Economic Significance of Universities for local economies

Source: The post economic Significance of Universities for local economies has been created, based on the article “Universities can drive economic expansion around campus towns” published in “Live mints” on 29th April 2024.

UPSC Syllabus Topic: GS Paper 2 – Governance – Issues relating to development and management of Social Sector/Services relating to Education.

News: The article discusses how universities significantly boost local economies by attracting students who spend money on tuition and living expenses. Economic Significance of Universities for local economies

What role do universities play in local economies?

Economic Contribution: Universities attract substantial fees from students. For example, Indian students at Boston University and Northeastern University contribute approximately ₹1,990 crore annually to Boston’s economy through tuition and other university fees.

Support for Local Businesses: The influx of students fuels local businesses such as shops, eateries, and accommodation services. This is particularly evident when students are present during the academic year, and the contrast is stark during summer breaks when many businesses experience a downturn.

Attraction of International Students: International students contribute significantly. In the U.S., Indian students alone account for about $19 billion annually. This kind of spending power benefits not just the universities but the local economies extensively.

How significant is the contribution of international students?

Financial Impact: International students contribute significantly to the economies of host countries. For instance, in the U.S., Indian students alone bring in approximately $19 billion annually.

Per Capita Earnings: This contribution translates into substantial per capita earnings from international students. Every American earns an average of $57 annually from Indian students, while every Canadian earns about ₹1,600 monthly.

What opportunities are missed in India?

International Student Deficit: India experiences a significant international student deficit, sending 1.33 million students abroad but receiving only around 47,000.

Economic Benefits Not Captured: This disparity means India misses out on economic benefits like those seen in the U.S., where Indian students contribute approximately $19 billion annually.

Underutilized Local Economic Growth: With more international students, Indian towns could see increased spending on education, living expenses, and local services, similar to economic activities around universities in countries like the U.S. and Canada.

Question for practice:

Discuss how the presence of international students at universities influences local economies.