Language selection


1. Introduction

International education plays an important role in the Canadian economy. International Affairs commissioned Canmac Economics Limited to conduct this study to assess the value of the economic impact that international students’ spending in Canada has on the Canadian economy. This study is an update to the 2017 assessment[1] and uses the same estimation approach, although some minor adjustments of assumptions have been made.

The analytical approach used in this study included the estimation of total spending by international students (including tuition and fees, books, accommodation, transportation and discretional spending), and the estimation of the economic impact on the Canadian economy as of 2017 and 2018 in terms of exports,  GDP, labour income, employment and government revenue. The study provides the economic impact by province and territory and the level of studies, as well as the impact by the top 10 source countries.

This study covers long-term students at schools, colleges and universities, as well as short-term students. For the number of long-term international students (those pursuing education and training for periods longer than six months and requiring study permits), we relied on Immigration, Refugees and Citizenship Canada (IRCC) data. For short-term students (less than six months duration), we relied on Languages Canada’s data. In order to calculate student expenditures, we relied on data from various sources, including Statistics Canada’s annual Tuition and Living Accommodation Costs survey. The various data sources and adjustments are detailed in Appendix 1.

To capture the overall impact of total spending by international students on the Canadian economy, we used Statistics Canada’s interprovincial input-output expenditure impact model. In this study we quantified the direct economic impact associated with international student spending plus indirect impacts in the main body of the report. These include quantifying the activities of businesses (supply chain) providing goods and services to the direct expenditures occur (thus including direct and indirect impacts). As a result of increased labour income from the direct and indirect impacts, households may make further increases in overall expenditures. This is considered the induced impact. An impact study can include all three: the direct, indirect and induced impacts of an initial spending. This total impact can be considered the upper band of economic impacts, whereas the sum of direct and indirect impacts provides a conservative level of impacts on the economy. In this study, we focus on the direct and indirect economic impact on the Canadian economy for 2017 and 2018. Appendix 2 provides estimates of the total direct, indirect and induced impacts.

1.1. Methodology overview

Canmac’s approach to this study on the economic impact of international education in Canada included extensive secondary research involving reviewing literature, collecting existing statistical data and information, as well as consulting with representatives from the provincial and territorial education sectors, and representatives from organizations promoting and researching trends in international education in Canada and/or the provinces. In this section we provide an overview of the methodology. 

To capture the overall impact on the Canadian economy of total spending by international students, the expenditures of international students and their visiting family and friends were applied to Statistics Canada’s interprovincial impact simulation model. The model provides estimates of the overall impact on output, gross domestic product (GDP), household income, and employment in each province/territory’s economy. Figure 1.1 provides a diagram showing the I-O model impacts. The first step is the estimation of student expenditures. This is estimated by type of student and expenditure category for 2017 and 2018. The indirect effect is shown as the supply chain do the direct expenditures. The induced impact is the household expenditures from the direct and indirect impacts. The Statistics Canada I-O Model used is the extended model. The extended model includes the interprovincial feedback impacts of spending in province I that gets supplies from province J that in turn makes purchases from province I.

Figure 1.1: Economic impact

Figure1.1: Economic impact

When students spend money on a product (goods and/or services), that amount creates a direct requirement for the production of that product. The economic impact, however, does not end there. The increased production of this product leads to increased production of all the intermediate goods and services that are used to make this product, and the increased production of intermediate goods and services will in turn generate more demand for other goods and services that are needed to produce these intermediate products (indirect impact). As demand rises, workers are able to earn a higher wage, and they sometimes decide to spend a portion of their extra earnings on more goods and services (induced impact).

An economic impact analysis is designed to study such interlinkage between industries in order to evaluate how a change in an initial demand for goods or services contributes to changes in other industries’ levels of production and the overall economic activity level within a region.

The input-output model is based on the input-output structure of the Canadian economy, which is essentially a set of tables describing the flows of goods and services among the various sectors of the economy. Such a model is useful in determining how much additional production is generated by a change in the demand for one or more products or by a change in an industry’s output.

Currently, Statistics Canada uses the 2016 interprovincial input-output model to estimate economic impact and the results are used for comparative analysis purposes. It should be noted that employment impact estimates from this model are based on the 2016 total compensation per job. 

1.2. Report overview

In the main body of the report, we present our estimates of the number of international students in Canada by province and territory and by long-term and short-term study status. Then we present our estimates of their annual total spending and resulting combined direct and indirect economic contribution to the Canadian economy, and the importance of international education services to Canada’s trade with the rest of the world. We also provided historical comparisons of the value and impacts of international education to highlight its growing contribution to Canada’s economy. In addition, the study includes a comparison of economic impacts by the top 10 source countries.

The appendices provide more detail on the estimation procedures and the total economic impact including the induced effect.

[1] Roslyn Kunin and Associates (RKA) “Economic Impact of International Education in Canada – An Update Final Report” December 2017

Report a problem on this page
Please select all that apply:

Thank you for your help!

You will not receive a reply. For enquiries, please contact us.

Date Modified: