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One of the consequences of demographic change is a possible decrease in the European supply of graduates. Europe has to fill the gap in young talented workers. The best way to attract young workers from developing countries (which do not have the infrastructure to provide all their qualified youngsters with the needed human capital) is through the internationalization of higher education in Europe. This challenge is intimately related to that of increasing intra-European mobility. Internationalization is necessary because of the requirements of European labour market and the need to increase European innovation capacity. However, Europe is not doing enough well with respect to internationalization. Policy conclusions are drawn.