Refugees in Rwandan camps increased the annual real income in the local economy by over $200
June 24, 2016, Washington, DC—Refugees can have a positive effect on local economies, according to a study published this week. Using data from two refugee camps in Rwanda, the study found that an additional adult refugee receiving cash aid increases the real income within a 10-kilometer radius around the camp by between $205 and $253 annually. This number is significantly more than the amount of aid each refugee receives ($120-$126), and reflects the fact that refugees interact with their local economy, purchasing goods from local businesses and providing labor.
In a third camp, where refugees received $113 of in-kind aid—providing refugees with food itself, not the cash to purchase it—economic spillovers were lower at $145.
“Economic impact of refugees” also found that, due to increased demand, refugees’ impact can be felt throughout the country. The study suggests that refugees stimulate trade between the local economy and the rest of the country by between $35 to $55 per year, per refugee.
“There’s a sense, particularly in the United States and Europe, that refugees are a burden on local populations,” said Mateusz J. Filipski, a research fellow at the International Food Policy Research Institute (IFPRI). Filipski said there’s a lack of research on the subject and that additional studies will be required to understand the full impact of refugees on host economies. “However, this study does show that, in these camps in Rwanda at least, refugees are not draining local economies, but contributing to them.”
The authors said that while the numbers in the report can’t be ascribed to the Syrian refugee situation in Europe and the Middle East, the general findings may apply.
“Syrian refugee migration is of a different order of magnitude, of course, but the same key findings apply there as to the Congolese refugees we studied in Rwanda,” said lead author J. Edward Taylor from the Department of Agricultural & Resource Economics at the University of California-Davis. “The worst-case scenario is to trap refugees in huge camps dependent on food aid, without the potential to interact and contribute to the economies around them.”
The study was published in the Proceedings of the National Academy of Sciences of the United States of America (PNAS). Mohamad Alloush, Anubhab Gupta, and Ruben Irvin Rojas Valdes from UC-Davis and Ernesto Gonzalez-Estrada from the United Nations World Food Programme also contributed to the article.
###
The International Food Policy Research Institute (IFPRI) seeks sustainable solutions for ending hunger and poverty. IFPRI was established in 1975 to identify and analyze alternative national and international strategies and policies for meeting the food needs of the developing world, with particular emphasis on low-income countries and on the poorer groups in those countries. www.ifpri.org.