Beyond the Immigrant Ethnic Economy:

A Network Theory of Socio-economic Wellbeing

Claire L. Adida

Stanford University

Prepared for the Society for Comparative Research Graduate Student Retreat

May 5-7, 2006

I. Introduction

Why are some minorities more economically successful than others? How can

minority groups seek economic advancement without the social and political backlash

such success might engender? What presages the socio-economic wellbeing of minority

groups across time and space? Theories that explain minority groups’ socio-economic

fates lend important implications to questions of human capital and economic

development, as well as ethnic and social violence. The scholarship on comparative

ethnic politics tends to emphasize ethnic groups’ dense social ties to explain various

economic and political outcomes. On one hand, dense social networks enhance in-group

trust and solidarity norms that are at the heart of economic subsistence systems (Scott,

1977; Popkin, 1979; Woolcock and Narayan, 1999). On the other hand, dense network

ties also enhance in-group monitoring and policing tools that place ethnic groups at a

particular advantage for engaging in trading or middleman economic activities (Landa,

1988; Greif, 1989, 1990, 1993; Fearon and Laitin, 1996). Social networks are indeed

important determinants of economic opportunity for minority groups and their members.

Yet they can also yield economic success at the expense of socio-political safety. The

expulsion of Uganda’s Indians in 1972 and the social riots targeted at Southeast Asia’s

Chinese minorities since the late 1960s are illuminating examples of the social and

political backlash that tend to go hand in hand with visible economic success.

Social networks constitute an important mechanism by which ethnic minorities

can operate successfully in certain economic activities. This is particularly true of ethnic

immigrant groups that lack the resources, the formal/legal means, or the demographic

weight to cast a significant vote; in these circumstances, they can turn to their networks, a

1
structured set of informal ties within their communities, for critical social capital under

economic stress. Yet this perspective provides an incomplete picture and explanation of

the variation in socio-economic outcomes that we observe across ethnic immigrant

groups over time and space. What are we to make of the varying fates of Indian

minorities in Malaysia and Singapore? How are we to understand the success of Indians

in East Africa if such success has also engendered social violence and even political

expulsion?

I propose a more comprehensive description and understanding of socio-

economic outcomes that takes into account both economic wealth and socio-political

safety. While dense social networks may be a necessary condition for minority group

performance in certain niche activities, they cannot explain the full range of socio-

economic outcomes along those two dimensions. Drawing on insights from social

network theory (Granovetter 1973, 1974, 1995; Friedkin 1980, 1982), I argue that a

particular configuration of social network structure – one that balances strong in-group

ties with weak bridging ties – shapes the socio-economic opportunities of ethnic

immigrant groups and determines their subsequent socio-economic outcomes.1 The

network structures that groups build at key moments in time shape their subsequent

economic fates: those who are able to foster dense in-group ties alongside weak out-

group ties benefit from both economic opportunity and socio-political security, hence

ensuring their social and economic wellbeing.

1
Granovetter defines the strength of a tie as a “combination of the amount of time, the
emotional intensity, the intimacy (mutual confiding), and the reciprocal services which
characterize the tie” (Granovetter, 1973). In short, strong ties are close friendships and
weak ties are casual acquaintances (Granovetter, 1983).

2
 This paper introduces a network theory of immigrant ethnic minorities’ economic

success. Arguing that minorities seek not only wealth, but also social and political

security, I propose a new conceptualization of economic wellbeing that takes into account

the group’s economic success as well as the risks it faces of socio-political backlash.

Moreover, this paper spells out the mechanism by which network structure yields socio-

economic wellbeing as defined along those two dimensions.

The empirical strategy in this paper is three-fold. First, it establishes the variation

of interest at both international and sub-national levels. At the international level,

variation in the socio-economic fates of Indian and Chinese Diasporas across countries,

specifically that of the indentured labor wave of migration in the late 19th century, rejects

the notion that success is minority-based or minority-specific. At the sub-national level,

the divergent fates of Vietnamese and Cambodian immigrants in the United States

provide further motivating contrast. Second, using Public Use Micro Data from the 2000

U.S. National Census, this paper offers an initial test of some observable implications of

the theory on the varying experiences of Vietnamese and Cambodian immigrants in the

United States. Third, this paper proposes a research design for data collection in the field

that allows for a direct test of the network theory of socio-economic wellbeing.

This paper proceeds as follows. After describing a new conceptualization of

socio-economic wellbeing for ethnic immigrant minorities, I present the network theory

of ethnic immigrant socio-economic fates. I then present some of the motivating

empirical variation and test observable implications of the theory. Finally, I conclude

with implications for further research.

3
II. Theory

1. A new conceptualization of socio-economic wellbeing

The academic research on ethnic minorities’ economic fates presents a compelling

puzzle: how are we to explain the variation in economic outcomes of various minority

groups across time and space? Current explanations of ethnic minorities’ economic

success seem to presume that qualities inherent to being an ethnic minority tend to favor

them in the economic realm. Greif, for example, refers to the Maghrebi traders’

multilateral punishment system in medieval North Africa as an arrangement that enabled

the group to overcome commitment problems inherent in traders’ principal-agent

relationships. Maghrebi traders were able to curtail this commitment problem by sharing

information and building reputations through their dense social networks (Greif, 1993).

