How Refugees Can Strengthen Economies

Refugees the world over, along with being considered security threats, are blamed for sapping public resources and stealing jobs.

But some economists are now turning those assumptions upside down.

Letting refugees die at sea or languish in camps isn’t just morally reprehensible, goes the argument—it is not in anyone’s best economic interest.

Arab countries are at the forefront of the debate over how best to handle refugee flows. “Jordan and Lebanon are actually test cases internationally of whether we can do this better than we have in the past,” says Stefan Dercon, chief economist for the U.K. Department for International Development. Dercon spoke at the June symposium “For a Better Future for Syrian and Lebanon,” hosted by the Issam Fares Institute for Public Policy and International Affairs at the American University in Beirut.

Syrians make up the largest single group among the world’s estimated 22 million refugees. Although Western public opinion became focused on the Syrian refugee crisis in 2015, when record numbers began reaching Europe, Syrian refugees had already fled by the millions to other countries in the region. One in 30 people in Turkey is a Syrian refugee; one in ten in Jordan, and one in four in Lebanon.

Host countries should accept that refugees will be there for many years, argues Dercon, and the “traditional humanitarian model is not working anymore.” Providing basic benefits while not allowing refugees to integrate and to work breeds despair on the part of refugees and resentment on the part of surrounding communities that are often barely better off, he says.

Instead, Dercon advocates opening the job market to Syrians while providing more educational and entrepreneurial opportunities to all. This would be to Lebanon’s advantage too, he maintains. Lebanon could benefit from skilled and unskilled Syrian workers, he says. It could take advantage of Syrian businesses seeking to relocate and gain international support to boost the Lebanese economy and social infrastructure. Lebanese politicians should create investment incentives in labor-intensive sectors and view “the refugee situation as an opportunity to reboot the economy, creating job opportunities for Syrians and Lebanese alike.”

Likewise, Dercon said, international aid organizations need to broaden their focus beyond refugees to include the communities they live in.

Arab governments may be skeptical of Western experts telling them they should absorb millions of Syrian refugees into economies that already suffer from high unemployment. Yet similar advice is also being directed at European countries.

“The notion that refugees are an economic drag is a misconception,” argues a new report, which bills itself as “the first comprehensive, international study of how refugees can contribute to advanced economies.”

Refugees Work: A Humanitarian Investment that Yield Economic Dividends was published by the Tent Foundation, a U.S. nonprofit organization dedicated to assisting displaced persons.

The lead author of the report, economist Philippe Legrain, argues that unskilled refugees take the most low-paid and least desired jobs. Skilled refugees, he says, enrich the economy with their capabilities and innovations. They also help their home countries with the money they send back home.

The report is based on International Monetary Fund statistics and cites various studies on the economic impact of refugees by academics around the world. According to the report’s calculations, “investing one euro in refugee assistance can yield two euros in economic benefits within five years.” It notes that many refugee communities integrate so well in the West that they have lower unemployment rates than native-born citizens. It costs “only $35,750 to train a refugee doctor to practice in the U.K., compared with over $357,500 for a new British one.”

According to Stefan Dercon’s calculations, half of Syria’s most educated citizens have fled the country. Those who have made it to Europe may very well never go back, he says. Those who have settled in neighboring countries represent the best chance for Syria’s eventual reconstruction.

Yannick Du Pont, head of SPARK, an NGO based in Amsterdam that funds educational programs for Syrian refugees, says his organization has decided to “gear everything towards future reconstruction.” The scholarships SPARK finances are in fields such as construction and engineering, computer programming, agriculture, health, and education. The organization also seeks to train electricians, plumbers and other technicians. These are fields in which “there is a 90 percent chance of finding a job once peace breaks out,” says Du Pont. And they are generally fields that have employment potential in the countries that refugees are in now.

In Lebanon, which has a weak state, a volatile sectarian balance and a history of civil war, there is great political reluctance to admit that a million Syrians are now semi-permanently part of the economic equation.

But, says Du Pont, “they are there now. How are you going to deal with them? You’re not going to send them back across the border. So what’s your next move? This just makes basic economic sense. It makes sense in terms of security. Real situations dictate the options that politicians and communities have. You try to make the best of the terrible situation that everyone is in.”
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