Conflicts and refugees in developing countries

Many reasons have been put forward explaining the rate of economic growth in developing countries. The aim of this dissertation is to investigate whether refugees and conflict help to explain Africa and other developing regions’ rate of economic growth. Economists, especially development economists, have been long engaged with the question of what makes different countries more or less successful economically and what explains their rate of economic growth. Different authors select their own favorite explanatory variables ranging from purely economic, geographic, legal, political, cultural, religious and historical ones. In this work, the flow of refugees and the prevalence conflict in developing countries is introduced as key variables among others as possible factors that could explain the rate of economic growth in Africa and other regions of the developing world. The poorest countries have provided asylum and shelter for almost three quarter of the world’s refugees over the past decade. However, statistics on refugees in these countries suffer from unavailability, periodical lags and some times contradictions. This study takes the initiative, with these problems in mind, to do a quantitative analysis of the effects of refugees on developing countries. The dataset consists of 72 countries, of which 40 countries are in sub-Saharan Africa, 4 in North Africa and 14 in Asia and South America respectively. The inclusion of countries from other parts of the developing world-Asia and South America- is driven by comparative motives. Using econometric methods on cross sectional data, the study finds very interesting results on the economic relationship between refugees and refugee-receiving developing countries, refugees and conflict and both variables’ effect on developing countries. In addition, several socio-economic variables-trade, life expectancy, illiteracy rate, gross capital formation and gross foreign direct investment- are significantly affected if a country’s neighbour(s) is/are in conflict and when countries receive large influx of refugees. The study also uses standard methods of panel data estimation (fixed effects and random effects) which makes it possible to control for time-invariant country-specific effects in further establishing short run effects of refugees and conflict in developing countries. Empirical analysis is also carried out, with the use of pooled cross sectional data, on factors affecting the flow of refugees, the effects of refugees on ‘rich’ and ‘poor’ ( rich and poor developing countries are defined by the author in relation to countries in the study) and factors attracting/distracting refugees to /from certain developing countries. The study also looks at the spill over effects of conflicts in neighbouring countries.