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Immigrants And International Students Boost Exports

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Economists have concluded that increasing exports and imports is a significant benefit that countries gain from admitting immigrants and international students. New research finds international students provide more of an economic boost than previously thought.

International students benefit the United States in several ways, according to analysts. These benefits include providing a way for U.S. students to experience other cultures without leaving their college campuses. International students also subsidize the tuition that U.S. students pay, encourage more to enter technology-related fields and are a significant source of talent for employers. Many international students also become entrepreneurs and create highly successful companies.

New research addresses a different benefit of international students—the way they expand trade, which helps U.S. workers and consumers. “Total immigration has a significantly positive effect on exports: a 10% increase in total immigrants is associated with a 2.6% increase in exports from the host to the origin country,” according to a study by Lena Susanne Specht at the UCD School of Economics, University College Dublin.

Among the foreign-born, Specht finds international students play a significant role in increasing trade, even though many students may live in another country for only a short period. To examine the connection, Specht looked at data from 34 host countries and 172 origin countries between 2000 and 2018 and found, “[I]ncreasing the share of international students in total immigration by one percentage point is associated with a rise in exports of around 1.6%.”

Research by economist Marina Murat focused on Latin American students and found similar results. “Social ties among university students—of friendship, mutual trust and attachment to the alma mater—tend to be robust and enduring. Through information-diffusion and behaviour-enforcement mechanisms, they can boost the economic exchanges between countries. . . . Results show that Latin American student networks exert strong, positive and significant effects on bilateral imports and exports. A 10% increase in the number of Latin American students in the OECD [Organisation for Economic Co-operation and Development] economy boost bilateral trade by about 3%.”

Specht found that international students are associated with increased trade. “This is especially true for students from non-OECD countries where informational barriers may be most severe,” writes Specht. “This is reinforced by findings that indicate that students from these countries most affect products where issues of information and trust are major.”

“While there are always caveats, the data suggest that foreign student exchanges within OECD countries increase trade in easily tradable goods,” said Specht in an interview via email. “Students from non-OECD countries seem to increase more complicated trades. This is possibly due to the job position students are in upon graduation: the skill upgrade for non-OECD students from studying in an OECD country could drive them into managerial positions with the influence to make such decisions. My findings imply that students have a special ability in promoting trust between countries and especially between institutionally different ones.”

Specht notes that differentiated products are such things as apparel and machinery, which require more information to be traded. “Most of the literature argues that immigrants can lower these informational hurdles due to their contacts with and knowledge about their origin country markets,” she said. “One could then expect that international students possess similar qualities.”

The research adds to our knowledge about the benefits of international students. “International students contributed $33.8 billion and supported 335,423 jobs to the U.S. economy during the 2021-2022 academic year,” according to an analysis produced for NAFSA by JB International.

Specht sees policy implications in her research. She notes that encouraging more international students to study in the United States is a good development strategy that would benefit both the U.S. and the students’ countries of origin. Specht believes it would be in an OECD country’s interest, such as the United States, to provide more funding to international students to allow more of them to study in their country.

Opportunities to work after graduation are also beneficial. “[P]roviding international students with internships and other hands-on opportunities may help origin countries upgrade their export product basket or better connect them to global supply chains via imported intermediates,” writes Specht. “Policies in this direction might include allowing students to be employed as part of their student visas or giving students the opportunity to extend their visas after graduation.”

International students can work in Optional Practical Training (OPT) for 12 months after graduation in the United States. OPT can be extended to 36 months for students in science, technology, engineering and math (STEM) fields. The research on international students and expanding trade indicates welcoming students from other countries to U.S. campuses provides additional benefits to Americans.

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