Chicago Booth Review Podcast The Economics of the Refugee Crisis

Hal Weitzman: We are living through the greatest global refugee crisis in world history. According to the UN in 2022, the number of displaced people in the world surpassed 100 million, meaning that over 1.2% of the global population have been forced to leave their homes. About a third of them are refugees, fleeing conflicts in Africa, the Middle East, Central America, and Eastern Europe. And the numbers are only likely to grow as climate change prompts further migration and displacement.

Welcome to the Chicago Booth Review Podcast, where we bring you insights from some of the world's top policy thinkers. I'm Hal Weitzman, and today I'm talking with Andrew Leon Hanna, a social entrepreneur, lawyer, and Chicago Booth adjunct assistant professor whose book, 25 Million Sparks: The Untold Story of Refugee Entrepreneurs, documents the experiences of individual refugees who started their own ventures.

In the second of two podcasts about the book, we discussed how we thinks policymakers should respond to the refugee crisis. In many countries, migration has shaped politics, with demands for stricter border controls often leading to government promises to clamp down on immigration. What gets lost among the noise is the economic benefits that migrants often bring. Andrew Leon Hanna, welcome back to the Chicago Booth Review Podcast.

Andrew Leon Hanna: Thank you so much, Hal.

Hal Weitzman: We had such a fun time last time talking with you about your book, 25 Million Sparks, which is such a good read, so thought-provoking. And we wanted to have you back to talk about policy really and what migrant refugee policy should be, what we misunderstand about migrants. So first of all, you talk about how the global refugee crisis is the largest in the history of the world. Is there any region that's not affected? We think of Africa, the Middle East, Central America, Europe. Is there any region that's not affected by this?

Andrew Leon Hanna: It's really a global crisis. I always share about the fact that when I started writing the book, it was about 25 million refugees in late 2018. Now it's already at 36 million, so a huge amount of growth. And even then it was the largest total number of refugees in the world, largest total number of displaced people when you include refugees, asylum seekers, and internally displaced. Now it's even greater, so 36 plus million refugees, 100 plus million displaced in total.

We've seen big increases of displaced folks from Ukraine, more than six million refugees there. In Sudan, it's now the largest internal displacement crisis. In Gaza, 80% of the population is displaced. And so you've just seen more and more, and I think another one that keeps becoming an issue is climate refugees. And so there are some models and projections that say hundreds of millions will be displaced.

That's already beginning. And so really no region is immune, whether it's you're the region that is having people displaced or whether you're dealing with the question of whether we should allow people to seek asylum in our country. That's touching almost every region.

Hal Weitzman: I guess that's the one part that we don't talk a lot about. In fact, at Chicago Booth Review, we did have a cover story on climate migrants, but the prospect of 100 million people on the move across the planet doubling in our lifetimes is significant. You have a feeling that policy hasn't quite caught up or the political debate doesn't quite reflect that. There was a really poignant quote in your book from a Somali refugee who pointed out it takes seconds now for money to go around the world, but it takes decades.

And I believe the person who said that had himself been waiting 20 years to be resettled, right? It takes decades for a refugee to be resettled if it happens at all. Maybe talk a little bit about that, about there seems to be this disconnect between policy and what's happening and what's likely to happen. I guess we see the same in climate change itself, but this is about people on the move and our instinct is perhaps to put up walls and not think about how to manage.

Andrew Leon Hanna: That's right, yeah. I mean, to your point on climate refugees, even climate hasn't even been put into the definition of refugees according to the UNHCR. So there's some movements to include that as part of the infrastructure of the UNHCR providing camp support and providing resettlement support. But to your point, we have certainly not created a global system. We've fundamentally failed migrants and refugees all around the world.

After World War II, the mass displacement that occurred particularly of the Jewish community and of people seeking some kind of home and some kind of refuge, there was a big agreement in the United Nations to say, hey, we want to have this refugee convention. We want to agree that any person seeking asylum because of violence, persecution, human rights violations, or religious persecution, anything like that, should be able to come across borders and go through a process to see if they can stay.

And so that was a big commitment we made that I think we've generally failed. There's been some beautiful highlights in it, but at the end of the day, it's a voluntary program. Only about 30 nations take part in the UN's resettlement efforts. A shocking number of less than 1% or about 1% of people who are seeking refuge get formally resettled a year. So definitely inadequate.