Yet the extent to which the Maghrebi trader experience has been replicated across

minority group and throughout time is variable. The very same dense networks that seem

to provide Maghrebi traders with an economic edge in the trading arena have even been

deemed the cause of many minority groups’ poverty traps elsewhere.

If minority groups are endowed with characteristics that explain their economic

success in certain activities, the variation in minority groups’ economic fates remains

puzzling in several ways. First, the same group might experience economic success under

certain circumstances but not others – for example, Indians have thrived in Uganda and

Singapore but they live in relative poverty in Malaysia. Second, different immigrant

groups coming to the same place at the same time, achieve notably different levels of

success. The Vietnamese and Cambodian experience in the United States, which ranges

4
in 2000 from marked success for the Vietnamese to economic struggles for the

Cambodians, provides a case in point.

If the same ethnic immigrant minority experiences a wide range of economic

outcomes, or if different groups facing parallel original conditions experience divergent

fates through time, then factors characteristic of being an ethnic minority are insufficient

explanations of economic success. The gap between our theoretical understanding of the

usefulness of dense networks for minority groups, and the empirical variation in these

groups’ economic experiences, calls for a better specification of economic success.

A concept of economic success that takes no account of socio-political safety is

myopic at best. I propose that ethnic immigrant groups don’t just want to be wealthy:

they want to be safe and wealthy. The Indian experience in Eastern Africa, where market-

dominant Indian merchants met social violence in Kenya and Tanzania, and even

expulsion in Uganda in the 1970s, strongly suggests that wealth alone cannot fully

describe the success of a minority group.2 The full range of socio-economic outcomes for

ethnic immigrant groups is described in the table below:

Risk of Expulsion

Low High
Subsistence Economic
Low
equilibrium underclass
Economic success
Socio-economic
High Niche success
wellbeing

Immigrant ethnic groups can achieve economic success by capturing and

dominating an important economic niche, or by diversifying their opportunities through

2
Amy Chua (2001) explores the socio-political backlash that market dominant minorities
such as the Chinese in Southeast Asia and the Indians in East Africa, have experienced
with developing countries’ simultaneous transitions to capitalism and democracy.

5
various sectors of the economy. They run a risk of expulsion if they are considered to be

either a socio-economic burden on society, or an oppressive monopolistic enclave. The

various experiences of the Indian and Chinese indentured Diasporas covers the range of

outcomes described above. The indentured labor arrangement of the mid-19 th century to

the early 20th century contributed considerably to the large Indian and Chinese Diasporas

we observe today. It brought Indian labor to Eastern Africa, South Africa, the British

West Indies and Southeast Asia, and Chinese labor predominantly to the Americas. The

descendants of these indentured groups today span a wide range of socioeconomic

outcomes. The Indian experience in Singapore since its independence from Malaysia in

1965 and the Chinese experience in Panama after serving as construction labor for the

canal, are examples of ethnic immigrant groups that have achieved considerable

economic wellbeing over time. The Indian experience in Uganda and Kenya throughout

the 20th century and the Chinese experience in Cuba until Castro’s policy of business

nationalization drove thousands of Chinese entrepreneurs out of the country in 1959 are

examples of niche groups that endured targeted violence as a result of their visible

success. The Chinese experience in Peru is an example of a subsistence group, a small

middle class of farmers and shopkeepers that has kept a low profile in a rather racist

surrounding. Finally, the Indian experience in Malaysia, which has met rural poverty and

socio-political oppression, illustrates the economic underclass outcome where both

wealth and safety are low.

6
2. A network theory of socio-economic wellbeing

The economic success of ethnic minority groups, conceptualized so far mainly as

niche success, is not enough: it is instead the extension and diversification of success

beyond the niche economy that guarantees socio-economic wellbeing through both

economic success and socio-political safety. A group’s socio-economic wellbeing is

predicated on its ability to access a diversity of new economic opportunities, on one hand,

and provide privileged access to these opportunities to its members on the other: a

structure that maximizes the number of strong ties within a group and the number of

weak ties that bridge the group to the rest of society optimizes opportunity and security

for its members. This balanced informal structure allows for preferential treatment and

diversified access to economic opportunity and yields the desirable socio-economic

outcome.

The research on networks as potential poverty traps is theoretically and

empirically extensive. It depicts investment in dense in-group ties as a minority group’s

rational response to risk. Furthermore, social network literature can inform us as to how

and why this particular network structure yields socio-economic wellbeing. The literature

on social networks developed in the early 1970s to explain how groups under socio-

political and/or economic duress use community networks as mutual insurance systems.

James C. Scott’s analysis of peasant societies in Southeast Asia (1976) and Samuel L.

Popkin’s work on the rational peasant in rural Vietnam (1969) provide some of the first

rational explanations for the existence of subsistence economies. Under economic duress,

societies have reacted rationally by devising mutual insurance systems, an economic

arrangement based on subsistence and solidarity norms (Fafchamps, 1992). These

7
rational responses, however, present a real conundrum. On one hand, pre-industrial

societies need solidarity ties in order to run their mutual insurance systems; on the other

hand, it is precisely this density of binding ties that maintains groups in poor, subsistence

arrangements. Fafchamps accurately depicts this predicament where “[C]ommunities can

find themselves trapped in inferior equilibria where they continue investing in low-

income activities because they cannot individually incur the cost of establishing the

required contacts to penetrate more profitable sectors” (Fafchamps, 2001: 110). This line

of argument was most recently echoed in a World Bank Policy Paper in August 2005,

which provides a game theoretic explanation for why ethnic kin systems are likely to

break down when an economy modernizes its industry and rationalizes its labor market:

“If a kin member achieves economic success in the modern sector, he is invariably

besieged with demands by his less successful kin to help them out […] In such a

scenario, a kin member’s response may be to demonstrably sever his kin ties, if he can

(although at a substantial psychological cost), in order to improve his modern sector

opportunities.” (Hoff and Sen, 2005: 3)

Networks are also a form of social capital because they provide a number of

benefits over time to the members who invest in them. In Getting a Job, Mark

Granovetter performs a study of professional, technical and managerial workers in

Newton, Massachusetts to analyze the ways in which people find jobs; he finds that

almost 56% of his respondents used personal contacts while 18.8% used formal means

and 18.8% used direct application (Granovetter 1974: 11). 3 He specifies the role of

3
Ronald Burt also explores and analyzes how networks can deliver benefits to their
members according to the number of reliable and well-positioned contacts they contain
(Burt 2003).

8
network ties in his article “The Strengh of Weak Ties” (1973), arguing that while strong

ties are efficient at promoting information flows about activities within a group, weak ties

are important for promoting information flows about activities outside a group and may

therefore be instrumental in securing new economic opportunities. 4 This field of research

in sociology depicts group networks as potential repositories of new opportunity.

The literature on social networks informs us that, though networks may tie groups

down into poverty traps, they are also potentially powerful mechanisms of socio-

economic advancement. The key to ethnic immigrant groups’ socio-economic wellbeing

is the configuration of a network structure that balances strong in-group ties with weak

bridging ties. Strong in-group ties provide preferential access to existing opportunities;

weak out-group ties provide diversified access to new opportunities. The presence of

strong in-group ties differentiates between groups that can rely on their kin for social

capital and groups that cannot. The former, though poor, have each other for self-help

and insurance: they are poor but safe. The latter lack such recourse, and need the

assistance of the wider society. Their poverty places demands on national institutions:

they are poor and unsafe. The presence of weak out-group ties further differentiates

between groups that are stuck in a subsistence-equilibrium, and groups that are able to

infiltrate wealthier sectors or new economic activities. The abundance of weak out-group

ties further differentiates between groups that remain successful as niche enclaves, and

groups that diversify their activities. The former, though rich, are visibly wealthy and risk

socio-political backlash: they are wealthy and unsafe. The latter are well off and their

4
See Friedkin 1980 for an empirical test of this statement.

9
economic presence diffuse: they are rich and safe.5 To summarize, weak ties matter

because “those to whom we are weakly tied are more likely to move in circles different

from our own and will thus have access to information different from that which we

receive” (Granovetter in Sasson and Cross, 2003: 118). Strong ties matter as well because

they “have greater motivation to be of assistance and are typically more easily available”

(Granovetter, 1982: 113).6 A group’s configuration of network structure is an important

predictor of socio-economic outcomes:

Differentiation of Network Structures and Outcomes

Network Composition Outcome for Immigrant

Ethnic Minority

Economic
Few underclass
(1) Strong binding
in-group ties Subsistence
equilibrium
Many

Few Niche success

(2) Weak bridging
out-group ties
Socio-economic
Many wellbeing

5
Note that there is no concept of groups with weak out-group ties but no strong in-group
ties. Though individuals may foster weak out-group ties or strong in-group ties on their
own, a group does not foster weak out-group ties as an entity if it does not have a social
network that defines it as such in the first place.
6
The notion that weak bridging ties is an essential complement to the density of in-group
ties is the synthesis of Simmel’s original insight that “poor communities need[ed] to
generate social ties extending beyond their primordial groups if long-term developmental
outcomes [were] to be achieved” (Woolcock, 1998: 19) and Granovetter and Friedkin’s
findings that information between groups travels more efficiently through weak ties.

