Will the next generation of world leaders – the Manmohan Singhs, Benazir Bhuttos and Bill Clintons of the future – be educated in the UK? Our world-class universities explain why the UK is the most popular destination for international students after the US. The 400,000 that come to British colleges and universities each year make up the major component of the UK’s ￡15bn-a-year education exports, and are also a source of lasting value. They take friendships and loyalties home with them that later become trade links, cultural bonds and diplomatic ties.

Britain’s universities are a globally competitive export sector and well-placed to make a greater contribution to growth. With economic growth at a premium, the UK should be wary of artificially hobbling it. Despite an increase in the total number of foreign students, our overall market share in international student education fell by nearly 1 percentage point between 2000 and 2009. It is important to understand why Britain is slipping and what can be done about it.

Unlike many other countries, the UK makes no distinction between temporary and permanent migration. All migrants who stay for more than a year show up in the long-term migration statistics, regardless of whether they leave a few years later. That means students who study in the UK for more than a year are caught by the government’s net migration target, despite the fact that they have little long-term impact. Cutting international student numbers leads to rapid short-term reductions in net migration: smaller cohorts arrive while larger cohorts from previous years leave.