Graduate Schools as Development Strategy

When the number of international students increases in the US many people there rejoice. Foreign students who attend graduate-school usually stay in the US after their studies, create companies, and increase productivity. Attracting talented people increases prosperity. That is one of the reasons why many economists are so keen on immigration. A large percentage of companies in the US (last figure I saw was 25%) are founded by immigrants, and many of them went there initially as graduate students. Some Nobel Prize Winners went to the US as graduate students, Daniel Kahneman, for example. Strong graduate schools are engines of growth.

I see a potential in developing countries to emulate that. Building strong Masters and Ph.D. programs can be a developing strategy. There are many very talented people who do not have the means, the opportunity, or the favorable circumstances to study in richer countries. They however could study sound programs in poorer countries if those programs were available. There are several advantages to this approach:

1. Theses and dissertations can address important local policy problems and offer solutions, they become teaching material in undergraduate programs. Universities in "the South" can start producing useful knowledge more actively. 
2. Ph.D. and MA students can be excellent research assistants, adjunct professors, and mentors, and their cost is relatively low. Because of that graduate students can complement and contribute to academic excellence in undergraduate programs, which are usually more financially stable than graduate ones.  
3. Professors and students can interact with peers in richer countries to produce research, innovative teaching, and eventually get funding for collaborative projects.  
4. Strong graduate schools are in better position to interact with the industry to foster clusters of new products and services. 

There are some examples, like INCAE in Costa Rica and Nicaragua, Universidad de Los Andes in Colombia, and several schools in Mexico such as El Colegio de Mexico, ITAM, Tecnologico de Monterrey, etc. The African School of Economics is a new initiative that will start in 2014 in Benin, it was founded by a Princeton professor and the project looks promising. I have taught at AIMS (African Institute for Mathematical Sciences) Senegal, which is one of several centers across Africa (with others in Cameroon and Ghana, and headquarters in South Africa), and it is excellent.

Two more things: 1) it is expensive but worthwhile, and 2) what I have seen with universities in Ghana and Guatemala, is that with so many young people in those countries, and with their economies growing as they have in the past few years (at least in some sectors in Guatemala), universities quickly become centers of growth, they gain momentum and grow even faster.

Some potential problems:

1. Some people who have the capital or the power to make this happen probably do not know well   the way graduate schools work in richer countries. 
2. Regulations in some countries can make it very difficult to open new higher-ed schools. 
3. Graduate schools could become "enclaves of growth," meaning that there might be little external benefits.