10
 The theory yields the following hypotheses:

Strong in-group Weak out-group Safety Wealth Economic Wellbeing

Few No No No -

Many No Yes No -

Many Few No Yes -

Many Many Yes Yes +

III. Empirical Analysis

1. The motivating variation

i. Indentured Indian labor across countries

Diaspora groups cover a wide range of socio-economic variation, much of which

is often attributed to differences in initial levels of human or financial capital. Variation

persists within single waves of migration, however, offering a real puzzle as to why the

same communities thrive in certain countries and not others. Two particular sets of cases

are informative here. The first is the different evolving fates of Indian and Chinese

indentured labor across developing countries. The second is the differences in economic

outcomes between Vietnamese and Cambodian immigrants in the U.S.

Following the abolition of slavery in the early 19th century, colonial empires

began relying on indentured labor contracts to supply their colonies with cheap manual

labor. As such, the East Indian companies established in the 16 th and 17th centuries by

Western European powers to deepen and monopolize trade with the East Indies, began

transferring labor to and from various colonies. In particular, indentured Indian labor

arrived in the sugar plantations of Natal and Malaya, and the railroad construction project

of East Africa among other places. Similarly, indentured Chinese laborers were brought

11
to the sugar plantations of Peru and Cuba and eventually helped build the Panama Canal.

Subsequently, these Indian and Chinese labor communities followed very divergent

paths. Originating in one same flux of migration by which the East Indian companies

transferred Indian and Chinese laborers to satisfy a shortage of cheap manual labor in the

colonies, these various ethnic immigrant groups have experienced a wide range of socio-

economic outcomes.

Some of the variation in socio-economic outcomes across ethnic immigrant

Indians is worth describing here in more detail. The descendants of Indian indentured

labor in East Africa became the classic case of a niche group. Most of the indentured

Indian labor transitioned into industry, commerce and trade after the railroad was built in

1906.7 By the 1930s, cotton was an Indian monopoly in Uganda, with Indians owning

187 of the 194 cotton ginning and pressing industries (Laxmi Narayan, 1995). Almost

half of the entire Indian population of Uganda was concentrated in the capital Kampala

by 1969 (Chattopadhyaya, 1970). By 1962, a few years before their incipient exodus

from the region amidst increasing social and political violence, almost 70% of Kenya’s

Indians belonged in the top quintile income group (Ghai, 1965). A majority of Indians in

Kenya and Uganda controlled the cotton, sugar and sesal industries as well as the

construction and transport industries. The result of such marked and concentrated

economic success for the Indians in East Africa was increasing discrimination throughout

7
Waves of free merchant Indians followed these initial indentured laborers. This took
place in all colonies. Yet evidence from East Africa shows that the business communities
in East Africa and South Africa were not merchants who traveled from India, but rather
“agriculturalists-cum-small traders who shifted to a completely urban and commercial
mode of life after their migration” (Markovits, 2000: 18).

12
the 1960s, and socio-political violence culminating in the Asian expulsion from Uganda

in 1972.

The fate of the indentured Indian labor in Malaysia has been one of coupled

poverty and insecurity. In 1975 in Malaysia, Indian unemployment figures topped

Chinese and Malay figures at 12.12% against 7.2% and 6.9% respectively (Lee and

Rajoo, 1987: 395). Moreover, an extensive empirical analysis of poverty rates by

population group in Malaysia in the early 1980s found that Indian households are

significantly more likely to be poor than Malay households if total observable income is

taken as measure of poverty (Kusnic & DaVanzao, 1982: 29). The latest figures show

that Malaysian Indians constitute 8% of the country’s population and own less than 2% of

its national wealth. Just over half of the Indian population in Malaysia continues to work

on the country’s plantations today. In addition to their economic plight, the Indians in

Malaysia have been victims of socio-political violence and repression as recently as 1998

in the northern state of Penang. The Malaysian media and authorities today point to the

violence that seems to characterize the Indian Malays, decrying the high frequency of

juvenile delinquency, indigence, and domestic violence they experience rather than the

poverty that continues to entrap them (Kuppuswamy, 2003).

By contrast in Singapore, since the country’s independence from Malaysia in

1965 and even before the latest wave of high-tech Indian immigration in the 1990s, the

Indian minority has thrived and established itself in a variety of professional sectors and

political positions. Approximately 30% of the Indian population in Singapore belonged to

the middle-class by the late 1980s (Laxmi Narayan, 1995). In 1990 already, before the

last wave of immigration, 22.3% of the Indian labor force held professional, technical and

13
managerial occupations; 32% held clerical, sales and service occupations; and 24% were

employed in production. Today, Indians in Singapore represent approximately 8% of the

population. Though less than 8% of them have a college degree, many have made

learning Malay and Chinese a strong priority. In addition to their relative economic

wealth, anecdotal evidence suggests that the racial and social discrimination they

experience does not extend further than Singaporean society’s discomfort with inter-

racial marriage.8

ii. Vietnamese and Cambodian refugees in the United States9

The Vietnamese and Cambodian immigrants in the U.S. today originally entered

as refugees in the spring of 1975, after the Fall of Saigon. Both groups came in as

refugees and were eventually granted U.S. citizenship after being placed in refugee

centers in California, Arkansas, Florida and Pennsylvania. Yet micro-level data from the

2000 United States Census suggests divergent economic experiences for the two groups

over the past three decades. As Tables 1a, 1b and 1c summarize, the Vietnamese seem to

have prospered to above-average levels of household income, while the Cambodians have

remained significantly below average. Not only is the average household income of the

Vietnamese sample statistically significantly above that of the Cambodian sample, it is

also statistically significantly greater than that of the full sample.10

8
The section on Indians in Singapore is largely derived from Anjum, 2006.
9
Information on Cambodian and Vietnamese immigration to the United States is largely
derived from the Southeast Asia Resource Action Center: www.searac.org
10
Because of excessively large sample size, a sample of the 1% sample was taken as one
out of every five cases in the original 1% PUMS of the 2000 Census.

