Poverty reduction in a refugee-hosting economy: a natural experiment

The role of migration in reducing poverty in developing countries has been investigated mainly from the perspective of migrants and their relatives. This paper, however, reviews the way hosting households in Tanzania traced between 1991 and 2004, when their region had been affected by massive refugee inflows. The paper is sought to assess how migration may affect poverty in the hosting communities.

The results indicate that although doubling the refugee inflows from Burundi and Rwanda had increased real consumption by 8% in the hosting community, the probability of getting out of poverty had also increased by 11%.

Conclusions comprise: 

• the large population inflows from Burundi and Rwanda improved the standards of living of the migrants themselves and their relatives in their village of origin
• subsequently, forced migrants had a strong and positive impact on the standards of living of the hosting communities
• indeed, the refugee inflows led to a sharp decrease in poverty in an economy experiencing a process of structural transformation 
• indeed, the pro-poor nature of this development is found to be driven by improved agricultural labour productivity and possibly income diversification among the poor
  

The document illustrates that there was an imperfect substitution between refugees and their local hosts and an increase in market size, while land availability was preserved. Furthermore, it clarifies that the role of health and transport infrastructure was certainly complementary to these market-based channels, but the relative importance of public policies would need to be further investigated.