint presentation. Dr. Joanne van Selm, Senior Policy Analyst at MPI and Senior Researcher at the Institute for Migration and Ethnic Studies, introduced Dr. Rath and Dr. Pang.

Dr. Rath opened the briefing with a discussion of the history of the study of immigrant entrepreneurship in Europe. Immigrant entrepreneurs first attracted notice in Europe during the 1960s and 1970s, and they were something of a surprise. Until then, conventional wisdom had held that immigrants were wage workers or unemployed, not entrepreneurs. Further, entrepreneurship was observed not only in groups long associated with small businesses in the public mind, such as the Chinese, but also in many other groups of immigrants.

The study of this phenomenon, said Dr. Rath, began in the United States, spread to the United Kingdom, and later took hold in the rest of Europe. Early research focused on ethnic characteristics and, in the UK, gave class a major role in explaining immigrant entrepreneurship. The first comprehensive theory of immigrant entrepreneurship emerged in a book edited by Roger Waldinger. This theory was based on the interaction of social resources of immigrants with "opportunity structures" in the immigrant-receiving society.

Several shortcomings have been exposed in this model. According to Dr. Rath, the model failed to make comparative studies and to assess the roles of gender and race. Also, while the studies that grew out of this theory considered some barriers to entry for small businesses, others, such as the tax code, were not studied. Meanwhile, in the US, research continued, but with a focus on social capital and networks.

Dr. Rath, then turned to some of the overlooked ways in which government regulations affect immigrant entrepreneurs. Even a lack of regulation is a policy decision in itself, he said. Further, many regulations that affect immigrant businesses are indirect: immigration regulations and admissions, for example, affect the ability of immigrant businesses to bring in workers. Private regulation and de facto regulation that occurs through litigation (or the threat of litigation) are also important.

The tourism sector is a particularly important area for immigrant businesses, stated Dr. Rath. Tourism is 5% of the European Union's GDP, employing 12% of its workforce, and is among the fastest growing sectors in Europe, with gains in domestic tourism compensating for recent slowdowns in international tourism. Immigrants, and immigrant communities, play a part of the tourism industry by adding local diversity and color through parades, cultural events, restaurants, and ethnic precincts and neighborhoods. The ubiquitous Chinatown is a standard example.

A critical mass of tourists is an important precondition for success. Ethnic enclaves in London have prospered from the tourism trade, while similar communities in Bradford have not, for example. Also, not all immigrant groups can be successfully "packaged" for the tourist market. Crime in immigrant communities and access to them are also major issues.

Dr. Rath then turned the presenturned the presentation over to his colleague Dr. Pang. She opened her discussion with a few observations from her experiences growing up in Belgium and visiting Chinatown in London. The process of marketing immigrant communities to the tourist market creates some perverse effects and pitfalls, said Dr. Pang. The process may help reinforce stereotypes, maintain unequal power structures and gender dynamics, and promote inter-ethnic conflict and exploitation of co-ethnics, particularly trafficked migrants.

Additionally, said Dr. Pang, the marketing of ethnic enclaves may raise issues of cultural imperialism. In some cases, both immigrants and their descendants do not want to be labeled or pointed out: for some Chinese immigrants, the term "Chinatown" has negative implications. Also, the initiative for the marketing may not come from within the immigrant community, and entrepreneurs who are not members of the immigrant community take advantage of it. In Washington, for example, Chinese letters adorn businesses in Chinatown that are not Chinese owned or related, such as Starbucks Coffee.

At the conclusion of the presentation, Dr. van Selm invited questions and comments from the audience for Dr. Rath and Dr. Pang.

Question: Have you done research on immigrant entrepreneurship in Eastern Europe, in particular in Hungary?

Response: Both Dr. Rath and Dr. Pang said that they had not, although there are significant immigrant communities with numerous entrepreneurs in the Eastern European countries. Eastern Europe is a significant transit route for immigrants, so it is not surprising that there are growing immigrant enclaves there.

Question: To what extent are local grants and efforts to promote tourism in immigrant communities by local governments "fossilizing" their culture or affecting integration?

Response: First, grants by local governments are the exception rather than the rule. More often, autonomous departments or tourism boards are the primary actor. Immigrant groups may also play a large role. Beyond grants, regulations may have the effect of fossilizing culture…in Washington, for example, there are zoning guidelines for Chinatown that extend to the use of "Chinese" colors on buildings and signs. In Europe there is more resistance to supporting ethnic marketing because it is perceived as anti-assimilation, but this is less of an issue in the US, where assimilation occurs much more easily.

Question: How can informal or illegal businesses be discouraged and formal businesses encouraged?

Response: The traditional approach has been to send out the police to enforce laws and regulations. A much more realistic approach is to relax the regulations and make them more realistic. However, this can have perverse effects. In the Netherlands, when a price floor on bread was eliminated, Turkish bakeries began to use illegal labor and illegal practices to compete on a cost basis.