Even without reviewing an article, “How to Raise a Global Kid: Taking Tiger Mom tactics to radical new heights, these parents are packing up the family for a total Far East Immersion” written by Lisa Miller at Newsweek on July 25, 2011,1 we easily conclude that international education is and will be one of the great businesses. A report released on October 28, 2009 estimates that “total expenditures by international students while they study here resulted in a $6.5 billion infusion to the Canadian economy in 2008.”2 Expenditures of international education students have now surpassed exports of coniferous lumber ($5.1 billion) and coal ($6.1 billion). The report also finds that these international students generated about $291 million in government revenue in 2008 and created economic activity that sustained employment for 83 000 Canadians.3
1.http://proquest.umi.com.libresources2.sait.ab.ca/pqdweb?did=2402602851&sid=4&Fmt=3&clientId=5337&RQT=309&VName=PQD
According to the report, the number of international students in Canada has more than doubled since 1998 to 178,000, and I believe this trend will be same because China and India, who are main consumers for this, maintain their economic health, and thus their incomes tend to increase.
For example, in earlier 1990, when the economy of China started to grow faster but their people were still in poor, studying in foreign countries including Canada was luxury product. However, in these days, due to their enough income to cover the cost, much more student come out to foreign countries; depending on the level of the consumer’s income, studying in Canada may be a luxury at low levels of income, a necessity at intermediate levels, and an inferior good at high levels. Therefore, we can conclude the study in foreign countries including Canada is normal product for Chinese; a product of which more is purchased as income increase is normal or superior product and when the coefficient of income elasticity is negative, the good is inferior. If income elasticity is positive, the good is normal; a normal good is usually luxury if income elasticity is greater than 1, otherwise it is a necessity.
Here, we need to also consider the concept of cross elasticity of demand, which measures how sensitive consumer purchases of one product are to a change in the price of some other product; Studying in Canada and USA are substitute goods or Staying and studying in China and going to Canada are also substitute; the number of Chinese student in Canada varies directly with a change in the cost of studying in USA or staying in China; we conclude the cross elasticity of demand here is positive, and this positive coefficient is large.
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