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What on Earth is a Refugee Economy?

Updated: Mar 15, 2021

By Lamisa H. and Tahmina R.

The current global refugee regime was never fit for purpose, with over half the world’s refugee population living in temporary camps while they await visas. The greatest risk of this system is that the refugees become completely dependent on short-term aid. The refugee crisis has turned from a humanitarian crisis to a development crisis. Ultimately, providing aid in a vacuum is never sustainable and we need innovative, integrated solutions that work in the long term.

Keeping this in mind, an organisation that we have worked closely with in the past, Refugee Support Europe (RSE) recently moved out of the camps in Greece and relocated their operations to Cyprus. Although heartbreaking, the reason they did this was because they felt the residents of the camps they were working in for over two years were becoming dependent on their aid and felt that their presence was stunting the relationship between the Greek government and the residents that were under their care. In fulfilling immediate needs they had inadvertently created a situation where the residents of the camp were becoming very reliant on their aid alone. 

What is dependency theory?

Dependency theory suggests that there needs to be a reassessment of the relationship between the aid provider and receiver, to empower the latter. Barbara Harrell-Bond wrote as early as the 1980s that long term humanitarian assistance can undermine agency and fail to recognise or nurture the capabilities of refugees. It is like a double edged sword, helping in the short term, but often harming in the long term. With RSE, it was as simple as knowing when to leave. When they became aware that the residents were becoming dependent on their aid. So, after over two years of service in a camp that was never meant to be used for that long nor expand to the size that it eventually did, they decided to leave. 

While the role of aid cannot be understated in the short term, without long term strategies for moving residents out of there is a risk that decades will pass before they can leave. The average stay in a refugee camp is 17 years. The greatest risk here is that these camps will turn into ghettos and that an entire generation will be raised in conditions deprived of the entitlements enjoyed by citizens. There are situations where refugees have been in this limbo stage for decades, such as with the camps in Bosnia that have over the past two decades turned from short-term camps to long-term camps to what are now effectively ghettos. They have very minimal rights and protections and in this vacuum, agencies like the UNHCR and NGOs of all sizes try to fill the gap in resources and protection.

What was most impressive to us, was that the co-founders, John and Paul, were able to look two or three years ahead and realised that nothing would change unless they removed themselves from the equation. It was their ability to look outside their emotions and consider their situation as objectively as possible. Had they stayed and stretched their resources as long as they could, all they ever could have achieved beyond what they had already done is to sustain the delivery of food and clothing. But the circumstances of the camp, how far it was from the city, its distance from other camps and location in the mountains meant that beyond making the residents comfortable they were now contributing in such a way as to make it easier for the Greek government to keep the residents there for years, or even indefinitely. For more, have a read of the interview we did with Paul last year. 

What on Earth is a Refugee Economy?

RSE in the last two years has dedicated their projects in Cyprus to funding small business ventures and entrepreneurship by the refugees they are working with. This change in their operations is reflecting a shift in focus from ‘helping’ in the short term to better understanding how they assist residents of the camps in using their economic potential. With a growing number of displaced people and a declining global willingness to provide protection, we need more solutions that integrate refugees as a part of the solution to providing effective aid and to keep in mind that refugees are a key part of the private sector. 

‘Refugee Economies’ by Betts, Bloom, Kaplan and Omata ‘Refugee Economies’ use the concept of ‘refugee economies’ to describe the economic potential of refugees living in exile. They argue that if given sufficient support and opportunity, they themselves can play an active role in securing a sustainable future for themselves. As it stands, their labour is often absorbed with little recognition into the informal economies of the states that they are hosted in, making them especially vulnerable to exploitation - or as Ranabir Samaddar writes, “capitalism feeds on the informal economy and refugees.”

It is a combination of structure and agency that limits or creates opportunities for refugees. Structurally, it is the institutional context of being a refugee that shapes outcomes. On the agency side, the capacity of refugees to transcend that institutional context both as individuals and as communities also shapes outcomes. What is clear from Betts et al’s research is that there is a spectrum of income and dependency levels, refugees have the highest incomes and lowest dependency levels in the cities, away from the camps. This means that “the greater the opportunities for the refugees to integrate into the mainstream economy” the greater the potential to collectively move away from “a logic of dependency toward greater sustainability within our responses to refugees.” 

Refugees need to be part of the solution

Earlier this week the Australian government announced it would cost $55 million to reopen the detention centre on Christmas Island over the next 6 months. The offshore camps in Australia deprive the detainees of the very institutional/ legal safeguards that they would otherwise benefit from if they were on Australian soil. This is their entire purpose. With climate change, the refugee crisis will only worsen. While our system is among the most inhumane in the world, currently, research like that conducted by Betts in their book ‘Refugee Economies’ presents a promising future where it is possible for aid to work alongside those they are hoping to serve. 


Betts, A., Bloom, L., Kaplan, J. and Omata, N. 2017, Refugee Economies: Forced Displacement and Development, Oxford University Press, UK.

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