Evidence shows that refugees contribute to the economies of their new homes

Economic View: The distinction between economic migrants and refugees is not so clear cut. Many seek sanctuary in rich countries precisely because they do not want to be helpless refugees forever

Ben Chu
Monday 14 September 2015 07:36 BST
More than 378,000 people have entered Europe this year,according to the International Organisation for Migration
More than 378,000 people have entered Europe this year,according to the International Organisation for Migration (Reuters)

Support truly
independent journalism

Our mission is to deliver unbiased, fact-based reporting that holds power to account and exposes the truth.

Whether $5 or $50, every contribution counts.

Support us to deliver journalism without an agenda.

Louise Thomas

Louise Thomas


It’s clear where Roy “Chubby” Brown stands on the subject of refugee economics. “I am asylum seeker, we love all your benefits/You give us a house, car, money, NHS, and a glimpse of Jordan’s tits” the obscene comedian bellows in one of his charming ditties.

Chubby Brown doesn’t, mercifully, speak for Britain. Nevertheless this impression of refugees as an economic drain on the host community – as people who take but don’t give – is a depressingly common one.

It helps to explain why opinion polls still show a majority are against the UK accepting more refugees from Syria, despite pleas from the United Nations for European nations to do more, and even in the face of tragedies such as the drowning of three-year-old Aylan Kurdi in the Mediterranean as his family tried to reach Europe.

The idea that refugees are an economic burden is a myth. The evidence we have suggests the opposite. Of course, in the immediate term it does cost taxpayers money to shelter and feed the traumatised people who manage to escape violence and persecution in their home countries. But in the medium and long-term the evidence we have suggests that people fleeing across national borders for their safety generally end up contributing disproportionately to economic growth and living standards.

Research from Uganda, which has a large population of refugees from countries such as Congo and South Sudan, shows that asylum-seekers there are intimately plugged into the local economy as traders, consumers and business owners. In Kenya, proposals to shut down the giant Kakuma refugee camp, which hosts displaced people from 15 neighbouring countries, in the early 2000s provoked uproar from the local host community, similar to the outcry we see in the UK when a local hospital is threatened with the axe. Kenyans saw the camp as a major source of employment and commercial opportunities.

These are pertinent examples because there are far more refugees in developing countries than in rich ones. Amid the hysterical coverage of the refugee crisis in Europe it is often overlooked that of Syria’s four million refugees, two million are in Turkey and one million are in Lebanon.

But what about rich countries? Evidence from Australia (where attitudes towards refugees often make Chubby Brown sound like a spokesman for Amnesty International) suggests that refugees are more likely than other migrants to be entrepreneurs. A disproportionate number of asylum-seekers Down Under within a few years end up relying on income from their own unincorporated businesses.

There are many other examples of political refugees making a heroic economic contribution to their new homes. The influx of mainland Chinese into Hong Kong, fleeing first the Japanese invasion in the 1940s and then the economic lunacy of Mao in the 1950s, helped to power the British colony’s phenomenal success in the post-war years.

Among the refugees was a young boy called Li Ka-Shing. He built a great business empire and is one of Asia’s richest men.

Here in the UK an outstanding example of entrepreneurial refugees are the 40,000 Ugandan Asians who were admitted in the 1970s after the mass expulsion by Idi Amin.

Going back further, the tale of Michael Marks is one that deserves to be highlighted. He was a Jewish child from Belarus, then part of the Russian empire. He came to Leeds to escape the Tsarist pogroms in 1882. He worked for a tailoring factory in the city that employed Jewish asylum-seekers. Later he opened a penny bizarre market stall, and after that went into business with Thomas Spencer. If Britain hadn’t admitted this Jewish refugee we would today have no Marks & Spencer.

It’s not surprising that refugees often make a large economic contribution. Not everyone flees, even in the face of repression or death. As well as desperation, it often requires a certain level of determination and courage. Those that make it are often natural risk-takers.

Furthermore, the dictators and sectarian thugs that drive out communities tend not to be economically clued up about the human capital they are depriving themselves of. The imbecilic Amin is said to have expelled Uganda’s Asians after a bad dream.

This means that quite often refugees are educated, bringing with them skills that can be put to use in their new homes. Hitler drove out scores of brilliant Jewish scientists from Germany in the 1930s. Sir Ian Jacob, one of Winston Churchill’s aides, is said to have joked that the Allies won the Second World War because “our German scientists were better than their German scientists”.

The idea that there is a major refugee “pull factor” from the rich world’s welfare states is unsubstantiated. If anything, the pull factor seems to be the work opportunities on offer. Why are asylum-seekers who have arrived in Hungary so desperate to depart for Germany? Because they have a desire, ultimately, to work for a living, and Germany, rather than Hungary, provides that opportunity.

In truth, the distinction between economic migrants and refugees is not so clear cut. Many want to seek sanctuary in rich countries precisely because they do not want to be helpless refugees forever.

It’s worth noting that, even in the immediate term, if immigrants arrive in sufficient numbers their presence can be economically helpful. The distribution of humanitarian aid boosts government spending. Germany’s budget surplus this year will be smaller because of its government’s decision to welcome 800,000 asylum-seekers. That will help growth and result in a loosening of Berlin’s excessively tight fiscal policy. Thus we have a rare example of Angela Merkel’s government doing something macroeconomically sensible. The newcomers – equal to 1 per cent of Germany’s population – will also help to ease the country’s long-term demographic crisis.

As for Britain, when it comes to refugees, our own government often seems to do the wrong thing for the wrong reasons. A salient example is the tight restrictions on asylum seekers finding work. It must seem a Kafkaesque nightmare to refugees to be criticised for relying on benefits while being obstructed by the law from providing for themselves.

The debate about the admittance of refugees should not, of course, be dominated by economic concerns. Morality, justice and culture are, quite rightly, the dominant part of the mix. But the argument that we should refuse to accept our share of the world’s refugees because we can’t afford it is as feeble as Chubby Brown’s brand of humour.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies


Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in