The eruption of new conflicts, the worsening of old crises, rampant human rights abuses and catastrophic natural disasters have led to an unprecedented rise in the number of globally displaced persons during 2014 and the first half of 2015.[1] Whilst the global refugee situation is not a new international issue, the scale of the situation certainly is. The UN High Commissioner for Refugees (UNHCR) revealed in 2014 that the number of forced displaced persons globally had reached 51.2 million, the highest the figure had been since the post-World War II refugee crisis era.[2] In the year since, the figure has risen by an enormous margin to 59.5 million worldwide – the highest increase in a single year ever documented.[3]

The issue of escalating forced displacement is commonly categorised as having only social and humanitarian dimensions, and the economic impact is often ignored or considered only to be a burden. However, there are huge positive and negative economic effects associated with large-scale refugee influxes. If G20 nations increase their refugee intakes and financial aid to large host countries they can disperse the costs and realise the economic benefits of refugee resettlement whilst fostering inclusive growth. As the G20 directly engages the leaders of some of the richest and most powerful countries in the world, it can play a crucial role in creating an equitable and inclusive response to a terrible humanitarian crisis. In turn, the G20 can also reassert itself as an important and inclusive forum that effectively tackles pertinent international issues.

Redefining refugees as an economic opportunity

Refugees have long been conceptualised as a huge economic burden in political rhetoric.^[4] There are some elements of truth in this idea, but the negative economic effects tend to only be short-term. In Australia, refugees have the highest dependency on social welfare of all migrant groups for the first ten years after arrival, and are also disproportionately represented amongst unskilled workers and the unemployed.^[5] However, once refugees overcome the initial obstacles of settlement, these costs tend to fade to the level of non-refugee citizens.^[6] Over time, participation and unemployment rates of refugees converge towards those of non-refugees.^[7] Moreover, after arrival refugees are overrepresented in unskilled or low skilled employment, but do achieve high occupational mobility in the long term.^[8] Furthermore, refugees extend and diversify the skills and networks in host country business and industrial sectors, and increase trade and investment by establishing links to other regional and global markets.^[9] Refugees have an entrepreneurial spirit, as evidenced by a recent Australian Bureau of Statistics (ABS) study that found humanitarian migrants in Australia have the highest rate of business ownership of all recent migrants.[10] As almost 50 per cent of refugees are young people, there is also an argument that a rise in refugees can help offset an ageing population.^[11]

Broadly, the macro-economic effects of refugees on host country economies can be both positive and negative.^[12] Refugees can increase consumer markets for domestic commodities, create new markets, bring in new skills, provide employment and fill vacant employment positions in host countries.^[13] However, their presence also creates pressure on education, welfare services, healthcare services, and infrastructure such as transportation, sanitation, and water supply.^[14] These negative economic effects, however, are most likely to occur when there is such a large-scale protracted influx of refugees in developing countries. The impact has been observed to be different in the developed world.^[15] Often ‘better off’ host countries tend to gain from the presence of refugees in the region, whereas poorer host countries are negatively affected by competition for employment, food, services, and so on.^[16] Increasing refugee quotas amongst G20 countries, therefore, can be a means of not only meeting humanitarian obligations, but enabling these positive economic effects.

A recent report released by over 200 partners of the Regional Refugee and Resilience Plan (3RP) in Response to the Syrian crisis claims there is still a severe lack of funding in relation to the Syrian crisis.^[17] This is despite the growing impact some wealthy European frontline states are experiencing.[18] The report estimates there is a need for US$4.53 billion for assistance programs implemented by the UN and non-government organisations (NGOs), yet only 23 per cent of this figure has been met.^[19] Therefore, G20 governments must prioritise funding these programs to ease the burden on the governments hosting the most refugees.

Why should the G20 act on a humanitarian crisis?

The promotion of the G20 to a leader-level summit in 2008 was a response to the unprecedented challenge of the Global Financial Crisis (GFC).^[20] As one of the gravest international challenges of the twenty first century,^[21] the global refugee crisis demands another unprecedented response: G20 involvement in the humanitarian sphere. The G20, particularly during the Turkish presidency, has the potential to be a vital interface between the economic and humanitarian spheres whilst maintaining its core functions.

