A trade deficit is a negative balance between a nation’s imports and its exports, so a country with a trade deficit is spending more on imports than it is receiving for selling its exports. Is there any more that can be done to reduce this deficit over the course of time? One potential solution the US trade deficit would be to increase the attractiveness of its higher education institutions to international students, and to therefore increase the amount of money coming into the country. Money from abroad that is spent in the US, such as on tourism, or in this case, on education, is considered an export.
President Obama identified a key element for future growth of the US economy as “exporting more of our goods,” and whilst this is a great way of decreasing the trade deficit, the actual ability of the country to create more manufactured goods or natural resources is fairly limited.
But the US has a great potential for growth in the services sector, including financial services, licensing fees, entertainment, and telecommunications. Education could be a particularly high earner for the US, if it were prepared to put more money forward to attract international students.
The US currently has around 691 thousand international students enrolled in higher education, with the tuition fees estimated to total around $13 billion during the 2009-10 academic year. Consider as well the cost of living for international students, and you can see that the economic impact of international students can be a major earner for the country.
A University of California at Berkeley Center for Studies in Higher Education paper was released in support of the development of US higher education as an export. The Obama administration has set a goal of doubling export growth by 2015. Whilst this is an ambitious target, it is not beyond achievable.
Increasing higher education for international students makes viable economic sense not only because the service itself is an extremely profitable one, but also because it will help meet future labour market and growth needs of the country, and fulfil "a diplomatic and cultural mission like no other form of trade”. International students can benefit from the experience of a well-organized educational system.
There have been countries that have recognised this opportunity for growth and acted upon it. Australia, for example, has grown its educational market to attract more international students, although it has recently announced plans to prop up the educational system with a price hike for lower school years. It seems that the demand for Australian education has been on a steady rise, and there has been a corresponding increase in spending and development by higher education institutions. In the opinion of Michael Andrew, Chairman of Australia's Skills and Innovation Task Force, after recognising the value of international students and scrutinizing the lengthy application process for higher education, Australia expects that the natural growth in interest will not be enough to keep maintain the industry's economic boom.
Andrew has highlighted the benefits of a strong educational policy which educates graduates to opportunities of forming strong links with Australian companies that currently operate in their home countries within Asia and India.
Australia, the US and Canada would certainly benefit from working harder to encourage learning in industries that are suffering a skills shortage. Foreign students provide what's been accurately called a ‘rich talent pool’ for industries that these countries have failed to utilize effectively.
America and Canada differ from Australia in that their markets for labour are already quite saturated, so pushing education as an export and the advantages it can bring to the economy can be overlooked as an investment into future economic development.
Exporting education can benefit the US in a way that not many other services can, by monetary gain, as well as by continual benefits should international students stay to ply their trades. And even those who don’t remain in the US will thereafter be advocates of the US educational system, and may inspire future generations to learn in the US. Finally, there will always be opportunities for the students to work in their own countries but under US corporations.
Whether or not the Obama Administration will meet the targets they have set by positioning education as an export is another question in its own right. The US can not expect to grow this lucrative industry without further pushes to attract foreign students looking to learn at the higher education establishments of America.
Either way, they are on the right track, and are onto how much of an advantage they have over other nations in the education system they can offer. With the right development and marketing, education, sold as an export, could grow to become one of the United States’ highest earners.
Andy studied International Economics at University but now works as a freelance Search Engine Optimizer and travel advisor for All Inclusive Holidays provider Tropical Sky. Comment here or follow him on his twitter @andym23
Photo by Evive: International Student Week