Syrian Refugees: From Burden to Benefit
Liam Fortin, Dartmouth Business Journal
Syria’s recent refugee crisis has instigated debates about the economic effects of refugees seeking asylum in foreign countries. While some countries, such as Hungary, are deploying armies to prevent refugees from entering, others such as Germany are openly embracing them in the hopes that they will bring economic benefits. The stark disparity in reactions naturally begs the question: what really are the economic effects of accepting refugees?
Since October, millions of Syrians have been racing across international borders to seek asylum from their war-ravaged country. Syrian refugees now account for one in five people in Lebanon and one in ten in Jordan. Both the World Health Organization (WHO) and the United Nations High Commissioner for Refugees (UNHCR) fear that these countries’ fragile infrastructures and limited resources may be approaching their breaking points, and that the mass exodus is altering the social, cultural and economic climate of Syria’s neighbors.
The notion that refugees pose an economic burden still remains prevalent. Many countries point to the initial costs of building temporary housing, feeding refugees, and paying for jobs and skills training. In order to prevent Syrian refugees from entering, some countries have even constructed barriers, and Hungary has gone so far as to deploy armed forces.
Refugees have also begun seeking asylum throughout all of Europe. Yet Europe, similarly to Syria’s neighbors, is providing little refuge, fearing that letting some refugees in will encourage more to come, and that these refugees are destined to become an economic burden.
An article earlier this month in the International Business Times reported that three hundred UK judges in an open letter criticized government officials over their repose to the migrant crisis saying it is “too low, slow and narrow.” In a September news release, Amnesty International cited key facts on resettlement efforts of Syrian refugees, noting that Germany and Sweden have received 47 percent of Syrian asylum applications while the remaining 26 European Union countries have pledged around 8,700 resettlement places, well under one percent of the refugees. Gulf countries, like Qatar, Saudi Arabia and Kuwait have offered zero resettlement places to Syrian refugees, as is also the case with other high-income counties, such as Japan.
Governments who refuse refugees typically emphasize the negative impacts that refugees might bring. They cite that the costs of strained public welfare budgets will hinder economic growth, reduce jobs, drive down wages and waste tax dollars. The UNHCR issued a report on the impacts of large refugee populations in January 1997, in which it cited how refugees in Zaire were receiving services and entitlements that were not available to the local poor populations.
But until recently, quantitative methods and empirical data that tell a very different story have been noticeably missing, as economists focused only on the “costs” of refugees on their hosts. Today, new evidence appears to defy public perceptions that refugees are a burden.
According to Alexander Betts, the Director of the Refugee Studies Centre (RSC) at the University of Oxford, refugees bring measurable economic benefits and development potential. They are a younger population with new skills and expand the consumption of food and commodities, which stimulates growth of the host economy.
“The RSC’s research has shown that, with socioeconomic rights, refugees can make an enormous contribution,” writes Bett in a June 2014 report entitled “Refugee Economies: Rethinking Popular Assumptions.”
Betts’s research shows that the economic impact of accepting refugees is generally positive, especially if immigrants are well-educated, as most Syrians are. Recent figures released from the U.N. and other aid organizations have shown that the majority of Syrians seeking asylum in Europe come from upper-middle class, and well-educated backgrounds. From an international trade standpoint, accepting Syrian refugees is a policy decision that could potentially lead to economic benefits.
In a recent report issued by the World Bank examining the impacts of Syrian refugees on Lebanese trade, a one-percent increase in Syrian refugees increased Lebanese services exports by about 1.5 percent, after just two months.
The main impacts, according to Roger Zetter of the Refugees Study Centre at Oxford University, “are seen in investment and capital formation – for example, in additions to the housing stock or to infrastructure, or in the start-up of new businesses.”
He cites the Eastleigh area of Nairobi, where many Somali refugees settled, as a textbook example. It can best be described as “a country within a country with its own economy,” according to the Norwegian Council for Africa, on account of its robust business sector.
Likewise, Afghan refugees expanded Pakistan’s trucking business, creating new markets for transport and adding to the productivity of the host country as well as international trade. Similar stories are found in the surprisingly resilient economies of Lebanon, Jordan and Turkey, despite the large inflows of refugees. According to the World Bank, Lebanon is predicted to grow 2.5 percent, which is remarkable considering the spillover from the war in neighboring Syria. Jordan and Turkey have also seen economic growth throughout the inflow of refugees.
Germany’s Chancellor Angela Merkel recognizes the opportunity Syria’s refugees provide because she is wary that Germany will soon suffer from the effects of an aging economy. Moreover, a study commissioned by the German government showed that migrants actually pay more taxes than they take out in public benefits, leaving a net surplus.
Last year, according to the International Business Times, Germany invested $2.7 billion for its 203,000 migrants, or just under $14,000 per refugee. This year Germany expects to accept 800,000 at an estimated cost of $11 billion.
Yet, many European countries, particularly Great Britain, continue to oppose accepting refugees, despite recent research that suggests refugees can actually benefit economies.
“A lot of politics is relatively fact-free in this arena, and we need to much better understand what drives migration before we can form the right policies,” Hein de Haas told The WorldPost. In general, “migration has a relatively small – rather than radical or negative – effect on economies,” Hein de Haas said.
The reality remains that more refugees are staged to flee Syria as the war escalates with Russia’s involvement. More Syrians are willing to risk the perilous journey, even for temporary asylum, to escape deplorable living conditions.
In light of new facts and research, political leaders need to see beyond the near-term costs of accommodating a new work force. If the international community allows itself to remain burdened by timeworn dogmatic thinking, then it stands to risk sacrificing the benefits of accepting refugees.