Despite being some of the wealthiest nations in the world, G20 members have been taking in small amounts of refugees relative to the rest of the world.[22] Developing regions host 86 per cent of the world’s refugees,^[23] and Least Developed Countries provide refugee protection to 25 per cent of the global total.^[24] There has been severe damage to the economies of nations hosting the largest amount of refugees as a consequence to this G20 inaction, because they simply cannot afford it. The negative economic impacts of the crisis on the nations of Lebanon, Jordan, and Turkey that necessitate this G20 action are illustrated below.

Lebanon

By the end of 2014, Lebanon was the third largest host country, supporting 1.15 million refugees.[25] Refugees therefore comprise over a quarter of Lebanon’s population and have had a considerable negative impact on unemployment and poverty in the region, and created further strain on already weak government finances.[26] During the period of 2012-2014, Syrian refugees alone have had an estimated fiscal cost of US$308-$340 billion on social security, health care, and education in the country.[27] Lebanon’s infrastructure was already constrained and thus ill-prepared to deal with the influx of refugees, which has resulted in an estimated fiscal cost of US$589 million.[28] Total public expenditure was expected to grow by US$1.1 billion during the same period, largely due to a dramatic increase in consumption of and demand for public services by refugees.[29] As Lebanon’s public finances were already structurally weak, the nation’s deficit was estimated to grow by US$2.6 billion during 2012-2014.[30] The World Bank estimated that the impact of refugees in the country would cut GDP growth by 2.9 points yearly, resulting in large losses of profits, taxes, wages, or private consumption and investment.[31] In 2012 alone, prior to a further rise in refugees, Lebanon’s budget deficit was 8.6 per cent of GDP, and its debt-to-GDP ratio was 134 per cent.[32] Whilst the UN has launched an appeal for funding, only 17 percent of the required figure has been met.[33] The already financially weak nation will struggle to shoulder these exorbitant costs alone.[34]

Jordan

By the end of 2014, Jordan was hosting 654,100 refugees, making it the sixth largest host country.[35] This has resulted in a significant population increase of 8 per cent to the relatively small country.[36] There have been severe macroeconomic effects resulting from the large-scale influx. The sudden influx of refugees has stimulated demand for consumer goods that far outweighs supply, resulting in an inflationary impact on the nation.[37] The enormous number of refugees looking to rent properties has led to a 7.7 per cent rise in rent, an increase which would have otherwise only been 2.7 per cent.[38] Imports have increased to meet the needs of the significant rise in population caused by the refugees, with non-energy imports seeing a rise of 11 per cent.[39] As Jordan has lost a vital trading pathway in Syria, its exports have simultaneously been decreasing, affecting the trade balance.[40] Furthermore, without the rise in refugees, GDP would have risen 4 per cent instead of the documented 3 per cent in 2013.[41] This 1 per cent amounts to the cumulative figure of government grants Jordan received in the same year.[42] Throughout 2013-2014, the Jordanian government’s public expenditure is estimated to have increased by 1 per cent of GDP to allow for the humanitarian needs of refugees, including the provision of health services, education, and electricity.[43] This added pressure on public services has also led to the deterioration in their quality.[44] The nation’s International Monetary Fund (IMF) supported economic program has helped with much of the fiscal costs of hosting the large number of refugees, but this alone is not sufficient or sustainable, nor should this cost be disproportionately borne by Jordan.[45]

Turkey

After the number of refugees in the nation rose to 1.59 million in 2014, Turkey became the largest host country for the first time.[46] Turkey has much more budgetary space to accommodate refugees than Lebanon and Jordan, however, this burden will soon become too much to withstand as the situation continues to escalate.[47] Similar to Jordan, Turkey has seen inflation rise due to a sharp increase in consumer demand for rental properties attributed to the influx of refugees.[48] Some of the local population believe jobs are being taken by refugees who will work for lower wages, which is supported by the rise in the nation’s unemployment rate to 10.1 per cent in November 2014.[49] However, there is some evidence to suggest this increase in unemployment is due to normal economic developments.[50] In fact, employers and businesses in the country believe refugees have filled low-skilled job vacancies that locals were unwilling to fill, such as positions in agriculture and manufacturing sectors.^[51] Furthermore, government expenditure on the rising refugee population has totalled US$4.5 billion to date.[52] This is a substantial cost for a nation that is not receiving adequate financial assistance despite urgently appealing for greater assistance in managing the mounting problem.[53]

Leaders of G20 nations should take advantage of their budgetary space and increase their refugee quotas and funding to ease the pressure on these struggling states and facilitate the economic benefits refugees create. The need for G20 involvement in a previously untouched area, however, is not just about what the G20 is; it is also about what the G20 can be.

