Market intelligence for international student recruitment from ICEF
28th Aug 2019

International students generate global economic impact of US$300 billion

Short on time? Here are the highlights:
    • A new research report explores the financial impact and current and predicted mobility flows of international students
    • It also conceptualises a framework of international student mobility trends beginning in 2001 and stretching into the coming decade, and outlines challenges to the future growth of mobility
    • The report calculates that the direct and indirect financial contributions to the world economy made by international students – as well as the multiplier effect of international student spending – amounted to US$300 billion as of 2016

International students contributed US$300 billion to the global economy in 2016, estimates a new Studyportals research report. The report, authored by Dr Rahul Choudaha, is entitled Beyond $300 Billion: The Global Impact of International Students.

The US$300 billion estimate reflects the direct and indirect economic impact of the 5.1 million post-secondary students who were studying abroad in 2016, as well as their “induced” impact, meaning the ripple effect that international student spending has on jobs, tax revenues, and household income. Not factored in to the figure are the “intangible” other benefits these students provide such as “academic, research, experiential, and cultural dimensions contributing towards an inclusive, innovative, and interconnected global society.”

The report warns that the growth of international student mobility may be curtailed by two factors:

  1. Students having trouble finding post-graduate work due to anti-immigration policies in some countries and “labour market complexities”;
  2. Students facing higher education costs, as institutions are feeling pressure to generate revenues through adding more international student numbers and increasing their tuition fees.

Billions of dollars to major economies

Together, the US, UK, Australia, Canada, Germany, France, and the Netherlands enrolled half the world’s international post-secondary students in 2016. That year, considering direct, indirect, and induced impacts, international students contributed:

  • US$57.3 billion to the US;
  • US$25.5 billion to the UK;
  • US$19.8 billion to Australia;
  • US$14.5 billion to France, and France charges no to low tuition fees for international students;
  • US$14.4 billion to Germany, and international students do not pay tuition fees in Germany;
  • US$11.1 billion to Canada;
  • US$5.3 billion to the Netherlands, a country that charges differential tuition fee for EU and non-EU international students.

In 2030, Studyportals estimates that there will be 51% more students studying in higher education institutions outside their own countries than there were in 2015 (so an additional 2.3 million students to total 6.9 million tertiary students abroad in 2030). The competition for these students will be intense, and the factors influencing where students choose to study will be different as they have been so far, as Dr Choudaha explains in his report.

Three waves of international student mobility

Dr Choudaha has conceptualised a three-stage evolution over the last 20 years of international student mobility:

  • In the first wave, 2001–2008, students began considering alternative destinations to the US, and Australia, Canada, and the UK picked up market share. The Bologna Process ushered in a spike in intra-regional mobility in Europe, and Japan became a regional hub in Asia. This wave saw the beginning of the massive outflow of Chinese and Indian students that has continued to this day; in 2001–2008 master’s and doctoral programmes were the main beneficiaries of Chinese and Indian students.
  • In the second wave, 2008–2016, US colleges ramped up their recruitment activities and the debate about whether they should be allowed to use commission-based agents began. International branch campuses gained traction and Asian institutions rose up world university rankings; China, Hong Kong, Malaysia, Japan, and Singapore could all claim to be regional education hubs by 2016. Intra-regional mobility continued to be a major driver of enrolments in Europe. China sent large numbers of undergraduate as well as graduate students out to other countries for study. The UK, the world’s second-largest destination for international students, tightened post-study work rights as a result of public pushback against immigration, and began to see international enrolments fall.
  • Dr Choudaha’s concept of the third wave – “2016–onwards” – is defined by an increasingly unstable geo-political environment, with anti-immigrant policies and populism in several countries changing the way international students choose destinations. Such policies are contributing to falling market share for the US and UK; in contrast, Australia’s and Canada’s more welcoming stances are helping them to increase market share. The latter two countries have seen enrolments grow so quickly – and particularly when it comes to Chinese and Indian students – that institutions in these countries are now having to grapple with how to manage growth and diversify their source countries for students. In Asia, institutions in regional hubs are dealing with issues of how to integrate international students. And demographic and economic trends in China are beginning to flatten the growth trend from this country. Institutions competing for international students are now turning to new source markets with large youth populations and insufficient higher education capacity such as Nigeria and Vietnam.

Maintaining a “growth momentum” in the third wave, says Dr Choudaha, “requires aligning national policies and institutional strategies.” He concludes that,

“Breaking barriers of visas and costs is paramount for sustaining the momentum of globally mobility students. This will require concerted efforts to align national policies with institutional strategies to attract and retain international students. Immigration and visa policies must become more proactive and welcoming for international students. Likewise, higher education institutions must reinvest in strategies that grow international student body while balancing goals of diversity, quality, access, and success.”

He adds in a further comment to ICEF Monitor: “The crux of the issue is that national policies and institutional strategies must build on each other’s success and priority rather than be at loggerheads. In the current climate, there are more examples where national policies are getting out of sync with institutional strategies. In the US, for example, institutions are keen to attract international students. However, the government is putting all the visa barriers to make things difficult for students and institutions. Likewise, the Dutch government intends to require Dutch lessons for international students, and the French government is now increasing fees for non-EU students. One of the few exceptions is Canada, where the recent announcement to diversify its international student body aligns with institutional strategy and provides a funding base for further development.”

Employment goals will be crucial in wave three

To this analysis of what will be required in “wave three” for international mobility to remain a trend on the rise, we would add that the extent to which institutions are able to graduate students who go on to secure desired employment will also be the degree to which they are more competitive than other institutions. Internships and other institution-industry collaboration, innovative partnerships between academic programmes and more vocationally oriented ones, assistance with job searches, and energised alumni communities can go a long way towards meeting this crucial area of concern for students.

“Overseas education is one of the most significant investments for international students and their families,” adds Dr Choudaha. “It is only logical to expect that they would like to make sure that they get optimum return on their investment. As the cost of overseas education (tuition and living) goes up while prospects of career opportunities and immigration decline, many families will start considering alternative destinations. The increased emphasis on ‘value for money’ is a boon for emerging destinations which are more likely to offer lower tuition and living cost as compared to traditional destinations. One of the ways it will become apparent is the increase in applications and enrollment of international students at non-traditional destinations. Another implication for traditional destinations will be an increase in expectations for information transparency on career outcomes of alumni and advising and coaching services to help international students succeed.”

For additional background, please see:

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