In this chapter, we 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.
a. 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?
b. Did this make it more or less likely that other Cambodian refugees would open doughnut shops? Why?
c. As more refugees came in, did this encourage a virtuous cycle of Cambodian-owned doughnut shops? Why?
d. At this point in the story, what sort of cost industry (constant, increasing, or decreasing) would you consider doughnut shops owned by Cambodians to be? Why?
e. Why did this cycle not continue forever? What kind of cost structure are Californian doughnut shops probably in now?