What was once labelled the premier economic forum is now coming under increasing criticism for losing relevance and effectiveness.[54] From the outset the very nature of the G20 has attracted criticism of hegemony and a lack of inclusiveness.[55] The global refugee crisis requires collective action from wealthy nations to assist non-members and middle-power members alike, and is best served by cooperative direct leader involvement. Therefore, what is a humanitarian tragedy can be addressed in a manner that presents the opportunity for the G20 to reframe itself as an inclusive economic forum. Addressing the crisis in this manner provides a more equitable solution to the issue that considers the interests of non-member states, rather than ignoring the issue and thereby facilitating members to overlook the problem. This allows an opportunity to achieve more inclusive growth, particularly supporting Low Income Developing Countries (LIDCs), themes that are central to the Turkish G20 presidency.^[56]

Conclusion

The global refugee crisis is one of the largest humanitarian crises of the twenty first century, and effective global management will be the difference between an economic disaster and an opportunity for inclusive economic growth. The G20’s strength is that it provides a platform for leaders of some of the wealthiest nations to coordinate effective international responses. This strength can be employed to not only turn a crisis into an opportunity, but reframe the G20 as an inclusive and relevant forum. Whilst the number of globally displaced persons mounts, so does the cost that is disproportionately endured by some of the world’s poorest nations. The economic impact of a large-scale refugee influx negatively affects poorer nations more so than it does richer nations, therefore the more economically capable G20 states should do their part in managing the crisis to mitigate the costs and maximise the benefits. This should be done by simultaneously increasing refugee quotas and funding to programs and struggling host countries.

[1] United Nations High Commissioner for Refugees (2015) Preserving Life, Amidst Turmoil, http://www.unhcr.org/5461e5ed0.html, accessed 10 April 2015.

[2] United Nations High Commissioner for Refugees (2014) Global Forced Displacement Tops 50 Million for the First Time Since World War II – UNHCR Report, http://unhcr.org.au/unhcr/index.php?option=com_content&view=article&id=426:global-forced-displacement-tops-50-million-for-first-time-since-world-war-ii-unhcr-report&catid=35:news-a-media&Itemid=63, accessed 15 May 2015.

[3] United Nations High Commissioner for Refugees (2015), World at War, http://www.unhcr.org/556725e69.html, accessed 27 June 2015.

[4] Zetter, R (2012) “Are refugees an economic burden or benefit?” in Forced Migration Review, Vol. 41, No. 1, p. 50.

[5] Parsons, R (2013) Assessing the Economic Contribution of Refugees in Australia, http://www.mdainc.org.au/sites/default/files/Assessing-the-economic-contribution-of-refugees-in-Australia-Final.pdf, accessed 2 April 2015.

[6] Parsons, above n 5.

[7] Parsons, above n 5.

[8] Parsons, above n 5.

[9] Stevenson, R (2005) Refugees and Economic Contributions, http://www.crr.unsw.edu.au/media/File/Refugees_and_Economic_Contributions.pdf, accessed 29 June 2015.

[10] Australian Bureau of Statistics (2015) Personal Income of Migrants, Australia, Experimental, 2009-10, http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/3418.0Main%20Features12009-10?opendocument&tabname=Summary&prodno=3418.0&issue=2009-10&num=&view, accessed 18 September 2015.

[11] Stevenson, above n 9.

[12] Gomez, MP & A Christensen (2010) The Impacts of Refugees on Neighbouring Countries: A Development Challenge, http://siteresources.worldbank.org/EXTWDR2011/Resources/6406082-1283882418764/WDR_Background_Paper_Refugees.pdf, accessed 3 June 2015.

[13] Brima, E (2013) How Refugees Stimulate the Economy, http://www.latrobe.edu.au/news/articles/2013/opinion/how-refugees-stimulate-the-economy, accessed 10 April 2015.

