Date of this Version
Yeutter Institute International Trade Policy Review, August 28, 2023
Historically, the higher education system in countries belonging to the Organization for Economic Cooperation and Developing (OECD), a grouping of advanced economies, and especially in the United States, has been a magnet for foreign students, both graduate and undergraduates. Graduate students tend to be supported by teaching and research assistantships from the hosting university and do not generate direct revenues for the hosting institution. They do contribute to the economy with their productivity in research projects and with their private consumption. In contrast, most undergraduate foreign students pay fees and tuition which are often higher than those paid by local domestic students. The difference between out-of-state and in-state tuition and fees captures the “price” differential between local domestic students and their foreign counterparts. The latter undergraduate group generates foreign exchange revenues for the country in which the hosting institutions are located. These revenues constitute export revenues although the export is “consumed” in the hosting countries, unlike corn exports consumed at destination in the importing market. Foreign students in OECD countries come predominantly from Asian countries. This discussion abstracts from interstate trade which occurs when a university student from a given state studies in another state. Here, we only consider foreign buyers of U.S. education services.