14
 U.S. Census data also provides information on employment activity. By

constructing a Herfindahl index of the concentration of employment by industry, it is

possible to compare the degree of economic diversification for the full sample, the

Vietnamese sub-sample and the Cambodian sub-sample.11 Data suggest that employment

concentration is 2.86% for the full sample, 2.20% for the Vietnamese sub-sample and

2.41% for the Cambodian sub-sample. To summarize, the Vietnamese appear to have

achieved economic wellbeing in the United States: their average household income is

significantly above that of the average American, and their economic concentration is

lower than that of the full sample. They are not only wealthy, but also safely diversified

in economic activity. The Cambodians, on the other hand, though relatively diversified in

industrial employment, lie significantly below the average American in household

income. They are poor but safe. Two ethnic immigrant groups arriving in the same

country at the same point in time and under similar conditions have evolved over the past

thirty years toward divergent socio-economic paths. While the Vietnamese seem to have

achieved economic wellbeing, the Cambodians remain stuck in a subsistence trap.

2. An Empirical Probe

The variation above lends evidence to the fact that ethnic immigrant minorities

originating in rather similar conditions of migration and travel have experienced

divergent socio-economic fates over time and space. This paper argues that different

constellations of networks help explain the variation observed in socio-economic

11
A Herfindahl index is a sum of squares of the market share of various players in an
industry. It is typically used to measure industrial concentration by the number of firms
and their market power. I use it here to measure the concentration of employment in
various industries.

15
wellbeing. Though it is not possible to provide a direct test of the hypotheses on network

structure for lack of empirical instruments that directly measure this concept, it is

possible to draw a number of observable implications from the theory and test them on

Vietnamese and Cambodian immigrant groups from the 2000 United States micro-level

Census data.

i. Observable implications

The theory asserts that both strong in-group ties and weak out-group ties are

necessary to achieve economic wellbeing. In-group ties are important to establish group

members’ privileged access to existing information and opportunity. Out-group ties are

important for diversified access to new information and opportunity. A balance between

in-group and out-group ties is key to economic wellbeing. According to the previous

section, the Vietnamese appear to have achieved economic wellbeing while the

Cambodians find themselves in a subsistence-equilibrium. If the theory is correct, we

would expect to find Vietnamese benefiting from a balance of strong in-group ties and

weak out-group ties. We would expect the Cambodians to benefit from strong in-group

ties, and to suffer from an absence of weak out-group ties.

Social network literature tends to refer to strong family ties as indicators of dense

networks.12 As James Scott explores in his work on the Moral Economy of the Peasant,

pre-industrial societies without a market-recourse for insurance against risk tend to rely

on their families and kin for self-insurance and self-help. Large kin networks can provide

valuable self-insurance mechanisms and social capital to ethnic immigrant minorities. If

12
See, for example, Fukuyama 1996.

16
family ties are indicators of strong in-group ties, any ethnic immigrant group that is not

an economic underclass is more likely to have larger families, but ethnic immigrant

groups that have achieved economic wellbeing have less dense network structures, and

are likely to have smaller families than other ethnic immigrants.

Hypothesis A: Larger families are indicative of denser networks. I expect

both Cambodian and Vietnamese immigrants to have on average larger

families than the average American. I also expect Cambodian immigrants

to have on average larger families than Vietnamese immigrants.

If bridging ties are key to economic wellbeing, then ethnic immigrant groups that

are able to achieve relative economic diversification are groups that have fostered an

abundance of ties with the wider society to balance their in-group networks. The extent to

which groups come into contact with non-group members is an important element of its

ability to foster weak out-group ties. Geographical location should thus matter in the

extent to which a group can foster bridging ties. It also impacts the extent to which

groups can maintain their strong in-group ties: though larger surrounding populations can

motivate groups to foster bridging ties, they can also erode their strong in-group ties. I

therefore expect ethnic immigrant minorities with strong in-group ties to live in less

populated areas than the average American. I also expect ethnic immigrant minorities

who have further balanced those strong in-group ties with weak bridging ties to live in

more populated areas than those minorities who have not: Vietnamese immigrants, as a

group that has achieved socio-economic wellbeing compared to Cambodian immigrants,

should have enjoyed significantly better access to bridging ties and should therefore

reside in more populated areas.

