Why Trump’s new student visa rule could backfire on the US economy

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The F-1 visa is a non-immigrant category for students attending academic institutions in the US, while the M-1 visa covers vocational and non-academic programmes.

The new visa rules for international students in the US can incur a loss of $200 billion to $400 billion per year to the country’s economy, says a study in the Peterson Institute for International Economics

The new regulation caps the stay of international students in US universities at a maximum of four years. The rule also mandates that the students, mostly on F-1 visas, will transition to the new system “automatically”. They will hence face fixed admission deadlines and will be required to file for an extension of stay to complete longer degrees

It means disallowing many of them to stay back to work after they graduate, and can lead to mounting delays for routine extensions required to complete their courses

The rule has hence overturned America’s half-century-old policy of granting student visas that used to be valid until the student completes their course of study (“duration of status”), including a short experience of employment directly related to their classwork, just after graduation

How the new visa restriction can hurt the US economy

Education to foreign students is an ‘export’: According to a paper by Michael A. Clemens, a senior research staffer at the Peterson Institute for International Economics, the new restriction, disrupting the academic prospects of foreign students, will deter them from coming to the US in the first place. Clemens explains that providing education to international students is an export, contributing about 5% of overall US service exports. Hence, the drop in the number of students due to the complicated rules will deepen the US trade deficit, he says.

Shortage in supply of skilled workers:However, beyond this, the shortage of high-skilled workers resulting from the move will impact the country more, Clemens’ study says. “Americans should be alarmed at this final rule’s likely impact. It would drastically restrict high-skill foreign talent in the vital science, technology, engineering, and mathematics (STEM) fields that are at the heart of innovation and productivity growth in the US economy,” he writes in the paper.

Clemens points out that the US-trained, high-skilled foreign STEM workers who stay back after graduation patent new inventions at four times the rate of typical college graduates. They are also responsible for around 10 per cent of all inventions patented in the United States. They found fast-growing startup companies at six times the rate of US-born graduates, Clemens says. “The accelerating exclusion of international students from the US workforce will make the US economy less productive and Americans in general poorer.”

How much loss can it incur?

Clemens says he and his coauthors estimated the overall cost in an analysis commissioned by the National Academies of Sciences, Engineering, and Medicine. Taking a conservative estimate, a one-third drop in the annual influx of foreign students will cost the United States roughly $200 billion to $400 billion per year — roughly 0.7 to 1.3 per cent of its GDP, which is “a lost output equivalent to losing the entire economy of Utah or South Carolina”, the study says.

This includes the loss from products that will never be innovated, manufacturing processes that will never be developed, the startup firms that will never be established, the inventions that will never materialize, and entire industries that will never emerge

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Source: indianexpress.com