Maximilian Yoshioka, lead researcher for Legatum Institute's Centre for Entrepreneurs makes the business case in City A.M. for welcoming refugees.
As the legal battle rages on around Donald Trump’s chaotic travel ban and moratorium on refugees, you could be forgiven for thinking that the West faces an existential threat unparalleled in its history.
Yet as politicians rush to placate and at times inflate public fears about the negative impact of refugees on jobs, public services and national security, a growing body of research strongly suggests that refugees – far from being passive welfare claimants – create businesses and jobs wherever they go. Instead of accelerating the West’s economic decline, refugees might just be a part of the solution.
Forced to flee from violence and persecution, countries accept refugees for humanitarian reasons. Nevertheless, there is a convincing economic rationale for welcoming them with open arms.
Throughout history, people fleeing destruction and persecution have contributed hugely to their adoptive countries. From the Huguenots who arrived in England in the seventeenth century bringing with them expertise in textiles, watchmaking, carpentry and science, to the Jewish diaspora that escaped war-engulfed Europe to America’s great benefit, and the Cuban refugees that have become inseparable from Miami’s culinary and cultural identity, nations have long reaped the benefits of harbouring those with no place else to go.
Fast forward to today, a succession of devastating wars in the Middle East has led millions to flee in search of refuge, mostly to other countries in the region, but also to Europe and North America. Yet despite both academic research and the historical record suggesting otherwise, voters in many developed countries are alarmed by what they see as an influx of welfare scroungers or, worse, possible terrorists. This has led to a political reluctance to take in greater numbers, and has meant that countries are missing out on a potentially dramatic boost to their cultural and economic prosperity.
This is not to say that refugees do not face a whole host of challenges once they arrive in their host countries. While many bring valuable skills and education – particularly true of the current wave of Syrian asylum seekers – finding regular employment poses substantial difficulties.
Despite many having had successful careers back home, refugees often struggle to get hired in the formal economy. While the reasons vary – from language barriers, unrecognised qualifications and extended unemployment during the asylum period, to uncertainty around working rights and even blatant prejudice – the outcome is the same: unemployment and, frequently, destitution. Of those refugees that do find jobs, over half feel overqualified for them.
In response to this frustrating underutilisation of skills, talent and experience, some see entrepreneurship as the solution. Unlike a traditional job, being an entrepreneur enables a refugee to circumvent the hiring process and pursue a passion or idea on its own merits.
As a vehicle of social mobility less determined by social standing or cultural origin, entrepreneurship is often an ideal career path for individuals without any roots or connections in their new country. The resilience a person acquires in the process of leaving his or her home, livelihood and culture may also prepare them for the challenges of starting and running a new venture.
Take Turkey, where over the past five years Syrian refugees have set up over 4,000 businesses, bringing with them $220m in capital and making up over a quarter of all new foreign-owned firms established annually.
Or consider pioneering research carried out in Uganda by Oxford University professor Alexander Betts, who found that the presence of refugees from neighbouring countries dramatically boosted local purchasing power, employment and human capital. In the capital city of Kampala, 21 per cent of refugees run businesses that employ other people.
Data from the Australian Bureau of Statistics, meanwhile, shows that refugees make twice as much money from their own businesses as people arriving on skilled and family visas. And a recent feature in the Economist highlights some of the successful businesses started by refugee arrivals in Germany.
Here in the UK, official government data reveals that refugees are the most likely to be self-employed of all migrant groups (with migrants as a whole more likely to be entrepreneurs than the native-born). This corroborates recent research by the Centre for Entrepreneurs which found that foreign nationals start more companies per head than the UK-born.
From Michael Marks of Marks & Spencer and Rashmi Thakrar of Tilda Rice, to Adnan Medjedovic and Edin Basic, two exiled Bosnians who founded thriving UK gourmet pizza chain Firezza, examples abound of refugees setting up successful companies in this country. As the government debates and articulates its policies towards refugees, it would do well to remember this fact.
Instead of seeing refugees as a one-way burden on the economy and the state, we need a different vision that celebrates their potential to improve and rejuvenate our societies – as entrepreneurs or otherwise. This isn’t wishful thinking – the evidence supports it – but it will require drawing attention to inspirational success stories, reframing the negative narrative around refugees, and supporting initiatives that help fulfil their potential.
This article originally appeared in City A.M.