Discussed the story of Dalton, Georgia, and its role as the "carpet capital of the world." A similar story can be used to explain why some 60% of the motels in the United States are owned by people of Indian origin or why, as of 1995, 80% of doughnut shops in California were owned by Cambodian immigrants. Let's look at the latter case. In the 1970s, Cambodian immigrant Ted Ngoy began working at a doughnut shop. He then opened his own store (and later stores).*
- Ngoy was drawn to the doughnut industry because it required little English, startup capital, or special skills. Speaking the same language as your workers, however, helps a lot.
- As other Cambodian refugees came to Los Angeles fleeing the tyrannical rule of the Khmer Rouge, which group-the refugees or existing residents-was Ngoy more likely to hire from? Why?
- Did this make it more or less likely that other Cambodian refugees would open doughnut shops? Why?
- As more refugees came in, did this encourage a virtuous cycle of Cambodian-owned doughnut shops? Why?
- At these points in the story, what sort of cost industry (constant, increasing, or decreasing) would you consider doughnut shops owned by Cambodians to be? Why?
- Why did this cycle not continue forever? What kind of cost structure are Californian doughnut shops probably in now?