The nexus of national educational and migration policies and international student mobility (ISM) in Europe becomes strikingly visible in Luxembourg. ISM is central for higher education policy in Luxembourg, but also for larger questions of social integration and economic development. Based on a discourse analysis of the political debates surrounding the foundation of the University of Luxembourg in 2003, we analyze how and why ISM became a cornerstone of higher education policy in Luxembourg. Our findings reveal that, on the one hand, incoming student mobility – and the establishment of an international research university – was and is seen as a means of competing for the best and brightest, regionally and globally, and of securing human resources to satisfy a booming, internationalized labor market. On the other hand, outgoing student mobility has traditionally been viewed as the main mechanism to establish international networks across Europe and foster elites back home. Both incoming and outgoing mobility are thought necessary to establish and maintain a competitive and sustainable knowledge economy. Reconstructing the underlying rationales behind the support for ISM as the key to higher education policy, we explain why Luxembourg currently has the highest proportion of ISM worldwide.