17
 Hypothesis B: Greater surrounding populations indicate greater access to

bridging ties. Vietnamese immigrants should on average reside in more

populated areas than Cambodian immigrants. Greater surrounding

populations also indicate the potential erosion of strong in-group ties. Both

Vietnamese and Cambodian immigrants, as minorities with strong in-

group ties, should reside in less populated areas than the average

American.

ii. Findings

Hypotheses A and B are tested using the United States 2000 Census, 1% Public

Use Micro Service Data. Findings are presented in Tables 2a through 2c in the Appendix.

Tables 2a and 2b confirm that on average, both Vietnamese and Cambodian immigrants

tend to have larger families than the full sample respondent; additionally, Cambodian

immigrants have larger families than Vietnamese immigrants. Moreover, both

Vietnamese and Cambodian immigrants tend to live in less populated areas than the full

sample respondent; additionally, with an average city population of 9,271 relative to the

Vietnamese average of 13,754, Cambodian immigrants live in even less populous areas

than Vietnamese immigrants. Table 3c presents results from statistical tests of these

differences in means, showing that these differences are statistically significant at the

99% confidence level. Though both Cambodian and Vietnamese immigrants tend to

maintain larger families than the average respondent, Cambodians have significantly

larger families than Vietnamese. Though both Cambodian and Vietnamese immigrants

tend to live in less populated areas than the average respondent, Cambodians live in

18
significantly less populated areas than Vietnamese. These findings corroborate

Hypotheses A and B and suggests that Vietnamese immigrants benefit from strong in-

group ties alongside bridging ties to enjoy diversified economic success; Cambodian

immigrants, on the other hand, benefit from strong in-group ties and suffer from an

absence of bridging ties to end up in a subsistence-equilibrium.

3. Alternative Hypothesis: Human Capital

The predominant alternative explanation to ethnic immigrant minorities’ use of

social capital for socio-economic wellbeing is the extent to which human capital matters.

Instead of using networks for economic opportunity and privileges, successful ethnic

immigrants may simply enjoy better levels of human capital. Tables 3a through 3c

address this issue by analyzing the differences in average education levels between the

full sample Census respondent, the Vietnamese sub-sample and the Cambodian sub-

sample. The results indeed suggest that Vietnamese immigrant groups are on average

more educated than Cambodian immigrant groups and that this difference is statistically

significant at the 99% confidence level.

The network theory of ethnic immigrant minorities’ socio-economic outcomes

does not preclude a role for education and human capital. However, a couple important

points must be noted. First, though Vietnamese immigrants are on average better

educated than Cambodian immigrants, they are on average less educated than the full

sample respondent. This is important to the extent that sample data suggest that

Vietnamese immigrants earn higher average levels of income than the average

respondent. In other words, although Vietnamese immigrants are more economically

19
successful than the average respondent, they are less educated. Human capital and

economic success do not map out consistently onto one another.

Second, Vietnamese and Cambodian immigrants arrived at the same time and

under similar conditions into the United States. Their arrival immediately followed the

Vietnam War, which ravaged both countries similarly. Any level of human capital that

distinguishes the two groups was therefore not likely imported from Southeast Asia, but

more likely created overtime in the U.S. If the attainment of education and the fostering

of social ties are investment decisions that immigrant groups make upon arrival and

settlement, then the task of explaining the endogeneity of various network structures

should simultaneously lend clarity to the differing levels of education that we observe

between groups.

4. The endogeneity of network structure

Networks are not exogenous phenomena: they emerge out of circumstances that

groups perceive as structuring their opportunity set. These structuring conditions create

incentives for group members to either reach beyond their dense networks and foster

weak ties, or retract within their dense networks in isolation. Fafchamps’ argument is

worth emphasizing here: “[C]ommunities can find themselves trapped in inferior

equilibria where they continue investing in low-income activities because they cannot

individually incur the cost of establishing the required contacts to penetrate more

profitable sectors” (Fafchamps, 2001: 110). There are costs to fostering weak out-group

ties, and no individual will assume such costs if the risks appear too high or the rewards

too low. Fostering out-group ties is a more risky but potentially more rewarding

20
endeavor. Maintaining in-group ties is a safer but certainly less potentially rewarding

endeavor. The first requires group members to move out of their safety zones in search

for new opportunities. The second ensures a certain degree of security at the expense of

new opportunity. Hence, conditions that signal few opportunities for economic

advancement in a country, or a low tolerance for socio-economic competition, will find

groups turning inward for economic recourse rather than outward. These conditions

create the individual incentives that aggregate into a group level network structure: they

determine a group’s economic outcome through the incentives they foster at the

individual level. An initial list of potential structuring conditions follows:

National economic structure: An economy that is heavily reliant on one economic

sector or one particular resource signals sparse opportunities for economic advancement.

If the economy is highly concentrated in one sector or one resource, the incentives are to

either capture the dominant sector or fall back on in-group ties to seek economic security.

