International Students Key to Boosting Canada's Economy

For decades, international students have contributed to Canada's research enterprise, workforce development and economic growth.

Now, as Canada navigates strained relations and an escalating trade war with its largest economic partner, it's important policymakers stop overlooking international education that could be a critical factor in bolstering Canada's resilience.

Unlike volatile trade agreements and fragile supply chains, international education provides a stable, long-term economic and social advantage.

Contributions

In 2018, international students contributed $21.6 billion to Canada's post-secondary institutions, local communities and gross domestic product (GDP).

By 2022, that figure had grown to $37.3 billion . This represented just over 23 per cent of Canada's total service exports and around five per cent of total merchandise exports. The economic contributions from international education outpaced economic contributions from other industries - such as softwood lumber and auto parts.

But their contributions extend far beyond financial impact. International students drive cutting-edge research in artificial intelligence, clean energy, biotechnology and climate science. This strengthens Canada's innovation ecosystem and global competitiveness .

International students also serve as vital ambassadors - diversifying trade connections and expanding Canada's global reach.

Despite their undeniable value, recent policy shifts risk undermining Canada's position as a top destination for global talent. In early 2024, the federal government imposed a two-year cap on new study permits . The cap would mean approximately 360,000 study permits would be approved in 2024 - a decrease of 35 per cent from the previous years.

However, institutions fell well below the imposed cap . This wasn't due to a lack of demand but because of the rushed, poorly managed roll-out that amplified disruption beyond expectations. In fall 2024, the number of permits granted was on track to drop by 45 per cent compared to the previous year.

The government plans a further 10 per cent cut in 2025 and 2026 and will cap approvals at 437,000 . They will also, for the first time, restrict master's and PhD students - limiting access to Canada's research ecosystem.

Talent and innovation

While a cap may have been necessary to moderate the sector's growth, its rollout created uncertainty for institutions and students. This damaged Canada's reputation for high-quality education. The impact to our global standing as a top destination for international students will take years to repair.

This policy shift is especially concerning given Canada's ongoing innovation and productivity challenges. A recent report from U15 research institutions shows Canada lags behind its peers in the Organization for Economic Co-operation and Development (OECD). It's mainly falling behind in research and development intensity, private sector innovation and technology adoption.

In 2022, Canada's research and development spending stood at just under two per cent of GDP . This is well below the OECD average of around three per cent.

Many small and medium-sized businesses rely on university partnerships for research and development. Cutting international graduate student numbers disrupts these collaborations - hindering innovation at a time when Canada can least afford it.

Policymakers claim restricting international student permits will ease labour market pressures . But the real problems with the labour market lie in skill mismatches, underemployment and employer hiring biases - not the number of international students.

With unemployment at around six-and-a-half per cent and youth unemployment at 13.6 per cent, concerns about job competition are valid. Yet newcomers and international students face significant barriers in finding jobs in their fields.

In 2024, the unemployment rate for recent immigrants reached 11 percent. This is nearly double the unemployment rate for Canadian-born workers. Despite holding advanced degrees, two-thirds of foreign-trained professionals remain underemployed. This may be due to employers undervaluing international credentials and prioritizing "Canadian experience."

This trend extends to international student graduates who remain less likely than their Canadian peers to find jobs that match their level of education. In 2023, just over 36 per cent of international graduates with a bachelor's degree secured roles requiring a university-level qualification, compared to just under 59 per cent of Canadian graduates . International student graduates also earn significantly lower salaries, despite having similar levels of job satisfaction.

Like many newcomers, I personally faced this Canadian experience barrier when I entered the workforce over 15 years ago as a permanent resident. Despite my education, multilingual abilities and professional skills, I submitted hundreds of applications and secured only a handful of interviews before landing my first opportunity. This frustrating, unnecessary and economically wasteful struggle remains just as prevalent today .

These barriers not only limit individual potential but also weaken Canada's ability to harness the talent it attracts.

Addressing systemic issues

International students are more than workers - they're entrepreneurs, innovators and future job creators.

For instance, as of 2022, nearly 180 of the U.S.'s billion-dollar companies were founded by former international students . Each of these companies created an average of 800 jobs and made up nearly a quarter of all dollar companies.

Canada risks losing similarly bright minds to more welcoming countries if clear pathways for them to stay, contribute and build businesses aren't established. This would cost the country both talent and billions in economic potential.

If Canada is serious about building a stronger, more competitive economy, it must address the systemic issues that stand in the way of international student success.

This includes modernizing credential recognition so employers can fairly assess international experience and qualifications, expanding co-op programs, internships and mentorships so international students can gain relevant Canadian experience before graduation and protect them from misinformation and questionable recruitment practices.

Employers need to be educated about immigration pathways to reduce hiring hesitancy. The government also must create a stable and predictable immigration policy framework to give businesses confidence in hiring international graduates.

As Canada continues to face labour shortages and growing economic and political volatility, international education remains a strategic asset. It fuels research, diversifies trading partners, supports innovation and supplies the workforce Canada needs for long-term prosperity.

The future of Canada's economy depends on its ability to attract and retain the thinkers, creators, and innovators who will define the next generation of progress. At this critical moment, Canada must decide if it will invest in the talent that fuels innovation, or close the door on opportunity.

Isaac Garcia-Sitton is affiliated with the Canadian Bureau for International Education (CBIE), the Council of Ontario Universities (COU), and the Council of International Schools (CIS)