Do more students studying abroad help the economy?
We are big believers in economies benefitting from diasporas and globalization of a country’s economies; opening up markets for its companies and people while allowing each company to manufacture where it makes the most sense. As part of this we wanted to look at the impact of having young people go abroad to receive a high-quality education, and then return; applying what they learned. Studying abroad is a badge of honor for much of the world’s elite. It is also, however, a source of frustration and disappointment for much of the world; it is indicative of a country that is often unable to provide for its best and brightest domestically. Students, that are forced to explore opportunities abroad.
For this divergence in motivation and benefits, we thought it would be interesting to look at what the relationship has been over time between GDP per capita growth and the growth of the % of students in a country that are studying abroad. We expected fat tails, where we would see that countries like Ukraine and Syria are experiencing exploding growth in the number of its students studying abroad, while certain developed countries would be experiencing the same, but more as a result of a global focus and mindset, rather than as a reflection of the poor state of educational institutions domestically. However, we did expect to see that those countries in Frontier Markets that over time have grown the number of students studying abroad would tend to exhibit a higher GDP per capita growth rate, as those students return to improve and build their native country’s economy.
What we found was absolutely no relationship between the number of students studying abroad as a percentage of total post-secondary students and economic growth. There is no indication that more or fewer students studying abroad have any impact on the economy. This most evident when we look at Frontier Markets, seeing the figure below.
Laos had one of the world’s fastest growing economies over the last 15 years, but the proportion of students studying abroad declined -8% on an annualized basis; largely driven by the dissolution of the USSR. At the same time, Tajikistan experienced a similar growth rate but had an annualized growth rate of 9% of students studying abroad. The same can be said on the other side of the spectrum. This is after removing the locations where a high proportion of students will always study abroad; islands such as those in the Caribbean and South Pacific.
Unquestionably, education is critical in improving the economic prospects of a country, where that education is sourced, however, is clearly irrelevant over the long-term; be it domestic or international. This was surprising to us. If you have any analysis which suggests otherwise we would be very interested to see it impacts. As a follow-on for which we could not find sufficient data, was of those studying abroad, what percentage returned and how does that correlate with economic growth. This could be directed to a country that found a way to contribute towards an individual’s education in return for their commitment of 2-5 years of working at home. Domestically, in Canada, this is used by the Northwest Territories to bring back quality graduates who would otherwise likely stay in Southern Canada.
Despite this data not showing us what we hope it to, we provide the countries with the least students studying abroad as a percentage of total post-secondary students below.
The countries with the most students studying abroad are provided below, but this is restricted to islands, given their fundamental difference from countries large enough to develop their own educational institutions.
The list below is the 10 countries with the highest proportion of students studying abroad that are not islands. In Qatar or Kuwait, 1 in 5 of the students that choose to pursue post-secondary education will go abroad.