The Global Competition for International Talent

World Education Services 40th Anniversary Forum,                     New York City

Published October 2, 2014

Good morning! I’d like to begin by expressing my heartfelt congratulations to World Education Services as you celebrate the 40 anniversary of this important organization.

Over the past four decades, WES has played such an instrumental role in the international higher education community—an impact that is certainly felt and appreciated at my institution, the University at Buffalo.

So many in the WES community are associated with our university, including:

  • Executive Director Mariam Assefa, a very distinguished UB alumna;
  • And of course our own Dr. Stephen Dunnett, Vice Provost for International Education at UB and a longstanding board member and former chair of WES.

I am honored to join you today for this 40 anniversary forum on international students and economic development—a subject of critical importance to universities everywhere.  I’m pleased to have the opportunity to share some of my thoughts on this subject from the vantage point of U.S. higher education.

As president of an internationalized American university—and a former international student myself—I am keenly aware of how important it is for higher education institutions to attract the best students from around the world. 

From my education in India, Canada, and the U.S., to my time as a visiting scholar in Germany, Italy, and France, I feel very fortunate to have had a multifaceted cultural background—not just as an Indian immigrant to the United States, but as a global academic citizen who has had the opportunity to learn from many different cultures.

My personal experience as a student and visiting scholar abroad has taught me that geographic and cultural diversity in the classroom and in the campus community are vital to fostering a robust living and learning environment. 

That is why I am proud to lead a major U.S. university that is a global institution in scope and impact. I like to remind people that this has been the case from the very beginning. In fact, our first entering cohort in 1846 included a significant international population—2 of the 18 students in that first graduating class were Canadian students from just over the border!

Over the years, UB has grown tremendously.  Today, we are:

·         The largest and most comprehensive public research university in New York State;

·         A member of the AAU—the 62 leading research universities in the U.S. and Canada;

·         And an internationalized university that is ranked among the world’s leading global institutions.

We were the first U.S. university to enter into a partnership in China following normalization of relations with that nation, and we have approximately 80 exchange agreements with universities all over the world. And with more than 5,800 international students, UB has ranked among the top 20 U.S. universities for international enrollment for over a decade.

For UB, and nationwide, the impact of these students on campus and throughout the communities we serve is significant—economically, socially, culturally, and intellectually. As one window on this impact, let’s consider the economic significance of international students alone. 

Here in New York State, NAFSA estimates expenditures by foreign students and their families for the past academic year exceeded $2.8 billion, and supported more than 35,000 jobs. In Western New York alone, UB’s 5800+ international students contribute nearly $120 million and support over 1,650 jobs annually.

Nationally, this impact is even more profound. The Institute of International Education has reported that the number of international students at U.S. universities reached an all-time high of nearly 820,000 in 2012-13.

According to NAFSA, these students and their families contributed $24 billion to the U.S. economy in the past year. As you know, many of the students contributing to this increase of international students in the U.S. are coming from Asian countries—especially from India and China. And many of these immigrants are focusing their studies in STEM fields, pursuing careers in medicine, engineering, industry, etc.

From these trends, it is clear that “talent” has become the focus of intense global competition.

This is a relatively recent phenomenon that coincides with the emergence over the past 30 years of a global knowledge economy dependent on highly skilled and creative professionals and business leaders. 

These are typically in short supply, and typically part of a global market. This supply problem is becoming more acute with the rapid development of economies in Asia and Latin America, and the globalization of corporate business. Demographic trends—for example, the aging-out of professional elites in Europe, Japan, and the U.S.—point to future potential talent shortfalls of unprecedented scale. The so-called “skills gaps” worsen in various sectors of highly dynamic contemporary economies, as competitive advantage depends increasingly on “niche skills” specific to new industries and start-ups.

Let me offer my own university and its surrounding region as a case in point of the vital role global talent plays in the knowledge economy. For UB, building a strong knowledge economy through a strategic partnership of higher education, business and industry, and community leadership is an important part of our mission as a research university.

