U.S. losing market share of foreign students

Via Daniel Drezner I learn that

The market share of lucrative international students enjoyed by British and US universities has dropped sharply as Australia, Japan and New Zealand become increasingly popular destinations, according to an international comparison of education systems published on Tuesday....

The Paris-based [OECD] reported that US market share fell 2 per cent between 2002-3 while the UK suffered the fastest decline among OECD members, falling from 16.2 per cent in 1998 to 13.5 per cent in 2003....

The economist also recently did a survey on higher education. Here's some excerpts.

We've done very well in years past:

The European Commission estimates that 400,000 EU-born scientific researchers are now working in the United States. Most have no plans to return.

And we're still at the top of the heap:

Top universities are a valuable asset in the global war for talent too. America's great research universities enable it to recruit more foreign PhD students than the rest of the OECD put together. And a striking number of these people stay put: in 1998-2001, about two-thirds of foreigners who earned American doctorates in science and engineering said they had “firm plans” to stay, up from 57% in 1994-97.

Related is this list of the world's top 20 research universities; 17 are American.

The Ecomonist's take on the recent downturn:

For the past 50 years America has effortlessly dominated the market for international students, who have brought both direct and indirect benefits. Not only are they contributing some $13 billion a year to America's GDP, they are also supplying brainpower for its research machine and energy for its entrepreneurial economy. But now America's leadership is under challenge. The Institute of International Education reports that the number of foreign students on American campuses declined by 2.4% in 2003-04, the first time the number has gone down in 30 years. Foreign applications to American graduate schools fell by 28% last year, and actual enrolment dropped by 6%.

Coming after decades of steady growth, these figures sent shock waves through the academic system. Many American universities initially blamed the tightening of visa rules after September 11th 2001 and lobbied furiously for reform. Visa policy clearly played a part, but in fact America has been losing market share among international students since 1997. The biggest reason for that is foreign competition. In 2002-04 the number of foreign students increased by 21% in Britain, 23% in Germany and 28% in France. A growing number of European countries are offering American-style degree programmes taught in English. Germany has the added attraction of dispensing university education free to foreigners as well as to domestic students. Universities in the developing world, too, are expanding rapidly, and often a booming domestic job market stands ready to absorb the resulting graduates.

If we want to attract more of the world's best minds, then we need to change our immigration policy. My favorite policy mix is to build a wall along our southern border and sell the right to immigrate. There is nothing I would trust more than the price mechanism to produce the right mix of skills and talents in our labor force.