Refugees are often considered an economic burden for the countries that take them in, but a new study has found that asylum seekers receiving aid -especially in the form of cash – can actually give their host country’s economy a substantial boost.
Researchers from University of California, Davis (UC Davis) in the US found that these economic benefits significantly exceeded the amount of the donated aid.
The study examined the economic impact of three camps in Rwanda, housing refugees from the Congo.
In two of the camps, refugees received aid from the United Nations World Food Programme in the form of cash, while in the third camp the refugees received the same value of aid but in donated food.
Researchers used economic modelling methods, based on local surveys, to simulate the impact of the refugees on the host-country economy within a 10-kilometre radius of the three refugee camps.
They found that cash aid to the refugees had a greater positive impact on the host nation’s economy than did in-kind food aid.
“Our data support recent studies suggesting that although refugees have undergone forced migration and are often living in destitute conditions, they still are productive and can interact with their host country’s economy in positive ways,” said J Edward Taylor from UC Davis.
In the two cash-aid camps, each adult refugee annually received an annual amount of $120 and $126, respectively, transferred to accounts linked to cell phones provided by the World Food Programme.
Researchers found that each additional adult refugee in either of those two camps increased the annual real income in the local area by $204 and $253, respectively.
This was equivalent to 63 per cent and 96 per cent increases, created by each refugee in the two cash-aid camps, for the average per-capita income of Rwandan households neighbouring the camps, researchers said.
Most of that monetary “spillover” into the surrounding economy occurred when individuals and businesses within the camps purchased goods and services from businesses and households outside of the refugee camps, researchers found.
Refugee households inside the camps accounted for 5.5 per cent of the total income within the 10-kilometre radius of the three camps. And 17.3 per cent of the surveyed businesses outside of the camps reported that their main customers were refugees living in the camps, researchers said.
Looking beyond the immediate area, they found that the demand and spending generated locally by the refugees also raised the overall incomes and spending levels for the host country, Rwanda.
Each refugee in the two cash-aid camps boosted annual trade between the local economy and the rest of Rwanda by $49 and $55, the researchers said.
The findings were published in the journal PNAS.