"Forget the brain drain—today’s highly skilled migrants circulate between the US and developing countries, creating technology businesses and spreading prosperity along the way".—AnnaLee Saxenian, dean and professor of the University of California School of Information
ON Wednesday, an executive from a leading company providing software solutions to semiconductor companies worldwide urged the country’s leaders to tap the Filipino professional class in the United States to boost the local electronics company.
“You should bring home Filipino engineers working in the United States. There are hundreds of them out there,” G. Ravichandran—sales account manager for South Asia of the Singapore-based Cadence Design Systems providing electronic design software solutions worldwide—told the local electronics industry leaders at a symposium, stressing that the same approach has worked wonders for economic powerhouses China and India.
That proposal makes sense.
The Philippines is currently deep into assembly, test and manufacturing of electronics and semiconductors, shipping out more than $30 billion of such products for original equipment manufacturers worldwide.
Industry experts say there is a need, though, for the Philippines to go up the value chain, including integrated circuits design and research and development. All this, for the country to remain competitive vis-à-vis new players like Vietnam.
Going up the value chain, however, means hiring more skilled engineers. That’s where the problem lies. Our education system is producing only hundreds of engineers while the industry probably needs thousands of them. They need experience in chip design but there are only a dozen companies doing this. There are several start-ups and small design houses close to Ateneo and the University of the Philippines campuses, but most of these firms have weak financial muscle to make it big.
That’s the reason we need to tap into the skills and networks that are probably available in the United States, especially the Silicon Valley. Sounds ambitious, some people would probably say, but it might just work.
Well, it actually worked in another context. Ever wondered why economies like Israel and Taiwan developed so fast economically and technologically since the ’80s? It’s because they sent their young minds to study in Stanford, Santa Clara University, Carnegie Mellon and the University of California in the ’70s to study and learn mathematics, computer science, engineering, and business management.
Thinking then that they had nothing to do back home, many of those students stayed and worked in the Silicon Valley, as well as in other major cities for years.
But after working for several years in the US, many of these bright guys started their own companies and eventually started operations in their homelands. Many of them went straight home, bringing with them their fresh technologies and business savvy while retaining their links in Silicon Valley.
That explains why both countries are currently world beaters in electronics, with the Israelis emerging as the world’s leading player in cryptology, defense electronics and cybersecurity.
Do you know why China and India is rising as economic powerhouses? Because they are also doing what the Taiwanese and Israelis did.
Through the networks that the Indian and Chinese students forged in Silicon Valley, these returnees—called “sea turtles” in China and “NRI” or nonresident Indians in India—they set up operations in their home countries doing chip design, software development and manufacturing after working for about a decade among technology companies in America.
Having the experience, technological savvy and linkages in the Silicon Valley, these returning Indians and Chinese didn’t have to worry about start-up capital since venture capitalists in the Valley are just too eager to finance their new projects.
In China, it really helped that the State, so eager to leapfrog the development ladder, attracted them through financial incentives, as well as the establishment of technology parks, where they can do research in collaboration with their friends and colleagues in the Silicon Valley.
AnnaLee Saxenian, dean and professor of the University of California School of Information, calls these skilled migrants who crisscrossed continents to form companies in the US and their home countries the “new Argonauts,” a reference to Greek mythology where Jason and his band sailed the high seas in search of wealth and adventure. Because of these new Argonauts, brain drain—Saxenian stresses—has become more like “brain circulation,” that is, benefiting both developed and developing countries.
The case of the electronics industry in Taiwan and the mainland illustrates how these new Argonauts are transforming regional economies. Many of these engineers and tech guys start out to establish companies designing systems and chip architecture in Silicon Valley. Then they do value-added IC design and advanced manufacturing in Taiwan while they do regional distribution and low-cost manufacturing in China.
Do they need capital? No problem; the same guys could tap venture capitalists in Silicon Valley. Do they need managerial supervision or better business models? No problem; venture capitalists who infuse money actually provide mentoring. After a few years, the venture capitalists get their money 10 times the original amount they have invested through exit strategies that include acquisition or initial public offering. Everybody is happy.
Moral lesson? The Philippines should look at the possibility of mobilizing our own Pinoy Argonauts, not just in the electronics and industry but also in other spheres of the Philippine economy. We have close to 10 million overseas Filipinos abroad, and many of them are working as medical professionals doing research in life sciences and biotechnology. They could complement the country’s strength in biotechnology.
The Department of Science and Technology has its “Balik-Scientists” program, which encourages Filipino scientists already based abroad to render services to the country in their expertise in science, and thereby help in the country’s development. The government could broaden this program by including professionals in other fields.
There are also several Filipinos doing venture-capital work in Silicon Valley; they could probably help in assisting local technology start-ups. There are lots of possibilities that the county’s movers and shakers in the business community should explore. In fact, the country’s leaders both in the private and the public sector should make it part of the country’s economic strategy for development.
(Drafted as editorial for BusinessMirror, 8 June 2007)
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