UB is playing an important role in the resurgence of Buffalo’s economy: through the impact of what we do every day, and through our economic role in entrepreneurship and commercialization through our partnerships with business and industry.

We are fortunate that our state’s elected leadership recognizes the critical role of higher education in driving a 21 century knowledge economy. For example, this principle is central to New York’s current strategy for regional and statewide economic revitalization. Governor Cuomo has established 10 regional economic councils to guide the implementation of this strategy, and has structured them so that each is co-led by leaders from the higher education and business/industry sectors. I am honored to have been appointed as a co-chair of the Western New York Regional Economic Development Council, which is creating valuable economic opportunities across our region.

As a major research university, UB’s research and innovation have positioned our university and our region to be able to seize these opportunities. This is particularly true in key areas where we have critical faculty strength and infrastructure, such as the sectors of health care and life sciences, advanced manufacturing, and information technology. As a burgeoning hub for these industries, Buffalo is drawing not only on our university’s faculty expertise and research capacity, but also on the talent pool of UB students and graduates—including many international students.

And this progress is focusing international attention on Western New York as a hotspot for innovation, discovery, and entrepreneurship. As a result, it is positioning our university and our region as a magnet for global talent.

Because of UB’s leadership, Western New York is increasingly attracting foreign-born talent—including the world’s best and brightest faculty and students, as well as highly skilled immigrants who recognize the valuable opportunities available here. For example, our Governor recently unveiled a statewide tax incentive program, designed to spur economic growth, which allows SUNY campuses to designate tax-free zones to attract new business partners.

UB has seized this opportunity. Right now, UB sponsors 2/3 of the approved companies across the state. We’ve attracted 16 companies already in less than a year—many of these are international businesses, and all have tremendous potential to attract skilled immigrant labor.

We are, of course, seeing the same trends nationwide. The U.S. remains one of the strongest competitors for the talent needed to lead the innovation economy. For more than 70 years, U.S. higher education has been particularly successful in attracting and retaining global talent.

And U.S. higher education, moreover, has become increasingly dependent on foreign talent to sustain its competitive edge in the 21 century innovation-based economy. Many of the international students who come to the U.S. to pursue advanced degrees go on to careers here in academia or research. For example, it’s estimated that about 80% of students from China and India completing doctoral degrees in the U.S. do not return home immediately after graduation.

The increasingly foreign-born faculty ranks at U.S. research universities attest to this fact, and to the full emergence of a global marketplace for academic and research talent. Depending on the discipline, faculty and post-doc searches in the U.S. typically attract candidates from multiple countries.

A survey of enrollments in U.S. graduate programs in STEM fields—where there has been the greatest growth—reveals an often very high proportion of students from other countries. At UB, for example, our graduate programs in computer science and electrical engineering are currently between 85 and 90 % international.

In part, this is due to a diminishing pool of U.S. students interested in pursuing graduate work in STEM fields, because of cost/benefit considerations and other factors. Many international students in STEM fields go on to contribute to the innovation economy directly, developing new technologies or techniques and becoming founders of new companies. One study found that immigrants helped found one of every four U.S. tech start-ups in the decade between 1997 and 2007. A recent Brookings Institution report (2014) found that 45% of international students in the U.S. remain in the metropolitan areas of the institutions they graduate from in order to gain professional work experience through Optional Practical Training (OPT). 

Host communities of large international student populations thus benefit twice: First, by what the students spend on their higher education and related costs, which typically has a significant local economic impact; and second, through their direct contributions to the local economy once they enter the workforce.

And international students, especially those eventually sponsored for work visas, contribute importantly to their host U.S. cities by facilitating business and trade linkages back to their home countries. Acting as “bridges” between their home and destination countries, international students thus often benefit both.