[14] Gomez & Christensen, above n 12.

[15] Maystadt, JF & Verwimp, P (2014) “Winners and losers among a refugee-hosting population”, in Economic Development and Cultural Change, Vol. 62, No. 4, p. 770.

[16] Maystadt & Verwimp, above n 16.

[17] Regional Refugee and Resilience Plan (2015) 3RP Regional Progress Report, http://www.unhcr.org/558aa6566.html, accessed 29 June 2015.

[18] Andreychuk, R (2014) The Syrian Refugee Crisis and its Impact on the Region, http://www.nato-pa.int/Default.asp?SHORTCUT=3577, accessed 3 June 2015.

[19] United Nations High Commissioner for Refugees (2015) Funding Shortage Leaves Syrian Refugees in Danger of Missing Vital Support, http://www.unhcr.org/558acbbc6.html, accessed 29 June 2015.

[20] Cho, S & CR Kelly, (2012) “Promises and perils of new global governance: A case of the G20”, in Chicago Journal of International Law, Vol. 12, No. 2, p. 493.

[21] United Nations High Commissioner for Refugees, above n 2.

[22] United Nations High Commissioner for Refugees, above n 3.

[23] United Nations High Commissioner for Refugees, above n 3.

[24] United Nations High Commissioner for Refugees, above n 3.

[25] United Nations High Commissioner for Refugees, above n 3.

[26] International Monetary Fund (2015) Lebanon: Concluding Statement of the 2015 Article IV Mission, https://www.imf.org/external/np/ms/2015/051415.htm, accessed 3 June 2015.

[27] World Bank (2013) Lebanon: Economic and Social Impact Assessment of the Syrian Conflict, http://www.worldbank.org/content/dam/Worldbank/document/MNA/LBN-ESIA%20of%20Syrian%20Conflict-%20EX%20SUMMARY%20ENGLISH.pdf, accessed 3 June 2015.

[28] World Bank, above n 27.

[29] World Bank, above n 27.

[30] World Bank, above n 27.

[31] World Bank, above n 27.

[32] World Bank, above n 27.

[33] Andreychuk, above n 18.

[34] Andreychuk, above n 18.

[35] United Nations High Commissioner for Refugees, above n 3.

[36] Abdih, Y & C Geginat (2014) The Economic Impact of the Syrian Conflict on Jordan, http://www.imf.org/external/np/blog/nafida/093014.pdf, accessed June 3 2015.

[37] Andreychuk, above n 18.

[38] Abdih & Geginat, above n 36.

[39] Abdih & Geginat, above n 36.

[40] Abdih, Y, et. al. (2014) Jordan: Selected Issues, http://www.imf.org/external/pubs/ft/scr/2014/cr14153.pdf, accessed June 3 2015.

[41] Abdih, et. al., above n 40.

[42] Abdih & Geginat, above n 36.

[43] Abdih & Geginat, above n 36.

[44] Abdih & Geginat, above n 36.

[45] Abdih & Geginat, above n 36.

[46] United Nations High Commissioner for Refugees, above n 3.

[47] Andreychuk, above n 18.

[48] Turkish Economic and Social Studies Foundation (2015) Effects of the Syrian Refugees on Turkey, http://www.tesev.org.tr/assets/publications/file/09012015103629.pdf, accessed 10 June 2015.

[49] Turkish Economic and Social Studies Foundation, above n 48.

[50] Turkish Economic and Social Studies Foundation, above n 48.

[51] Turkish Economic and Social Studies Foundation, above n 48.

[52] Andreychuk, above n 18.

[53] Andreychuk, above n 18.

[54] Hajnal, PI (2014) The G20: Evolution, Interrelationships, Documentation, Ashgate Publishing: Farnham, p. 137.

[55] Beeson, M & S Bell (2009) “The G-20 and international economic governance: Hegemony, collectivism, or both?’ in Global Governance, Vol. 15, No. 1, p. 67.

[56] G20 (2014) Turkish G20 Presidency Priorities for 2015, https://g20.org/wp-content/uploads/2014/12/2015-TURKEY-G-20-PRESIDENCY-FINAL.pdf, accessed 2 April 2015.