About more than 80% of those who do either temporary resettle or formally resettle are doing so in emerging or developing economies. And so this problem where people like most of the Syrian refugees, for example, are in countries that are not already well off, only one in the top five that has welcomed Syrian refugees, that is a developed economy according to the World Bank is Germany.

And so you have a lot of countries that are already trying to get their footing and support their own communities that are struggling to welcome and bring in refugees and asylum seekers. Like you said, there's a storytelling element that I'm sure we'll talk about where the rhetoric is we don't want to shoulder this burden. We don't want to introduce potential crime, potential violence, potential taking of our jobs.

And there's not a realization or a correct calibration to say this is actually a economic development tactic is welcoming refugees on top of it being the morally right thing.

Hal Weitzman: Well, again, I feel like there might be a parallel with climate change, which has gone from being a scientific debate to being a political debate. And this is almost the same. The main effect we've had so far in the settling countries has been to transform the debate and to make this refugee issue a key part of politics. It determines elections. You have the rise of anti-immigrant parties all across Europe and in the United States, of course.

I mean, you and I have talked about some of the things, even those of us who are not connected to anti-immigrant policies, or at least not directly or feel like we don't want to vote for that, but we still have these I don't want to say biases, but we still have views about refugees. We have an image of refugees either as victims or villains. Talk a bit about that and how that shapes policy.

Andrew Leon Hanna: Yeah, exactly. The victim or a villain narrative is a big issue. The victim narrative being that refugees and asylum seekers and migrants in general are one dimensionally needy. And so they need our pity and support and that they don't have their own agency of their own. Often it's well-intentioned, like people trying to stir up support.

But when you only see refugees or asylum seekers as, for example, people being bused to Chicago and other cities and coming off the bus in the middle of the night, if that's the only image you see, you don't see them as the powerful, beautiful, creative, innovative human beings that they are, then policy reflects that. And so that's one element of it. And then the fill in element is, of course, what we hear, they're going to commit crimes.

They're going to take our jobs. I believe the former president said poison the blood something of that nature. I think these types of rhetorics are... That one is not even well-intentioned. It's just dangerous and it's inaccurate. As you said, it affects elections.

If the storytelling was much more to say, hey, let's talk about Esma, Melek, Yasmina, let's talk about the fact that immigrants create about half of unicorns in the US, I think two-thirds of unicorns in the US have at least one immigrant founder, let's talk about the fact that refugees after Hurricane Harvey in Houston, the Afghan Cultural Center was helping provide food for people who didn't have access to the roads, let's talk about during COVID-19, all these refugee communities that supported, then I think the rhetoric would say, actually like many cities say, let's actually campaign to welcome these folks.

Like Utica, New York was revitalized by an influx of refugees when it was a declining population and people wanted to leave. They're the ones who gave it a shot and actually want it to be there. And so if that was the rhetoric, you could see how things could turn completely on its head and it would be okay, yeah, this is an upfront cost. And some people are well-intentioned about it. It's totally understandable to say, "What about our own people?"

We have a lot of poor native born people here in Chicago or here in Jacksonville or wherever it is. But if you see it as there's a lot of things our tax dollars are going to, if they went towards a quick resettlement of these folks, how much economic benefit could come from that? And I think that's the angle that should be taken. And unfortunately, it should be an easy decision.

I always say if the Venn diagram for a governor or a mayor or president is moral on one side and economic growth on the other and something is right in the middle, it should be an easy call. But things have been turned completely on its head and it's been used to weaponize division.

Hal Weitzman: One of the things you talk about in your book is infrastructure. And I don't mean roads and bridges, but the legal, financial, social infrastructure that we have to start businesses that makes it relatively easy, even if though it feels very hard to start a business, it's relatively easy in the USA compared to a refugee camp in Jordan. And what often happens according to your story is that refugees just don't have access to that infrastructure.

If they did, they might be able to add a lot more quickly to our economy. So what do you think, what support do new immigrants need in terms of that infrastructure? I don't mean handouts. I mean the infrastructure that they need to stand up and start doing their own stuff that they don't currently get. What should we be giving them?

