Increased globalisation has not left the education system untouched. Completing education abroad is not only now more feasible, but also increasingly necessary for ambitious students from some countries. In higher education in the UK, this is reflected in the demand for university places from foreign students. This trend has implications for labour mobility as graduates are now more mobile and all students are taught in courses designed for the international market. An important issue in this context is the effect of an increase in overseas students for the higher education experience of UK students. Is there any evidence of a crowding-out effect in universities, whereby more places are now allocated to overseas students at the expense of home students? This has implications for governments targeting the number of young people in higher education. In the UK, the increase of overseas students in universities may impact upon the government target that 50% of 18-30 year olds attend higher education by the end of the decade. Another controversial aspect of this issue relates to funding. Does the chronic shortage of funding in the UK education system mean that overseas students, who pay substantially higher university fees than home students, are welcomed more than home students? This research will examine the possibility that foreign students are now greatly subsidising home students in UK universities. Courses taken by foreign students and the changes in this choice in recent years, is also of interest in this study. This gives a valuable insight into the skills that are demanded globally and should therefore be provided in UK universities in order to keep apace with the demands of the global workplace. The objectives of this research are to look at the effects of foreign students in the education system and also the changing skills required due to increased globalisation. We are able to investigate these issues using institution level panel data, drawn from administrative sources. In order to evaluate these particular effects of increased globalisation, an examination of how the student composition in UK higher education establishments has changed over the past 30 - 35 years is necessary. Analysing this using a regression framework allows one to see if there is any crowding-out of home students. Using the variation in institutions that provide places for foreign students allows us to see if there is a change in student inflows. This research enables us to see if globalisation has displaced home students from universities, or if there has been an expansion in the places offered to foreign students. It will give a clearer picture of how the education system has increased immigration, as the demand for globally adaptable skills has increased and previous barriers to labour mobility have been removed. It will also provide an understanding of the particular skills necessary resulting from increasing globalisation. This educational aspect of globalisation is not alone an issue for the UK educational system but also relevant internationally; countries that are losing university students to the UK may suffer from the "brain drain" phenomenon if their brightest and best students fail to return to their home country after completing their higher education in the UK.