RSU Rector Prof. Aigars Pētersons: Education Export Is a Powerful Engine of Economic Growth

One of the tasks of Latvian foreign policy is to ensure economic development and to promote export. This is done by approximating Latvia to the top indicators in the European Union (EU) and the OECD, and by facilitating economic growth and improving Latvian visibility internationally. 

These aims are in line with a policy many universities have implemented to attract international students - admitting students from the EU, the European Economic Area (EEA) and OECD countries. The widespread rise in COVID-19 cases has negatively impacted both global and Latvian security as well as the economy. Higher education export is one of the safest ways to contribute to the recovery of the national economy during the global pandemic, including by organising studies remotely. Additional state support is needed to further digitise universities, for example. 

Judging by size of economic sectors, higher education export is equivalent to the pharmaceutical industry, and it has increased significantly in the recent years. 

According to the findings of a study conducted by the think tank Certus RSU international students’ total contribution to the Latvian GDP was 56.7m euros during the 2015/2016 academic year. RSU’s contribution to the GDP has more than doubled over 5 years. In 2020, attracting international student will increase the Latvian GDP by 96.2m euros, international students at RSU have indirectly created more than 1,000 well-paid jobs and direct tax revenues from RSU international students amounted to 15m euros per year. Guests visiting international students spend at least 2.3m euros a year in Latvia. This is a significant economic boost that cannot be ignored during the COVID-19 crisis. 

This contribution will continue in the coming years. In addition, it has been estimated that the Latvian economy will receive an additional 438m euros due to the export of RSU higher education services between 2021 and 2024. Currently, there are 2,600 international students at RSU: 40% from Germany, 38% from the Nordic countries - Sweden, Finland, Norway, Denmark. The funding sources for the expenses of almost all RSU international students come from abroad. For example, 84% of respondents pay for their studies from personal, or family savings, which has a positive impact on the state service account balance.

Education export goes hand in hand with science export and multinational relations in science. Education export has a direct correlation to universities’ rise in global ratings. RSU’s own funds are channelled to scientific development and the possibility to enter global ratings. For example, in 2019 and 2020 RSU set aside more than 2m euros for internal scientific grants and to support researchers. In 2020, external funding for science amounted to 2.35m euros (Horizon, Era-Net etc.). Public funding, on the other hand, only amounted to 1.5m euros. Scientific performance has grown significantly over the last 3 years. For example, the number of internationally cited Scopus publications has increased by 42%.

The COVID-19 pandemic has been a challenge for universities’ development - within a short period of time, universities have had to refocus and transition to online studies. This would not have been possible without prior investment into digital platforms. Digitalisation is a social vaccine against the global pandemic. This was also pointed out by Ursula von der Leyen, the President of the European Commission, on 16 September, during her speech at the European Parliament (EP). Ursula von der Leyen pointed out that the EU needs digital transition, especially concerning data, technologies and infrastructure. Moreover, the opportunities offered by a single market should be maximally used within the EU. The development path of RSU confirms this. 

Despite the global pandemic, the Latvian economy will begin to recover. The Bank of Latvia (Latvijas Banka) has reduced its forecast gross domestic product fall to 4.7% as opposed to 7.5%, as was forecast in June. This is a positive trend that should be used to increase Latvia's export capacity.

Latvia's dominant export countries are those with which there is a common border – Lithuania, Estonia, Russia. But these are not the only ones. Latvia has stable export to Germany, Sweden, Denmark, UK, the Netherlands, Finland and Poland. If Latvia wishes to maintain stable economic growth without jeopardising its internal and external security, the higher education system should focus on attracting students from EU and EEA countries. Sporadic insecurities in the world prove that countries that do not recognise European values are not predictable, and will not create long-term added value for the economy.

In 2019, public funding for education and science accounted for 29% of RSU revenue, totalling 71m euros. For comparison - in 2019 the University of Tartu had a turnover of 200m euros. Moreover, the turnover grows with every year. No university in Latvia has such a budget.

State budget financing for higher education and science for all Latvian universities in 2020 is only 68.7m. The University of Tartu is fully state-funded, whereas Latvian universities have to attract most of their funding from external sources, which they are able to do. Moreover, universities make a significant contribution to the Latvian economy. If state support remains as it is, expectations to make their way to the world’s top 500 universities are very low. 

Decisive action has to be taken in order to maintain national security and economic viability during the pandemic. Much stronger support for higher education and science export is needed through the allocation of public or EU funding. 

This will promote the attraction of international students and create more high value-added jobs. The National Development Plan provides for activities for long-term support of the economy, prioritising export companies with the ability to compete in international markets. Similarly, in higher education and science priority should be given to higher education and science institutions with export capabilities and the ability to compete in international markets. 

Prof. Dr. habil. med. Aigars Pētersons

Rector
Academic Staff, Department of Paediatric Surgery