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Refugees Effects On Economy, Employment And Social Infrastructure In Host Countries

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A refugee crisis refers to the movement of people from one country to another at a massive scale. Historically, we can see that from the migration of the French Huguenots during the reign of Louis XIV in 1685 to World War II from 1939 to 1945 till today, people have been displaced from their homeland as a result of war and persecution. According to a report produced by the statisticians of the UNHCR in 2016, 65.6 million people have been displaced globally. The UNHCR claims that if the displaced population was to form one country that country would be the 21st largest in the world. Keeping these figures in mind it can easily be deduced that when the huge populations of refugees reside in the host countries they do affect the economic sustainability of the countries.


Refugees have come into countries which already have a huge population to support with the limited monetary resources. 400,000 Rohingya Muslims have left Myanmar because they are being targeted as part of “ethnic cleansing”. Bangladesh has closed its borders to these refugees due to the fact that all the refugee camps are occupied and it cannot afford to provide them with more settlement facilities. Before a country takes in refugees it must take into consideration its own economic position and ensure economic security to its future generations. “The government will have to revise the budget and increase the allocation. Otherwise, projects will be shelved and expenditures will be cut,” said former finance adviser of Bangladesh Mirza Azizul Islam.

The countries who have accepted refugees are facing adverse consequences because money is required to fulfill the needs of the refugees. As stated by the United Nations, the financial needs of Syrian refugees increased from $0.8 billion in 2012 to $7.4 billion in 2015.

When economic pressure proliferates, countries are forced to take loans. Government of Jordan decided to integrate refugees into the mainstream society as a result of which the country took $147 million from World Bank as loan. It should be noted here that these loans need to be returned and any mismanagement of funds can make repayment impossible thus putting the country’s international reputation at stake. As in the case of Tanzania, World Bank had offered it “$100 million, split between a loan and a grant” to develop a sustainable approach to the inflow of refugees from Burundi and the Democratic Republic of the Congo. However, Tanzanian President John Magufuli rejected the offer on the basis that the country would have to borrow money and this cannot be borne by the economy.

In 1979, during the Soviet invasion in Afghanistan, arms and ammunition were provided to Pakistan to train the Afghanis to counter attacks from USSR. These guns were illegally smuggled into Pakistan by the refugees. Killing and kidnapping along with drug trafficking became common. Pakistan became one of the world’s leading countries for drug trading. During a raid at Jadeed camp explosive material and weapons was recovered. The refugees have been harassed in various ways which has portrayed Pakistan as a state which has failed to protect the refugees it is hosting. To counter this threat to law and order, money that would otherwise be used for development projects is being spent to strengthen the security forces. The security situation in addition to the attitude of the forces towards refugees will surely increase the risk of foreign investors withdrawing their money from Pakistani industries.

Pakistan is currently hosting 1.4 million Afghan refugees. It has become difficult for the present wealth of the country, GDP being 283.66 billion dollars, to support the population. “Pakistan cannot afford to host Afghan refugees any longer and has spent more than $200 billion in the last 30 years on them,” said Minister for States and Frontier Regions Abdul Qadir Baloch.

I have noticed that in our society many economic problems have emerged which had not been there in the previous years. Inflation rate is increasing rapidly as population growth is increasing. Arrival of refugees is one of the reasons of population increase which has led to an increase in demand of goods. The gap between supply and demand leads to inflation. The prices of goods are raised making it difficult for the locals as well as the refugees to afford the necessities of life.


Creating employment opportunities for the refugees places an additional burden on the budget of the host country. In order to keep the situation under control, countries have placed legal limitations regarding the recruitment of refugees in the formal sector. This encourages them to seek illegal employment in informal economy where the labor is exploited. In Colombia there are about 300,000 Venezuelan refugees out of which approximately 100,000 have crossed the border illegally therefore they will not be granted with work permits. Such refugees opt for jobs that do not actively contribute to the economy of the country therefore it is quite possible that with the increased population the country’s system might collapse.

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Other countries have agreed to provide refugees with adequate employment opportunities. This allows refugees to contribute to the economy and minimize the effects of population growth. Several steps have been taken in countries including Netherlands and Mexico to integrate refugees in the labor market. But at the same time it should be considered that these refugees will compete with the nationals for the jobs available. There will be a noticeable reduction in wages as more labor will be available meaning that the per capita income will decrease. Hence, revenue from tax collection also reduces. Unemployment being rampant, there will be a fall in economic growth. World Bank Group has revealed that economic growth fell under 2 percent in 2014 in Lebanon due to the inflow of Syrian refugees. Unemployment soared to 20 percent as the supply of workers increased. The only statistics available were of 2014 but surely now in 2019 these rates have increased even more. If economic growth fells further the country will not be able to promise a good quality of life to its citizens.

