Would refugee cities only be for refugees?

No. First, refugee cities would ideally be open to people who meet the formal international legal definition of “refugee” and people who meet the more common usage of the term. Article 1(A)(2) of the 1951 Refugee Convention supplies the legal definition:

A “refugee” is any person who, “owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country; or who, not having a nationality and being outside the country of his former habitual residence as a result of such events, is unable or, owing to such fear, is unwilling to return to it.”

This definition excludes internally displaced people and people who flee war, natural disaster, general violence, and other forces causing displacement. However the more common understanding of a “refugee” tends to include these people as would, ideally, a refugee city. For that reason, our Mission Statement uses the term “displaced people” instead of “refugee” to avoid confusion.

Secondly, businesses in the cities should probably be allowed to employ people from the local host community as well. Doing this would reduce political opposition, facilitate regional economic growth, improve relations with the local community, and encourage investment. Generally speaking, restraints on employment should be removed, whether applied to refugees or the host population.

Why would a government want a refugee city?

When refugees are crossing their borders, governments are forced to respond in one way or another. Their response can be based on the assumption that refugees will be a burden or a benefit. If they assume the former and keep refugees in camps or detention centers, their assumption will probably become true. On the other hand, if they assume the latter and provide meaningful opportunities, the refugees will probably become a benefit.

Refugee cities are a way of turning refugee influxes from a burden to a benefit. Giving refugees the right to work legally means they can contribute to the economic development of the country by producing goods and services, earning income, filling labor shortages, attracting investment, and creating jobs through operating their own businesses. Access to economic opportunity will also reduce the potential for crime and violence within the displaced population.

A refugee city can also serve as a helpful transitional step toward full integration of refugees into the national labor market. For countries that want to admit more refugees but are reluctant to have them settle throughout the country, a refugee city can provide a defined space in which refugees can develop skills, recover from trauma, and earn income. Eventually, the refugees will be better candidates for nationwide integration.

A refugee city would also attract investment into the country, as discussed below.  Foreign investment is often a key element of a country’s development goals, since it helps stimulate growth throughout the economy, create jobs, and transfer skills and technology.

Why would businesses invest in a refugee city?

Businesses would be particularly attracted to a refugee city because of the ability to employ refugees.  Since labor is a crucial factor of production in economic growth, obstacles to employment restrain growth. Since refugees often flee their homelands for non-economic reasons, many had good jobs and carry noteworthy skills in a variety of professions. Even less-skilled refugees can still be productive additions to the workforce of a business where they can learn new skills on the job. Enabling a refugee community to work, therefore, opens up significant new opportunities for potential investors.

Creating an attractive business environment ultimately depends on many factors, including quality of infrastructure, ease of dealing with government, and proximity to markets. Access to a skilled and eager workforce, as is often the case with refugees, is just one factor. Still, as long as other conditions are adequate, it can be a powerful driver of investment.

What role would foreign aid or other assistance from governments, donor institutions, or philanthropists play in a refugee city?

The goal of the cities would be to create conditions in which refugees can find their own solutions to their problems. Outside assistance can help accomplish this in a number of ways, depending on the source:

(1) International organizations can urge governments to establish a refugee cities program, ensure they live up to their commitments once a city is established, and monitor conditions inside the city.

(2) Donor/Development institutions can provide financing and technical assistance for the development of a refugee city, including infrastructure, education and healthcare provision.

(3) Donor institutions, NGOs, and other financial supporters can help meet the basic needs of residents, who come with nothing.

(4) Investors can provide micro-finance to small businesses, startup capital to refugee entrepreneurs, and other forms of finance of businesses of all sizes.

Most importantly, all of these forms of assistance should be tailored to ensure residents have opportunities to support themselves and build their futures.

Most special economic zones (SEZs) have not been successful.  Why should they be a model for refugee solutions?

Approximately 3,000 SEZs or other similar special-status zones exist worldwide. Many have failed in terms of promoting economic growth, attracting investment, or promoting good environmental or labor conditions. On the other hand, many have succeeded, becoming bustling cities or industrial parks that provide opportunities, stimulate economic growth, and improve upon the environmental or social performance of the country.

Over 70 years of experience with these zones has allowed us to identify some of the key factors affecting success and failure. Successful zones programs have tended to:

  • Be located in areas with existing economic activity or strong market demand
  • Not rely heavily on income tax incentives to attract investment
  • Include value-added services, such as skills training programs, child care, and single-window interaction with government
  • Remove unnecessary red tape and bureaucracy
  • Provide high-quality infrastructure and reliable utilities, including electricity
  • Have private-sector, or public-private developers, managers, and service providers with an incentive to make the zone financially viable
  • Include teams of independent labor and environmental compliance officers that investigate factories, advise on and assist managers with their obligations, and receive and resolve complaints from workers and residents.
  • Provide customs duty exemptions on imports and reduce non-tariff barriers
  • Introduce beneficial policy reforms needed nationwide

Though zones often offer, and are unfortunately best known for, income tax breaks to companies investing in them, these tax breaks are of questionable value. They are difficult to apply, of little value when a foreign investor’s home country imposes taxes on a worldwide basis (as the US does), attract mainly “footloose” investors who will leave as soon as the exemptions expire or a different location offers lower taxes, and lead to market distortions and complaints from business owners outside the zones who do not receive the exemptions. These tax incentives also, naturally, drain public resources, making the government less able to perform its functions properly.

If you have other questions, please feel free to contact us.