Andrew Leon Hanna: You can start with all of their disadvantages and ways to remedy it. So the first is access to capital. A lot of immigrants will come obviously without a credit score, and that's a big way of evaluating loans. One partnership that we're proud of with my venture, Mona, is with a nonprofit called Kiva that I mentioned in the last episode or the last part of the episode, is we do zero interest lending.

Very inclusive kind of lending that has zero interest, zero fees, and is basically just designed to help low to medium income entrepreneurs, including immigrants and refugees, have some kind of capital to do something with. And so that's kind of an access to capital that needs to happen. We talked about Razan getting a 2,500 pound loan that was particularly designed for folks like her.

Hal Weitzman: To go back, that was in our previous episode that you were talking about. That was the woman who started this cheese business in north of England.

Andrew Leon Hanna: Exactly, yeah. And I think there's examples in camps where in the book we talk about a woman named Massika in the Sharkole Camp who just had tens of dollars of a loan or a grant to provide a bread cooperative that she created. It's really not a lot of an investment.

But the idea of saying, hey, we're going to create a loan program that provides some support to create ventures because we know refugees are entrepreneurial and we know this is a way that they can get in the net positive for our economy in addition to, of course, helping them and their families, that would be fantastic.

The government does provide support for refugees, but a lot of people can't access that depending on their legal status. And it's often just a three month period. The more we can provide access to capital, the better.

Hal Weitzman: I mean, the support, most of it, is not aimed at turning people into entrepreneurs or giving them the opportunities. It's aimed at helping them just to get on their feet.

Andrew Leon Hanna: Exactly.

Hal Weitzman: But we're talking about slightly a different kind of support to help them actually launch themselves, launch new ventures. So money is one. What else would be... I mean, we're sitting here talking in Chicago Booth. We give our MBAs so much support and the University of Chicago gives its students so much support to start businesses. Reading your book, I almost got a feeling, if we give the same kind of support to refugees, the economic impact would be huge.

Andrew Leon Hanna: Yeah, yeah. Aside from the money, which is number one, is there's a complete lack of networks. So a lot of small businesses don't like it when it's just an incubator program and there's no money. But I think for refugees and migrants, I mean, they're really looking for any kind of person to help situate or create connections. These incubator programs can be quite helpful because it's just saying, "Hey, you have someone to go to."

We work with a lot of small business development centers, refugee welcoming centers that have business components where you can just walk in and say, "Hey, help me find usually capital, or I need to figure out how to incorporate this business. I don't want to do something wrong. I need to figure out a permit to put up a sign," et cetera, et cetera. And so those are examples.

There's a film about Peace by Chocolate, which is a chocolate company started by Syrian entrepreneurs in Canada that does a good job of showing this. A neighborhood welcomes them, welcomes the entrepreneurs. It's a chocolatier from Syria that started it with his son and his family. And just opening the doors and saying, "Hey, you can start selling at our church. We'll provide a loan to you that's zero interest in honoring your Muslim tradition."

Things like that that people can do, but doesn't quite happen as much. So there's money, there's networks, and then there's obviously another issue is language barriers. And so a lot of the work that some nonprofits do is really critical to get them up to speed. And then companies making these commitments. There's something called the Tent Partnership, which companies have committed to hiring refugees. But the more that can happen, the better to get people going.

Hal Weitzman: If you're enjoying this podcast, there's another University of Chicago Podcast Network show that you should check out. It's called Entitled, and it's about human rights. Co-hosted by lawyers and law professors Claudia Flores and Tom Ginsburg, Entitled explores the stories around why rights matter and what's the matter with rights.

Let's talk a little bit about the economic impact that refugees have. Refugees create $6 billion in net revenue for the US every year, I read in your book, and you talk in the book about how towns like Utica in New York have been revived by new immigrants. Talk a little bit about that.

Andrew Leon Hanna: Yeah, certainly. As you said, there was a study that showed by the US government a net fiscal impact of 63 billion in a 10-year period, which amounts to what you said, 6 billion a year. And that's net fiscal impact. So it's over and above what it costs to resettle refugees. And that's because they'll get jobs and contribute from their tax base, and then they'll also create jobs through small businesses, generate two-thirds of net new jobs in the US. And refugees are a big contributor to that.