Either way, resource-dependence or concentrated national economies, foster incentives

for minorities to retract within their networks.

Political authoritarianism: Authoritarian leaders tend to exploit existing social

cleavages for political and personal gain. An authoritarian leader is more likely to single-

out and identify certain minorities as buffers or middleman groups, hence fostering

incentives for dense in-group ties with few and select bridging ties. Under authoritarian

leadership, groups will face incentives to cultivate their in-group ties and only a few out-

group ties with key players. They are more likely to end up in either a subsistence trap or

a niche economy.

21
 Demographic make-up: The presence of other minority groups affects the

perception of opportunity and competition upon arrival. Specifically, the social make-up

of the host country interacts with the size of the ethnic immigrant group to yield various

individual incentives for the immigrant. A homogenous society will encourage large

groups to retract inward and small groups to reach out: small groups in homogenous

societies are more likely to engage in the wider society without threatening it. A

heterogeneous society, on the other hand, will encourage small groups to retract inward

and large groups to reach out: large groups in heterogeneous societies are more likely to

engage in the wider society, using their demographic weight as a competitive edge.

The conditions listed above represent an initial attempt at isolating and specifying

those conditions that structure individual immigrant incentives upon arrival. They shape

the kinds of ties that immigrants will seek out, and thus mold the configurations of

networks that ethnic immigrant groups subsequently use as social capital.

IV. Further Research

The empirical analysis in this paper constitutes an empirical probe of the network

theory of ethnic immigrant wellbeing. The next step in this project calls for original data

collection in the field in order to directly measure social networks and their impact on

socioeconomic outcomes of ethnic immigrant groups.

1. Case Selection

The theory in this project considers ethnic immigrant minorities as its unit of

analysis for two reasons. First, immigrant minority groups are less likely to seek political

advancement because their demographic weight and immigrant status do not allow them

22
much representation or power in the political realm when they initially arrive and settle

into the host country.13 Second, I focus on minority groups that are ethnically different

from the majority because those groups are more easily identifiable: this is an important

factor in considering the safety dimension of my dependent variable.

Networks tend to take shape early on in an immigrant ethnic group’s lifetime. It is

thus difficult to capture network effects in established groups, as other factors – from

subsequent immigrant waves to political and economic change over time – quickly

conflate the process by which groups seek socioeconomic wellbeing. The 1990s saw a

high-tech wave of Indian immigration into Singapore, for example, undoubtedly a highly

educated group that would bias the analysis of ethnic Indian immigrant networks in

Singapore today. Measuring networks is a task that can only be done at the beginning of a

group’s settlement process.

With that in mind, I plan to pursue two instances of fieldwork to measure the

impact of social capital on ethnic immigrant minorities’ economic wellbeing. I will

undertake survey and ethnographic work this summer and fall, on a sample of

Vietnamese and Cambodian immigrants in the United States. A detailed comparison of

these two cases will hopefully offer insight on why two groups with similar original

conditions experienced such divergent economic realities overtime. Subsequently, I will

continue this data collection effort with a comparative analysis of various White

Zimbabwean refugee groups in Zambia, Botswana, Namibia Mozambique, and South

Africa. Victims of the land reform program, which President Mugabe used to drive white

Zimbabwean farmers off their lands, are now scattered throughout Southern Africa.

13
For now, I use as arbitrary threshold for defining minority status any group that
constitutes less then 10% of the national population.

23
Originally a strong identity group in Zimbabwe according to an analysis from the

Minority at Risk project, their experiences as ethnic immigrant minoritiess today provides

an opportunity to directly test the network theory of immigrant ethnic wellbeing at a

critical juncture of network formation.

2. Measuring the variables

I intend on using a combination of survey and interview methods to collect data

on the network and economic wellbeing dimensions in my theory. Table 5 in the

appendix summarizes the survey questions I intend to use to measure network ties. The

goal is to differentiate between the two functions a network performs for its members,

and the two types of ties used. Networks should provide both access to new opportunities

and privileged access to existing opportunities. I capture the former with questions on

job-seeking connections; I capture the latter with questions on financial loans and favors,

an activity referred to in the literature as highly reliant on trust and reciprocity through

dense social networks. Ties are either weak or strong, in-group or out-group. I pinpoint

the in-group and out-group differentiation with basic ethnic and racial identification

questions. I capture the strength of a tie both subjectively (“What is this person’s

relationship to you?”) and objectively, through an analysis of the symmetry or asymmetry

I find in people’s answers.14

14
To specify, if A turns to B for help in getting a job or a loan, but B does not turn to A,
that tie is defined as weak. If A turns to B and B turns to A, that tie is defined as strong.
This operationalization of tie strength was used by Friedkin in his empirical tests of
Granovetter’s theory.

