Reimagining Refugee Integration: Economic Burden or Boon?

By Ryan Lasnick

The changing dynamic of refugee situations across the globe necessitates new and creative solutions that reconcile the economic interests of host nations with the considerable needs of all refugees. Two-thirds of the world’s refugees have lived in exile for more than five years, often in overcrowded slums without freedom of movement and no possibility of work. These refugees are kept in a holding pattern, forced to wait for peace so that they can return to their homes. Refugees need financial stability to survive in their host countries, which only integration into the economy can provide.

One path toward integrating refugees as well as fostering economic growth within a country is the creation of special economic zones (SEZs). By understanding refugees not only as a humanitarian challenge but also a development opportunity, countries can create economic opportunities that are mutually beneficial. This post considers the case of the King Hussein Bin Talal Development Area (KHBTDA) in Jordan to analyze the potential impact of opening up labor markets for refugees.

While the creation of SEZs that are specifically open to refugees is a relatively new idea, SEZs in general are not. In fact, over the past decade Jordan has invested in the creation of several SEZs in order to attract foreign investment, increase employment, advance high-value economies, and facilitate the transfer of technology and skills. These zones are set up strategically throughout the country, but remain widely underutilized. The zones have the potential to be successful, already having robust physical infrastructure in place, but they lack the human and private capital needed to create sustainable economic opportunities for Jordan. In this case Jordan’s large educated working class hinders its economic development because most Jordanians are reluctant to take low-wage, labor-intensive manufacturing jobs that are common in SEZs.

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Special Economic Zones: South America Lags Behind

By Moises Rendon

It’s no coincidence that Hong Kong, Shenzhen and Dubai have been beacons of economic progress. These areas have attracted the most important high-technology firms and received vast influxes of foreign direct investment (FDI) in recent years. The three share a successful history of operating as what is known as a Special Economic Zone (SEZ), a unique regulatory status which has facilitated rapid economic development. While China, the United Arab Emirates, and other countries have reaped the benefits of SEZs, South American countries have yet to realize the potential benefits SEZs might offer their economies.

An SEZ is a demarcated geographic area within a country’s national boundaries where the rules of business are different from those that prevail in the surrounding territory. Compared to the economic regulations of the host countries, these zones typically include more friendly investment conditions, such as tax and customs exemptions. The goal is to create a globally competitive economic area that, through cost reductions and administrative simplification, attracts corporate investments to encourage new economic activity.

Shenzhen_CBD_and_River

Shenzhen was the first SEZ in China, and remains an economic hub.

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