Ethnic Enclaves

An ethnic enclave is a geographic location within an urban setting that is predominantly occupied by a population of individuals of a specific culture, nationality, or ethnicity. The enclave consists of a variety of local businesses that meet the general and specific commercial needs of the community. According to Alejandro Portes, ethnic enclaves are a product of past generations, who through ethnic solidarity, established diverse businesses that enabled socio-economic mobility within the enclave and outside, within the mainstream economy. Through these enclaves, individuals can economically transition into a new urban environment, without having to rapidly adopt the preexisting culture, language and educational standard of that environment.
Therefore, small business growth is enabled by the proximity of businesses to residents, which allow for the exchange of information, access to capital, labor and other pertinent resources. Alejandro Portes states that the economy of the ethnic enclave is propelled by immigrants with business knowledge, the access to labor, and the availability of capital. From a socio-economic perspective, the enclave is driven by a segmented labor market where the enclave’s primary market is composed of business owners who engage in a variety of businesses, and a secondary market composed of family members and recent arrivals who are willing to work for wages lower than the minimum wages provided outside of the enclave.

Alejandro Portes hypothesizes that ethnic enclaves help immigrants succeed economically in America through means of exclusive community support, and by serving as a cultural shields against the pressures exerted by a new environment in a new country.
For example, among original enclaves, Jewish and the Japanese communities established rotating credit associations which continuously financed new commercial operations within the enclave. Additionally, individuals work for low wages for an owner, and in return are compensated by the owner with financial support and future work/business opportunities for the worker. Therefore, this system allowed for businesses to operate with low labor costs that keep the enclave’s firms competitive in the open economy, while providing labor in abundance. In response to Portes’ work, a study conducted by Victor Nee and Jimy M. Sanders explain the negative consequences of ethnic solidarity on the socio-economic attainment for immigrant minority groups. Their findings on Cuban enclaves in Miami and Hialeah, and Chinese enclaves in San Francisco, show that workers in the enclave are not better off than other minorities living outside the enclave, because their income and standard of living were similar to those of immigrants living outside of the enclave or greatly disadvantaged. Based on their data, Nee and Sanders attribute this effect to the fact that business owners have a higher rate of economic success in the enclave because they
leverage their positions of power through forms of patronage relationships with their employees, proving that the enclave economy hypothesis holds true only for the self-employed.

The Silicon Valley’s skilled immigrants and traditional ethnic enclaves responded collectively to sense of exclusion from established business and social structures. Analogous to the Silicon Valley immigrants, are the Jewish and Japanese enclaves who made use of the resources made available by early immigrant entrepreneurs to enter the mainstream economy. AnnaLee Sexenian states that the Indian and Chinese immigrants who work highly skilled jobs in the Silicon Valley, over time, have assisted in creating social and professional networks on the basis of shared language, culture, and educational and professional experience all for furthering the rapid social and economic mobility of their respective groups. Trust and mutual respect through commonalities help to form mentorships, provide access to professional development, and access to capital that facilitate new immigrants to engage in business ventures. Consequently, they assimilate quickly into the American economy.

Unlike traditional enclaves who are culturally or ethnically homogeneous, the Silicon Valley enclaves are composed of various fragmented nationalities who share similarities, trust, and their experiences of immigration, which all appear to strengthen immigrant assimilation.
Traditionally, ethnic solidarity has been the basis for economic mobility within ethnic enclaves, In addition to ethnic solidarity, the Silicon Valley ethnic enclaves embrace the education of American managerial and economic principles in business rather than only maintaining traditional customs, which allow for the Silicon Valley’s newest immigrant entrepreneurs to develop professional and social networks that span national boundaries and facilitate flows of capital, skill, and technology. Since these enclaves coexist in the same geographical area, and are not isolated, it is easier for them to create international communities that share information, contacts, trust, and capital in order to fully participate in the global
economy.