The economic effects of refugee in host countries

By: Eshaq Barna

There has been a considerable debate about the refugee crises in recent years. Crises across the world, specifically in the Middle East, Asia, and Africa, have captured the world’s attention. The crisis of refugee derived by conflicts, natural disasters, discrimination, and other emergencies has caused millions of people to leave their homelands. These refugees often endure long and treacherous journeys, after which they have to figure out how to rebuild their lives. Many of them truly experienced challenges and difficulties through their journey, with many of them losing their lives, loved one, and relatives. To cover all the effects of the refugee crisis is a complex task since it’s a global issue.

However, in these tough times of political division and disagreement, many people are asking the question of whether humanitarian assistance can truly be effective in these crises, while there is evidence that offering humanitarian assistance can make a major positive difference that’s both effective and efficient.

Since the 1970s, the United States has taken leadership in refugee resettlement. In 1980, congress passed the U.S. Refugees Act which increased yearly quotas for refugees significantly. Over the past 40 years, the number of refugees admitted to the U.S. has depended on the situation of the administration as well as global conflicts and war; these instances cause the number of refugee to increase. In addition, the poorest countries in the world have the highest levels of refugee concentration. A large number of refugees live in the least developed regions.

Meanwhile, the economics effects of refugees on the host countries are felt from the moment of arrival. Refugees compete with local citizens for scarce resources such as land, water, housing, food, medical services, and other public services. Over time, the refugees place more substantial demands on other resources such as natural resources, education, health facilities, social services, and employment. Additionally, the refugees may put an inflationary pressure on prices in the market place and may therefore depress wages.   

Some the countries believe that refugees usually take advantage of public services before contributing to the economy themselves. Based on studies, on average the host country has to invest around $119,000 per refugee yearly and it takes years to settle one refugee.

Additionally, the host countries fear that refugees could take job opportunities from local citizens and raise the unemployment rate. Refugees, after arrival in their host country, usually start working in low-skilled jobs because of language barriers, cultural differences, working environments, and then move to more advance positions in the work place. Companies tend to employ refugees because of the cost and efficiency, and therefore, local citizens lose their job opportunities in the job market.

However, some people think that refugees are not necessarily negative; they could bring economic gain in the long run and it’s not necessarily negative to be accepting, protective, and empowering towards the refugees. They are a win for the host country; by providing them with rights to work, use health services, and attend education services, refugees can start productive lives and can be a productive force in their host communities. Therefore, they can integrate into the labour forces quicker, changing a refugee into a productive member of the host community.

Moreover, some studies have shown that the impact of refugees on a host community really depends on how the host society deals with refugees. Many researchers believe that refugees have a better effect on the local economy if they are allowed to have the rights and opportunities of work before their settlements, which usually takes a long time, because the refugees could create economic values through working.

Additionally, migrants engage well in entrepreneurship as compared to the local population because the refugees are more likely to accept more risk in business, such as creating a new business venture to create new economic opportunities, plus refugees will be able to create new jobs for everyone in the community.

Finally, we know that refugee became a global issue across many countries, especially in the Middle East, Asia, and Africa, creating a debate around the issue of whether it has a negative or positive in host countries and communities. Generally, the impact of refugees on host countries in the short run is negative because job opportunities are taken from local people, they lack skills, and don’t have enough understanding of the economic values of the host community. The host country needs to invest some capital in refugees for them to have the capability to enter public services such as education, health care, and other public goods.

However, according to researchers, the economic impacts of refugees on the host country can be positive in the long-run, specifically through providing the right of study and the right to work for refugees. This is because, in the long-run, refugees will change into an efficient work force in the job market of the host community. Moreover, in the long-run refugees can be a very powerful labour force for the economy of host country and the host country can see a sustainable growth in its economy because the labour force is one of the main factors for having sustainable economic growth. That’s why some the countries are investing millions into accepting refugees in their country such as Germany in recent years.  Refugees can play a fundamental role in having a sustainable economy and labour force in the long-run.

Eshaq  Barna currently doing master degree in business management at the faculty of Business and management, University of Technology Mara Malaysia, 

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