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International Higher Education is big business. In the year 2008-2009 the United States earned approximately $17.6 billion from foreign students and their dependents.

In Australia, which is the fifth largest exporter of education behind the U.S. the U.K., Germany and France; education is the fourth largest export product behind gold, iron and coal. The U.K. has also formalized its competition for foreign students under the 2006 initiative called PMI2 meant to make the U.K. the leader in international education.

For the U.S. this new competitive climate offers many new challenges. Most of our foreign students come from Asia –India, China, South Korea and Japan in that order. India has put in place credible initiatives to retain its talented students instead of sending them abroad. China is creating its own institutions and engaging with leading American, British and Australian universities to develop the Chinese faculty.

These efforts, aided by the economic events of the past two years, are bringing about a reversal in the direction of professional immigration. “For the first time in American history, we are experiencing the brain drain that other countries experienced,” says Duke University’s Vivek Wadhwa, who studies reverse immigration. Wadhwa projects that in the next five years, 100,000 immigrants will go back to India and 100,000 to China, countries that have had rapid economic growth. This will tend to reduce the number of students that will choose American institutions to pursue their degrees.

But the pull to study abroad is a matter of academic reputation which brings with it global employability and in such an environment the U.S. has the edge. Regardless of whether or not the local university has U.S. accreditation, the U.S.-based institution with the best reputations will continue to attract the top students, for the time being.

In a study entitled Whither the Global Talent Pool, authors Douglass and Edelstein from U.C. Berkeley, estimate that in order to maintain their pre-eminent role, U.S. Universities will have to attract more than double the number of students they attracted in 2008 –going from 625,000 to 1.5 million students.

The new Chinese global higher education ranking agency at the Shanghai Jiao Tong University, focusing mostly on science, math and engineering, has gotten the attention of Chinese students and there’s evidence that their recommendations are being followed as a guide for applying to foreign universities.  Of the top 25 universities in the world in 2009, 19 were U.S. institutions, 3 in the U. K., 2 in Japan and 1 in Switzerland.

Prestige is, according to some social scientists, the most elusive of the three “scarce resources of society.” The other two, money and power, are more tangible and easier to assess. But prestige comes from sustaining a superior reputation over time and no negative outcomes to report, which is very difficult to obtain and to retain. For the foreseeable future the U.S. is the most prestigious, whether or not the experiments with the UAE bear fruit, but for-profit universities and gigantic government-funded efforts in China and India are catching up.

The question for US institutions is not whether or not to go global; the question is how to go global. It begins with an assessment of the institutions’ strengths and unique characteristics; these would have to be matched with assessed needs abroad to find a market niche. In order to go global it would be advantageous if your institution is multicultural and multilingual right now, if not you must begin working on that. Finally, if you are seriously looking at having a footprint overseas, it would be best if recruiting students would follow a previous successful involvement either through a research project or a partner institution, in other words, a set of coattails that will enable you to begin and sustain what is likely to be an expensive and long-term proposition.

More next week…