Unfortunately, current U.S. immigration policy still creates significant impediments to those wishing to pursue careers here—particularly in the private sector. But the best global talent ultimately succeeds in the U.S. environment, which is particularly supportive of entrepreneurs and offers attractive conditions for start-ups—including effective regulatory systems and excellent capital markets.

While the U.S. has long been the biggest magnet for global talent, this position can no longer be taken for granted. The 2013 Global Talent Competitiveness Index ranks the U.S. only 9 in the world, behind top-ranked Switzerland, Singapore and Denmark. And despite having the largest number of international students, the U.S. share of international students worldwide has been steadily declining—from 28% in 2001, to 19% in 2012, according to IIE.

At the same time, other countries like Australia, New Zealand and Canada have seen significant growth in their market share of international students—thanks primarily to aggressive recruitment strategies and progressive immigration policies. And while international enrollment as a percentage of total has grown slightly in the U.S., this figure remains relatively small, at 3.9% (compared to 26% in Australia and 19% in the UK).

An increasing share of this total is comprised of undergraduate students. The drop in U.S. market share occurred during a period in which the global pool of international students nearly doubled to 4.5 million in 2012. This number is expected to grow to 7 or 8 million by 2020.

Clearly, the rapid growth in the number of international students—particularly undergraduate students, who constitute more than half of the total—involves the increasing mobility of more affluent students with more modest academic attainments. Nonetheless, the competition for global talent continues to increase, and involves a larger number of receiving countries.

As one example, China has become a major draw for international students, particularly so from other Asian countries. China’s current international enrollment (328,000) is rapidly approaching half that of the U.S. Again, the increased attractiveness of elite universities in Europe and Asia, as well as the appeal of immigration policies more friendly to international students, have intensified the competition for global talent and increased the challenges faced by the U.S.

Opportunities in the U.S. private sector continue to be significantly constrained by employment-based visa and green card bottlenecks. Rapidly increasing costs likewise place U.S. higher education at a competitive disadvantage. Even cost-competitive public universities have seen costs escalate for international students, due to prolonged state budget crises and the resulting divestment by state governments.

Budget cuts to funding agencies like NIH and NSF also negatively impact the ability of research universities to attract and retain global talent, since these agencies fund many graduate students and post-docs in scientific, biomedical and technical fields. In addition, efforts to “right-size” doctoral programs at American universities may also negatively affect U.S. capacity to recruit as many of the best graduate students from around the world.

While the overall U.S. economy is picking up steam, it is not creating enough new jobs for highly skilled professionals—as it did in the 1990s—to significantly enhance its attractiveness to foreign talent. The paradox is that not only the U.S. but many other developed and developing countries will face shortfalls in their highly skilled workforce in the years ahead. A McKinsey study anticipates an estimated potential shortfall of “40 million high-talent people across the world in the next two decades” (GTCI).

So what is the future outlook for the competition for global talent? I’d like to conclude by offering what I see as some of the critical “push” and “pull” factors at stake. As I’ve discussed, in terms of “pull factors,” the U.S. is not as strongly positioned as it once was, despite improvements to the economy and relatively healthier budgets at U.S. higher education institutions. But are there “push factors” that favor the U.S. in the competition for global talent? Lack of higher education capacity elsewhere will continue to be a push factor for the foreseeable future, as countries like China and India are unable to furnish university places for all the students who desire them.

In addition, economic conditions and employment prospects in key sending countries constitute a major push factor. Here again a key example is India, which continues to struggle to provide both university seats and employment prospects to its enormous population of young people. The U.S. is one beneficiary of this situation, with a large recent spike in the number of master’s-level Indian students applying to U.S. higher education, particularly in STEM and business programs. The latest survey by the U.S. Council of Graduate Schools found an unprecedented 33% increase in the number of graduate applications from India between fall 2013 and fall 2014!

Does the growing unemployment crisis due to economic stagnation in Europe and elsewhere likewise represent an opportunity for the U.S.? Perhaps, but push factors like unemployment are complex phenomena. While the H-1B bottleneck inhibits U.S. ability to import IT talent to meet growing demand, the Global Competitiveness Index Report notes that although there are 26 million unemployed citizens in the European Union, there are expected to be nearly 1 million unfilled Information and Communications Technology (ICT) positions in the EU by 2015.

