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In the debate surrounding the costs and benefits of having foreign students at South African universities, the financial contributions of foreign students to their host economies is sometimes cited. This article reports the results of a comparison between the economic impact on the Grahamstown economy of the spending of foreign and local students at Rhodes University. It finds that the spending patterns of both types of students are remarkably similar and that the somewhat higher economic impact of foreign students is largely as a result of their propensity to choose the more expensive residence accommodation, rather than as a result of greater average spending generally. We suggest that economic impact studies should be used with caution when making the case for continued public subsidy of goods with significant non-market values and that opportunity costs should also be considered.
South African Journal of Higher Education Vol. 20 (3) 2006: 532-545