World Economy

Investing in Refugees Will Yield Dividends

Investing in Refugees  Will Yield DividendsInvesting in Refugees  Will Yield Dividends

Refugees in Europe are likely to double the money initially invested in them over a five-year period, an NGO has claimed.

Investing in refugees will create jobs, increase trade, spur economic growth, and produce other benefits, suggests a 77-page report out on Wednesday by the Tent Foundation, an NGO that helps people who have been forcibly displaced, EUObserver reported.

Drafted by the EU commission’s former economic adviser Philippe Legrain, the report draws its conclusions, in part, from calculations by the International Monetary Fund.

The IMF notes that additional spending in the EU on refugees of 0.009% of GDP in 2015 and 0.11% in 2016 will raise its GDP by 0.13% in 2017.

The report also concludes that an increase in net debt of €68.8 billion ($77.6 billion) by 2020 to fund investment in refugees would yield a total increase in GDP between 2015 and 2020 of €126.6 billion.

Every euro invested in refugees can generate two euros in economic benefits over five years, the report said.

Dispelling the myth that refugees are fundamentally an economic burden, the research finds that while welcoming refugees requires an initial investment, it quickly yields economic dividends as refugees both supply labor and create consumer demand.

  Not a Burden

Legrain points to the hundreds of thousands of ‘boat people’ who fled Vietnam in the 1970s and 80s. Today, Vietnamese refugees are more likely to be employed than people born in the US, and have higher household incomes.

However, in order for these economic benefits to be unlocked, refugees must be allowed to work, an area in which the EU currently falls short.

More than one million refugees and asylum seekers arrived in the EU last year, most of whom headed to Germany and Sweden.

But the EU is now turning back migrants from Greece to Turkey as part of a policy to manage a crisis that has cost the lives of thousands since 2014.

More than 1,360 people have either died or gone missing so far this year in their efforts to reach the EU.

Legrain, who is also a senior visiting fellow at the London School of Economics, says refugees should be seen as an opportunity.

“Refugees are often seen as a burden to be shared or shirked, when in fact they are an opportunity to be welcomed,” he said in a statement.

“With a suitable upfront investment and wise policies, hard-working refugees of all skill levels have a lot to contribute to the economy, individual businesses and the public sector.”

Giving them greater access to the labor market means they will produce more tax revenue and act as a fiscal stimulus in economies where demand is depressed, notes the report.

  US vs Sweden

The report also draws comparisons between refugees of the same nationality in the United States and those found in the EU.

It notes, for instance, that while a Somali refugee in Sweden is often on welfare and unemployed, the same national in the US is more likely to be a small-business owner or employed.

“This suggests that Somalis’ lack of success in Sweden is due not to their cultural characteristics but to the fact they start off as outsiders in a labor market whose institutions privilege insiders,” the report says.

The report notes that the US system provides refugees with greater opportunities to become self-reliant. It means their reliance on social assistance declines more rapidly over time when compared with their EU-based counterparts.

Working refugees also provide value for their families back home. By sending money back, they help boost local development. Remittances in Liberia amount to some 18.5% of its GDP.

It also highlights the success of Sergey Brin, a child refugee who left the Soviet Union for the US, and later co-founded Google.