It seems that the trade war between the United States and China is all about soybeans, cars and air conditioning units. What is often overlooked is that there is another export that has become hugely important for an entire sector of the U.S. economy — international students studying at American universities.
The magnitude of the economic benefit of international students is impressive. The total value of international students to the U.S. economy is estimated to be $39 billion annually. International students are also estimated to be directly or indirectly responsible for close to 500,000 American jobs. In California, the value of international students to the state economy is $6.6 billion each year, supporting more than 74,000 jobs. So much for the good news.
Unfortunately, competition over international students between destination countries such as the U.S., Australia, Canada and the United Kingdom has intensified over the last five to 10 years. Recognizing the benefits, many countries have not only waged aggressive marketing campaigns to attract students to universities in their countries, but they have also streamlined their student visa processes and relaxed the regulations governing student and graduate employment.
Consequently, the total U.S. market share of international student enrollment has dropped, and it continues to drop precipitously. In 2011, the U.S. commanded a 28 percent market share of the 2.1 million students studying outside their own borders, but by 2017, when 4.7 million students were studying internationally, the U.S. share of the market had tumbled to 22 percent. Canada already receives approximately 10 percent of all international students globally. France recently announced a national campaign to double its inbound international student population to 500,000 students in less than a decade. China’s share of inbound international students, already exceeding 10 percent, continues to escalate. The government of Australia has announced a campaign to further increase international student numbers.
In addition, the inward focus the U.S. has taken over the last two years, coupled with tighter immigration practices, has made the U.S. a less attractive destination for international students.
According to a study by the Graduate Management Admissions Council, international applications dropped by 11 percent in 2018, and only 47 percent of potential international students considering degrees abroad prefer the U.S. as a destination, down from 56 percent in 2016.
Other countries win. For instance, applications from international students in Canada have increased by 16.4 percent.
Even from a short-term and purely economic perspective, these are alarming trends, not to mention the adverse long-term cultural, social and political effects. International students graduating from U.S. universities form long-lasting relationships that strengthen economic ties, improve political relations between countries and secure peaceful relations between nations. With billions of dollars and tens of thousands of jobs in California at risk in the relatively near term, corrective action is urgently needed in order to avoid long-term economic and intellectual damage to the entire higher education sector.
A more strategic view is needed not only for higher education, though. International graduates with highly specialized degrees in many areas are desperately needed in the U.S. economy, particularly in California’s thriving tech sector. According to studies based on U.S. census data, immigrants account for more than 40 percent of new businesses in California, New York and New Jersey. Immigrants are twice as likely to start new businesses than U.S.-born people.
The U.S. need only look to the examples of other countries that have realized that international students contribute immensely to domestic economies and have developed strategies to proactively attract and recruit them. Or, the U.S. administration could at least go back to its own prior practice of granting student visas more liberally, and not deterring international students with announcements over curbing immigrant visas.
• Gerhard Apfelthaler is the dean and Harry Domicone is a professor and assistant dean for international recruiting at the School of Management at California Lutheran University.