Only days before UN aid organizations called on the international community to donate more money to help almost 4 million Syrian refugees, a study showed that refugees not only cost money, but can also be profitable for the economy of their host country.
The United Nations Development Program (UNDP) and United Nations High Commissioner for Refugees (UNHCR) found that in Lebanon, the injection of $800 million worth of aid in 2014 led to an additional growth of 1.3 percent in the Lebanese gross domestic product (GDP).
Around 44 percent of the aid was injected into the economy in the form of direct cash to refugees, who used cards issued by UN agencies to buy food from Lebanese stores.
“The sectorial distribution of aid expenditures shows that the highest share of aid was allocated to food products (27 percent), followed by real estate, which includes rents (14 percent), chemicals, which includes pharmaceutical products (9 percent), education services (7 percent), transport (5 percent), clothing (5 percent) and health (5 percent),” the study said.
At the same time, the refugees had a negative effect on tourism and exports—with tourism falling by 23 percent and exports declining by 7.5 percent in 2014. They are also putting an extra strain on services such as water, electricity, waste disposal, primary education and health, while increasing competition for scarce jobs.
Whilst desperate refugees let themselves be stacked in dangerous boats to cross to a unhospitable Europe, often drowning on the way, few voices speak out about the profits these new citizens may also offer a country.
It took a German minister to make clear migrants are needed for the economy to go on growing, and a Dutch professor to explain why in the long run most countries need migrants to remain economically healthy.
In the past few years, Iraqi Kurdistan took in almost 2 million refugees and internally displaced persons (IDPs) on top of a population of around 5 million Kurds. This enormous task demanded major incentives from the government to house and feed them all, even though it had the help of the UN and other international aid organizations.
Until the war with ISIS started, the presence of refugees hardly had any negative impact on tourism or investments. Foreigners only stayed away when the threat of ISIS came too near for their sense of safety.
Last year, one of the main factors causing the recession was the fight between the governments in Erbil and Baghdad, which lead to the Kurdistan Region not receiving its part of the national Iraqi budget. Kurdish civil servants were not paid for months and government projects were halted.
In this climate, the money that IDPs brought in became one of the main factors preventing the economy from a complete collapse. Like in Lebanon, the refugees and IDPs added value to the economy.
Many Iraqi IDPs who fled ISIS and came to Kurdistan were still able to collect their government salaries. As a result, these people could rent houses, and the richer ones even bought apartments after prices dropped because of the recession—thus keeping the economy running.
For instance, the tourist town of Shaqlawa now houses 34,000 Arab IDPs and some 30,000 locals, and the economy runs mainly on the IDPs.
Whilst tourists stayed away—even local ones, who could not afford to come for lack of income—the IDPs pay the rents. They kept the local economy running, buying goods and services.
The owner of a computer shop there told me that now 99 percent of his services—and his income—comes from the IDPs. “I am not complaining, the work is good,” he said.
Some Kurds who were in a bad situation without a salary even moved in with family to be able to rent their house out to IDPs. In that way not only securing their own income, but also still being able to pay the baker, the butcher and the barber—so keeping the local economy going.
The economy of aid also helped, because more goods had to be imported for the refugees, more bread had to be baked, meat to be provided. Ventilators and water coolers were needed, their cars had to be serviced, they bought parts and petrol.
Of course there was a competition on the labor market, with the refugees and IDPs offering their services for lower wages. But at the same time more labor was needed with all these extra people living in Kurdistan and taking part in its economy.
Whilst the KRG could not pay wages, the international aid organizations did, and part of the local work force found work and income in helping the refugees.