In Pakistan, due to the fact that the Pakistan-Afghanistan border is unmonitored many Afghan refugees have entered the country illegally. It is not possible to give an accurate figure of the number of illegal refugees because of unsatisfactory management conditions. According to the Foreign Act of Pakistan anyone who lives in Pakistan without legal permission will not be employed in the formal sector. So these refugees have to work as manual laborers and garbage collectors. Some of the Afghan refugees have joined the carpet weaving industry where they form more than 70 percent of the workforce. Others have established the gemstone trade in Peshawar due to which Pakistan has been able to receive US$27.562 million in terms of foreign exchange in the last five years (till 2016). Afghan refugees pour 34 billion Pakistani rupees ($325 million) into Pakistan’s economy.

In Peshawar I have seen shops devoted to household goods such as crockery that are set up by Afghan refugees. They are generating considerable amount of money. So it can be deduced that in Pakistan a huge amount of profit is being made due to the efforts of refugees which is not the case in other countries including Colombia that has been discussed previously.


The social infrastructure is also burdened as it has been developed keeping into consideration the national population of the host country. Overcrowding becomes a common element in hospitals and schools. In Mafraq, Jordan it has been seen that in some classes there are as many as 55 students in one classroom. Refugees who arrive from war torn areas usually require health assistance. A recent Danish study found that among a group of newly arrived refugees, 65% had one or more severe somatic health problems, ranging from liver carcinoma to tuberculosis and diabetes. These statistics show the extent to which the health facilities are burdened. Funds have to be allocated to improve the facilities further straining the economy.

In Pakistan, consumption of wood is also increasing as refugee camps are being converted to villages. One of the owners of a firewood stall in Mansehra said “We used to sell over 1,000kg firewood daily when Afghan refugees were here but now, our daily sales have reduced to 200 kg or even less than that.” This indicates that a major portion of the wood was being utilized by the refugees. Refugees are potential buyers for Pakistani goods and resources. However, exhaustion of such natural resources is not conducive to infrastructure expansion.

Nevertheless, the opportunities being provided to the refugees can be utilized by the nationals as well. A small example can be seen in the radiotherapy machine worth Rs. 710 million that has been provided to the Shaukat Khanum Hospital by the UN Refugee Agency to facilitate refugees along with the host community.

In my opinion, infrastructure is vital for economic development. Poor infrastructure also reduces the incentive of investors as they are in search of promising markets and this can lead to a significant decrease in foreign investment. Afghan refugees who were previously ordered to return to their home country have been promised citizenship. The organizational structures of Pakistan are poorly managed and the existing facilities are overburdened. So a plan needs to be devised for refugee settlement.


In order to develop a sustainable approach towards the world’s refugee crisis it is necessary that the skills of the refugees are refined through proper training. In Pakistan, 74 per cent of refugees are under 24 years of age. Given the demographics of the Afghan refugee population, youth empowerment is a possible solution for the problem. Interactive sessions can be organized by inviting experts and volunteers to mentor the refugees and to provide them with a platform to voice their opinions and ideas. They can also be integrated into the small scale industry to produce goods that have high demand in the international market. Carpets and footballs are some goods that can be produced using cheap machinery and manual work. Additionally, the developed countries who have sustained their economies for a long period of time should share the responsibility of the refugees with the developing countries who are hosting most of the refugee populations. They can conclude treaties and pacts regarding funds that need to be provided to the host countries. In February 2016, several countries including Germany, the United Kingdom, Kuwait and Norway met in a conference in London and promised support to Jordan in providing funds to create employment opportunities for the Syrian refugees by giving $1.7 billion in grants.


In conclusion, I believe that the refugee crisis does have a negative impact on the sustainability of host communities but the crisis cannot be declared as the sole reason why resources and finance of a country cannot be sustained. Due to the in depth research of the issue, I have really understood the reason behind the refusal of various countries to accept refugees and how their refusal has led to the development of anti-refugee sentiments. Initially, I also believed that a huge refugee population can never have favorable impacts on the host country but after studying the positive impact of Afghan refugees on Pakistan, I figured out that the refugees can be made productive for the benefit of the country if the global community as a whole carries out planning and organization to transform the negative effects into positive ones. The whole concept of a refugee crisis can be revolutionized if only the governments of countries are able to balance the situation and channelize investment to sectors that would exploit the talent of the refugees and tap their aptitudes so instead of making the conditions difficult they could actively participate in bringing about a change.

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Refugees Effects On Economy, Employment And Social Infrastructure In Host Countries. (2021, August 23). Edubirdie. Retrieved March 21, 2023, from
“Refugees Effects On Economy, Employment And Social Infrastructure In Host Countries.” Edubirdie, 23 Aug. 2021,
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