And as we've talked about, they're often at the helm of large growth businesses as well. Cities like Utica, which was declining after factory closures and a lot of people were moving out, Upstate New York in the Rust Belt, and you had a thing where a lot of these Rust Belt cities said, "We want to welcome refugees because we need to stop the bleeding." And they did very much so. If you talk to people in Utica, it's generally agreed that refugees help to stabilize things.

And not just economically. They help to revive places of worship. They help to revive the downtown area in terms of just the life and the consumer base. A lot of smart, wise mayors have said, "I'm not going to listen to the rhetoric. I'm going to make this a point of welcoming folks, not just for the moral reason, but because I know it's going to benefit people no matter what I get criticized for I'm not helping my own people as much as I'm helping the newcomers."

They realize that this will help everyone, and the rising tide will lift all boats. And there are countless examples. Even in Port Adelaide, Australia, their Hazara refugees from Afghanistan who have revitalized the city and brought new businesses and new economic life. And it's a lot of the reasons we talked about last time, which is refugees are very entrepreneurial and they want to be welcomed and create a new community however they can.

And it's often in ways that not just economically, but spiritually and community wise create a big impact. And if we could see that, I mean, we're really getting in our own way because by making this a political divisive, it shouldn't be political, it shouldn't be Republican, Democrat in the US or whatever it may be in other countries, it should be about the dignity of these human beings and about the communities that they're going to make better. But instead, it's a lose-lose the way it's been talked about.

Hal Weitzman: It's so interesting the way to hear you talk about refugees as an engine of economic growth, which I guess we'd always heard a bit about that. But when you hear about it, a lot of what you hear is businesses need migrants to do low cost labor. The fruit goes unpicked in the fields or whatever. The factories can't pluck the chickens because they don't have the labor. But the way you're talking about it is quite different, as an entrepreneurial engine that really revives the economy.

And I love that example of the mayor who said, "Well, this is important for us as a community, not just as a charity case." They're not just doing the... You talk about the moral and the economic. And maybe we have lent a lot on the moral and say, "This is the right thing to do," rather than this being the right thing to do in an economic sense. I wanted to ask you about internationally how that translates because you talk about the rhetoric that we use between countries and talk about shouldering the burden.

And rather than seeing people as a benefit and potentially solving problems, I believe that so many countries projected to need particularly young people to keep their economy and health services and everything else going. Talk a little bit about that, about the rhetoric and how it affects the political debate we talked about at the beginning of this episode.

Andrew Leon Hanna: And just on that last point, if you ask the British-born citizens who work for Razan's company, of course, it was great that they welcomed...

Hal Weitzman: That's the cheese maker again.

Andrew Leon Hanna: Exactly. Again, it's more attenuated, but Apple having been started by the son of a refugee from Syria, had there been a policy in place where they weren't welcomed, then that probably would not have happened. So just from the community level businesses to the bigger ones. Like you say, the rhetoric has a huge effect because if you are a mayor... My hometown is Jacksonville, Florida.

If you're the mayor and the rhetoric there is, there's a lot of pressure to say, "Hey, we don't want to welcome these folks. They're committing crimes. They're drawing on our resources. They're not benefiting anyone, and we have a lot of people who need the help already," if that's the way that people see refugees as a liability, then it's natural that there's going to be pressure to not welcome them.

I mean, politicians, we hope that they'll be bold and moral, but they do respond to constituents and sometimes they should. It's weaponizing this victim or villain narrative. Like you say, the victim narrative is saying, please just be charitable. It's the right thing to do. But then that's easy to push back on when things are tough. Because it's like, well, we would love to be charitable, but not right now.

We have enough problems of our own. And if it's a villain narrative, then it's like, you actually are a terrible leader if you're welcoming refugees, because you're going to cause crimes and you're going to cause all kinds of problems. So you're actively causing problems. If it were turned on its head and people heard these stories more and said, "You're welcoming Esma, Melek, Yasmina," and by the way, all these things about crime are inaccurate.

