What is the value of International Students to Ireland?

What is the benefit to the economy of international students? We can think of lots of soft power benefits from people having a good educational experience but there must be economic costs and benefits also? What are they?

The simple answer is that we don’t really know. Like so much in Ireland we tend to make policy without much in the way of hard or public evidence. Non EU students in particular pay high fees and thus are seen as a source of significant revenue potential for cash strapped third and fourth level institutions.

International evidence on international student impact is quite well developed. A good recent example is that concluded for the University of Sheffield which examined 8,000 international students.. Based on the data there of a contribution of £STG 176m/€234 gross (£STG135m / €179net), we can estimate a similar effect of €1.3b gross €1b net, for Irish overseas students. Similar orders of magnitude of impact per student (of €25,000 to €30,000 per annum are found in the case of Exeter,  and for the San Francisco region  . A lower figure of approx. €5000 equivalent was found in a South African study . What is interesting however about these all is that the estimated per annum overall contribution is very close to the GDP per capita. In Ireland GDP per capita is €45000 and GNP per capita (perhaps a closer analog of the international situation ) €38000.   Exports of €1.3b, for that is economically what these are , is the same volume as exports of all beverages.

National evidence is scant. A 2003 study by Fitzpatrick and associates concluded for the HEA suggested a impact of all overseas (EEA and other) students as being equivalent to approx. 3.5% of overseas tourist revenue. This would be equivalent to 230m based on 2014 data . A 2007 study (see inter alia) put the overall economic contribution of the English language sector at €500m. No comprehensive economic analysis of this sector has been carried out since, it appears. Thus here we have to rely on what data we have from other studies and to make reasonable inferences.

So what is the impact? In general Economic impact analysis involves estimating three parts of analysis – numbers of persons, additional spend on goods and services,  additional costs from presence. A complication in any economic impat in the irish context is that we have poor or limited data on all three elements. Thus we must proceed on the basis of reasonable inference

There is no single comprehensive set of data on international students. Remember, Non EU students have to register with the Garda National Immigration Service – this is in itself a significant issue, not the registration per se but the process which can charitably be defined as chaotically inefficient. Why the GNIB cannot set up in each of the 20 or so HEI’s at the time of registration and process students there is beyond me. Also, not all non EU students require a visa. So we have some handle anyhow on non EU students. But it is not at all clear. Thus all estimates are inherently somewhat fuzzy. See here for an overview of the problem in estimation. Estimates for non EEA student numbers generally range in the area of 45000 or so. This is approx the size of Drogheda or Waterford.Within the HEA sector in 2014 we had approx. 12500 non EEA students enrolled. Thus we can place the remainder of those believed to be in country to be outside the HEA sector. Taking 45000 as the numbers and 12500 as those in HEA we get 32500 as those outside the HEA. This equates to a student body of just over ½ that of the whole IoT sector.

The effect of international students on the economy is embedded within the general issue of the economic effect and impact of higher education. Higher education economic impact has recently been estimated for the IoT and University sectors

Inferring from these as a first cut is possible. It requires assuming that the structure of the industry under analysis, the non-HEA covered international student body, is essentially similar to that of the HEA institutions. This is unlikely; universities and IOT staff are in general better paid than those in e.g. foreign language schools; they will have more extensive capital spend on equipment; they will not obtain income from research agencies etc. However, this gives us an upper range for impact. Overall the HEI sector analysed  contributed 10.6b to the economy in 2011. Of this 3.2b was attributable to the IoT sector. These impacts are within line with international norms. Employment multipliers, which estimate the effect via both direct and induced effects of expenditure are of the order of 5-6. A first cut at the impact of non-HEA international students therefore would be to place an upper bound of the order of €1.6b on their contribution. EEA students account for approximately 4,000 students, or 1/11 of the number of non EEA, so we can suggest a total of €1.75b here for all non Irish students.

Persons in country use public services. Two elements of costs are useful to consider. First, we have direct costs such as the use of public services and other public goods. Second, we have indirect costs such as increased congestion etc. Based on international research above we can see these costs as being typically estimated as being of the order of 20% of the overall benefit. Students for instance are less likely to use health services , they dont typically have children in school, usually cluster in small areas and thus reduce outside-area congestion etc. So we can reduce the sum above to reflect this.

Overall, based on what little we know and inferring from similar studies, international students are likely to benefit the economy to the tune of approximately €1.4b per annum. This is not to be sniffed at – studies in the USA suggest they gain approx $30b ; a 2009 study for Canada suggested CAD$7b.

There is a great potential for more international student exports. If the UK Brexit’s then that will have a chilling effect on the 400k international students who annually study in the UK. Picking up even 1/4 of them would be enormously beneficial. This doesn’t come without costs  and cannot happen without significant additional resources into the institutions they will enter, but the evidence is strong that the overall payoff to the economy is hugely positive. With a new minister for education who was previously minister for Jobs, a professionally trained economist with expertise in economic impact studies, this should be a high priority.

 

 

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6 thoughts on “What is the value of International Students to Ireland?

  1. Pingback: Ninth Level Ireland » Blog Archive » What is the value of International Students to Ireland?

  2. Dr.Cara Augustenborg (@CAugustenborg)

    Interesting analysis, Brian. Would love to know if you see any down sides to increasing international students in Ireland? For example, are we depriving our own young people of educational opportunities by filling spots with international students OR are we creating a brain drain of graduates that will return to their home countries rather than fill jobs here in Ireland? I believe there is evidence of this in the medical profession already. Thoughts?

    Reply
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