24
V. Conclusion

Ethnic immigrant minorities have been given a number of titles, from market-

dominant minorities in some cases to third class race in others.15 Although we have some

understanding that social networks can help minorities in precarious situations, even put

them at an advantage in performing certain kinds of economic activities, we lack a

specific understanding of which elements of social capital are beneficial to groups and

which are detrimental. I propose a network theory that identifies and maps constellations

of network ties to various socio-economic outcomes. Through extensive case study

analysis and original data collection, I hope to provide a measure of network structure

and a direct test of the theory. Ultimately, I hope to contribute to a more precise

understanding of the concept of social capital and a more comprehensive explanation of

immigrant ethnic minorities’ wellbeing overtime.

15
See Chua, 2001 and Kuppuswamy, 2003.

25
Appendix: Tables and Graphs

26
 Table 1a: Household income
2000 U.S. Census, 1% PUMS

Full Sample
Mean SD N
Household income 56,237.84 56,310.92 788,486

Table 1b: Vietnamese and Cambodian household income

2000 U.S. Census, 1% PUMS

Vietnamese Sub-Sample Cambodian Sub-Sample

Mean SD N Mean SD N
Household 59,850.61 53,617.83 2,701 42,682.61 39,631.15 521
income

Table 1c: Difference of means tests for household income

2000 U.S. Census, 1% PUMS

Difference of Standard Two-tailed One-tailed

Means Error t test t test

Household income: Full v. -3,612.77 1,033.63 Pr = 0.001 Pr = 0.000

Vietnamese

Household income: 13,555.23 1,737.43 Pr = 0.000 Pr = 0.000

Full v. Cambodian

Household income: 17,168 2,019.66 Pr = 0.000 Pr = 0.000

Vietnamese v. Cambodian

27
 Table 2a: Family size and city population
2000 U.S. Census, 1% PUMS

Full Sample
Mean SD N
Family size 3.25 1.77 810,663
City population 26,283.74 30,623.28 67,022

Table 2b: Vietnamese and Cambodian family size and city population
2000 U.S. Census, 1% PUMS

Vietnamese Sub-Sample Cambodian Sub-Sample

Mean SD N Mean SD N
Family 4.43 2.12 2,737 5.12 2.21 529
size
City 13,753.54 21,459.98 413 9,270.84 15,239.92 140
population

Table 2c: Difference of means tests for family size and city population
2000 Census, 1% PUMS

Difference of Standard Two-tailed One-tailed

Means Error t test t test

Family size: -1.18 0.04 Pr = 0.00 Pr = 0.00

Full v. Vietnamese

Family size: -1.87 0.10 Pr = 0.00 Pr = 0.00

Full v. Cambodian

Family size: -0.69 0.10 Pr = 0.00 Pr = 0.00

Vietnamese v. Cambodian

City population: 12,530.2 1,062.56 Pr = 0.00 Pr = 0.00

Full v. Vietnamese

City population: 17,012.9 1,293.43 Pr = 0.00 Pr = 0.00

Full v. Cambodian

City population: 4,482.70 1,665.55 Pr = 0.01 Pr = 0.00

Vietnamese v. Cambodian

28
 Table 3a: Education
2000 U.S. Census, 1% PUMS

Full Sample
Mean SD N
Education level 9.07 3.75 776,455

Table 3b: Vietnamese and Cambodian education

2000 U.S. Census, 1% PUMS

Vietnamese Sub-Sample Cambodian Sub-Sample

Mean SD N Mean SD N
Education 8.24 3.94 2,607 6.55 4.08 502
level

Table 3c: Difference of means tests for education level

2000 U.S. Census, 1% PUMS

Difference of Standard Two-tailed One-tailed

Means Error t test t test

Education level: 0.83 0.08 Pr = 0.00 Pr = 0.00

Full v. Vietnamese

Education level: 2.52 0.18 Pr = 0.00 Pr = 0.00

Full v. Cambodian

Education level: 1.69 0.20 Pr = 0.00 Pr = 0.00

Vietnamese v. Cambodian

29
 Table 4: Main variables
U.S. 2000 Census 1% PUMS

Variable Description
Education Variable that reports the respondent’s
highest level of educational attainment:
1: no school completed
2: nursery school
3: kindergarten
4: 1st-4th grade
5: 5th-8th grade
6: 9th grade
7: 10th grade
8: 11th grade
9: 12th grade, no diploma
10: high school graduate, or GED
11: some college, no degree
12: associate degree, occupational program
13: associate degree, academic program
14: bachelor’s degree
15: master’s degree
16: professional degree
17: doctorate degree
City population Reports the population, in hundreds, for all
incorporated municipalities
Household income Reports the total money income of all
household members aged 15+ during the
previous year
Family size Counts the number of own family members
residing with each individual, including
him or herself

30
 Table 5: Measuring Network Ties

Network function: access to new opportunities

a) How did you find your job? Was anyone instrumental in finding your job? Who
would you go to if you were to lose your job today and seek a new one?
b) What is this person’s relationship to you?
c) What is this person’s contact information?
d) How did this person know about the opportunity?

Network function: privileged access to existing opportunities

a) Who would you go to if you needed to borrow money today?

b) What is this person’s relationship to you?
c) What is this person’s contact information?

31
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