Studies showed that I mentioned in the book, looked at 10 cities that welcomed the most refugees in the US over a 10-year period. Nine of them not just didn't increase in crime, actually crime went down. There's one that went up and there was some confluencing factors with the opioid crisis. But even if that were true, nine of them, crime decreased. So all of these things that we're saying from the villain angle are not true.

And then not only are we going to be benefiting from a moral standpoint, we're actually going to be benefiting our own native born citizens. If that was the narrative and if we heard these refugee entrepreneurship stories, and if we knew that half of these unicorns were started by immigrants, then I think we would have a totally different constituent response.

We'd have people pushing President Biden to welcome more refugees. We'd have people pushing our mayors to welcome more refugees, and it would be a much more beautiful situation all around. And by the way, I mean, these refugees and asylum seekers are going to continue to happen, and there needs to be some solution. It's not going to be any thing where you can just ignore it. So it's a win-win-win to change the narrative and acknowledge this.

Hal Weitzman: Talk to us about some of the projects that are providing some of that entrepreneurial infrastructure to new migrants that could be a model to roll out across the US.

Andrew Leon Hanna: Yeah, definitely. Yeah, there's many. I mean, the one that I like a lot is the ones that provide capital. So there's a lot of work being done by Kiva nonprofit. We partner with them at my venture, Mona, to do zero interest lending. There's a lot of refugee resettlement centers that are really run by heroic people, people not getting paid a lot, doing great work. A lot of those were shuttered during the Trump administration, but they're being revived a bit.

But I think at the very minimum, having government funding for that is critical because these are the places that refugees when they come to a place they go to to get resources and caseworkers and job opportunities and language training and housing. So I think that's another element is just making sure that those places are well funded and well donated to and staffed. These are the Catholic charities of the world, Lutheran Services, YMCA, new immigrant welcoming centers.

They're on the ground doing that work, refugee welcoming centers. And so that's another one that's handling the basic early stuff. And then there are a few staffing agencies that companies can work with that focus particularly on refugees. One is called Amplio Recruiting that has done a good job of making the point that refugees have double the retention rate, and so it's a great investment, and worked with employers to hands-on place refugees in different cities.

And then there's folks in the VC world as well even that have done a good job of saying, "We're going to focus on immigrants." So there's some immigrant focused VC funds. There's something called the Refugee Investment Network, which focuses on how to add a refugee lens to investment more broadly. So bigger flows of capital going to either refugee entrepreneurs or ventures that have some impact on the refugee population.

So in our class actually at Booth, we have a couple partner social ventures that the students work with that are in that boat where one is a FinTech platform that helps across border payments for migrants and refugees in Africa. And Global Fund for Widows works with providing, again, low interest loans and bank ownership even to widows who are often victims of displacement and conflict.

There's a lot going on. I think my main message to people in their communities is get plugged in with an immigrant welcoming center. Either if you have the capital, donate to it. Get plugged into either a faith community sometimes. We talked about some people in Utica. One entrepreneur we featured, she lived in the steeple of a church for a little while before she could get going.

And just even that kind of support is critical. And then lending on a place like Kiva where you can filter by immigrants and refugee. And then even contributing to the narrative, so pushing back on when you hear these things, especially as election season comes up. Again, it should not be a political thing. It shouldn't be something where you're immediately labeled in one direction or the other.

It's good for economic growth, and it's good for social equality and justice. And so carrying that mantle and that storytelling is critical too. But a lot of the work is done in local communities, so it's not going to be hard. If you Google your city and immigrant welcoming or immigrant refugee center, there's going to be ways to plug in. And I hope people will contribute financially and/or with their time to those things.

Hal Weitzman: Well, Andrew Leon Hanna, thank you so much for coming back and talk to us a bit more about your book, 25 million Sparks, which is a great read. Thanks for joining us on the Chicago Booth Review Podcast.

Andrew Leon Hanna: It's my honor. I appreciate it.

Hal Weitzman: That's it for this episode of the Chicago Booth Review Podcast, part of the University of Chicago Podcast Network. For more research, analysis, and insights, visit our website at chicagobooth.edu/review. When you're there, sign up for our weekly newsletter so you never miss the latest in business-focused academic research. This episode was produced by Josh Stunkel. If you enjoyed it, please subscribe, and please do leave us a five-star review. Until next time, I'm Hal Weitzman. Thanks for listening.