When there is an influx of people to a new area, in an effort to escape the horrors of war, disaster and other hardships, local economies can be significantly strained. A humanitarian effort to help those in need is beneficial, but oftentimes the number of people in need can create circumstances where it is extremely difficult to provide everyone with their basic needs.

Normally, local economies are structured to provide for a relatively stable amount of people. The equilibrium of local supply and demand is stable, however, when an influx of people grows the demand for all types of goods at once, it creates a supply vacuum. This increase in demand and lack of supply creates a whole host of problems.

Turkey has absorbed about 200,000 Syrians. Many have become beggars, wandering in traffic, looking for spare change and unable to find employment. Others take up trades on the street, taking customers from existing Turkish vendors and businesses. These two cases are examples of the lack of supply and the increase in demand. The beggars along with the increased competition for some small Turkish businesses have created a hostile atmosphere against the Syrian refugees.

Lebanon is a more extreme example of the strain that refugees can put on an economy. One in 10 of Lebanon’s residents is now a Syrian refugee, escaping the war and famine that has eviscerated their homeland. This has created a range of problems similar to those seen in Turkey, however, the magnitude of the number of refugees seen in Lebanon is much worse.

Lebanon is a much smaller country than Turkey, and it is also taking in many more refugees than Turkey. Food prices in Lebanon have skyrocketed due to the increased demand from more than a half-million refugees entering the country in the span of a few years. Electricity was already faulty and has now been hit with a 27 percent increase in demand due to the housing of many of the new refugees. Again, similar patterns are immerging within Lebanon as they did in Turkey.

Just as Turkey experienced similar economic disruptions, the social aspect of the new population has put social tensions on the list of concerns for government officials in Lebanon. Some economists argue that the new populace has actually been beneficial to the local economies of rural areas in Lebanon because of an increase in spending in the local area.

In places like Canada, the effects of refugees are somewhat different. Typically, when developed nations accept refugees from other countries they are not accepting hundreds of thousands at a time. This difference is important because it means that local economies are not strained to the same extent.

A study by the Institute for the Study of Labor found that employed refugees in Canada were no worse off than average. However, the study also showed that the unemployed did end up needing significant government assistance.

The study concluded that refugees were not damaging to the economy and identified discrimination and lack of credential recognition as potential factors in unemployment rates amongst refugees. Better job training programs could help refugees adjust to a new economic landscape and help them integrate into the economic system.

The case of the Syrian refugees is one of the best modern-day examples of how massive amounts of refugees can disrupt local economies. In the case of Canada and other developed nations, it exemplifies how a smaller amount of refugees entering the country does not affect the economic and social situation in ways that are comparable to Turkey and Lebanon.

Context is important to see how refugees can affect local economics, but it is clear is that events that create massive migrations can be harmful to neighboring economies. Perhaps programs that help disperse refugees across more countries could be improved or expanded to reduce the impact that refugees have when overwhelming local areas. Nonetheless, it is important to recognize that it is in everyone’s interest to take in those in need and help them adjust to their own new realities.

– Martin Yim

Sources: New York Times, Reuters, Institute for the Study of Labor
Photo: Flickr