For the Irish case, given that money is being made available to fund PhD students, is it necessarily better that this would go to Irish residents or to EU residents instead of being opened up? If a bright Chinese student wins the competition, doesn't that yield benefits in terms of attracting bright people to Ireland? Ed Glaeser (talking in a general sense rather than specifically about this) argues that the best way for cities to grow is to attract bright people and let them do their thing. Restricting bright people from applying for your PhD funding is not a great way of achieving this. This is particularly serious in Europe compared to America as even the best universities in Europe have far more limitations in the extent to which they can provide their own funding to PhD students compared to US universities.
Related to this, if a bright Irish person gets accepted to a PhD programme abroad and at home, is it necessarily better for the Irish taxpayer if that person takes the home programme due to funding instead of being funded to take the programme abroad, particularly in cases where the programme abroad is better than the home programme? It really is an open question as to whether it would have been better had the 10 years or so of IRCHSS/IRCSET scholars gone away to whereever they would have got accepted, rather than doing their PhD to a large degree in Irish institutions. One model could be for every country to restrict some of its funding to natives but then to allow the natives to go to the best programmes they get accepted to.
A lot of the model now seems to be to retain bright natives and view foreign postgrads as effectively a cost. Does it make as much sense to think about viewing foreign postgrads as something worth subsidising and viewing native students going away as yielding more benefits than if they stayed at home?
Another way of putting this is that it is tempting to think that Spain is effectively free-riding by doing this. But perhaps it is inadvertently doing the opposite and instead pushing the brightest people in the rest of Europe from Spain to other countries.