Such asymmetries between labor market needs and available, properly trained talent obviously complicate the picture. And the continued flow of students to the U.S. recalls familiar concerns about “brain drain” and the net loss to sending countries of native talent and the resources involved in paying for their education abroad. 

At the same time, the absence of comprehensive immigration reform, and thus a rational, proactive policy for retaining global talent, will gravely impede U.S. efforts to continue attracting and retaining the best and the brightest from around the world. And the increasing competitiveness of other host countries and education systems mean the U.S. will continue to lose market share—and thus have less “surplus” talent at its disposal.

Moreover, neither push factors nor pull factors provide any assurance that global talent, once attracted, will be retained. And to some extent, talented elites prefer the option of global mobility, as they seek ever more advantageous positions—often in one or more countries.

Does this mean that global talent simply cannot be retained longer term? Certainly there is no guarantee. But a truly integrated global economy should in principle allow for convenient professional mobility—for more than just the privileged elites.

I have no crystal ball, but from the trends we see before us today, it is plain that the competition for global talent is only continuing to intensify. And one thing is clear: the United States can no longer afford to be complacent about our position in this global marketplace. This is why comprehensive immigration reform is so desperately needed in the U.S.

Our immigration system, as it currently stands, is broken. Restrictive American policies set up unnecessary roadblocks for foreign students seeking to enter the U.S. to study or conduct research. The shortage of green cards for employment-based immigration means that we risk turning away global talent—resulting in significant negative economic impact to their host regions.

As the pool of local talent shrinks in U.S. cities, businesses and companies increasingly are forced to look overseas for a highly skilled workforce. And more and more often, other countries with friendlier immigration policies are only too happy to accommodate the students, scholars, and skilled immigrant talent we are turning away because of these restrictions.

As a border city, we see this phenomenon often in Buffalo. More and more students are choosing to study in Canada, rather than the U.S., because their immigration policies are well-known to be far friendlier to students. In fact, Canadian advertisements to this effect appear frequently in U.S. newspapers and billboards.

Increasingly, we are unable to keep even the students who do come here. Among the international students who do graduate from our U.S. universities, many are choosing to seek employment across the border, where they have much greater chances of success.

The U.S. would do well to emulate the example of our neighbor to the north. And we have taken some strides in this direction. Last year, the United States Senate passed comprehensive legislation that would work to reverse these trends and uncap the onerous limits on green cards and H1-B visas for our best and brightest graduates. Our own member, Senator Chuck Schumer, led that effort because he understands the importance of international students to our New York institutions. 

Of course, fixing the U.S. immigration system, alone, will not solve the whole problem. Our dependence on global talent points, at least in part, to the need to develop more of our own domestic talent. We need to do a better job of educating our own American students, particularly in the critically important STEM fields, so that they are prepared to compete successfully in a global marketplace. And higher education institutions have a vital leadership role to play here as well—in partnering with K-12 schools to ensure that our students enter college, and the post-graduate marketplace, ready to thrive professionally.

Addressing this domestic need is a key priority for U.S. education now, as it should be. But in the meantime, we must also continue to press for comprehensive immigration reform. We need to implement a reasonable immigration process that preserves and expands our capacity to attract and retain the most talented students, scholars, and faculty to our universities and our communities.

We need to ensure that we remain a magnet for the best global talent—and the businesses and industries they help to drive. International students and scholars are vital to our universities, and to the communities we serve locally as well as globally. And higher education institutions have a critical leadership role in helping to increase awareness of just how important this global talent is to U.S. prosperity in the immediate and long term.

Thank you for opening up this important dialogue today. And thank you for the opportunity to share my perspective on these issues from the vantage point of an immigrant, and a U.S. research university president.