Significance The number of refugees displaced by civil conflict or natural disasters is on the rise. Economic impacts of refugees on host countries are controversial and little understood, because data have not been available and the question of refugee impacts does not lend itself to conventional impact evaluation methods. We use a unique Monte Carlo simulation approach with microdata from refugee and host-country surveys to obtain the first estimates of refugee camps’ impacts on surrounding host-country economies and to compare impacts of cash versus in-kind refugee aid. An additional refugee increases total real income within a 10-km radius around two cash camps by significantly more than the aid the refugee receives. Impacts around a camp receiving in-kind (food) aid are smaller.

Abstract In 2015, the United Nations High Commission for Refugees accommodated over 15 million refugees, mostly in refugee camps in developing countries. The World Food Program provided these refugees with food aid, in cash or in kind. Refugees’ impacts on host countries are controversial and little understood. This unique study analyzes the economic impacts of refugees on host-country economies within a 10-km radius of three Congolese refugee camps in Rwanda. Simulations using Monte Carlo methods reveal that cash aid to refugees creates significant positive income spillovers to host-country businesses and households. An additional adult refugee receiving cash aid increases annual real income in the local economy by $205 to $253, significantly more than the $120–$126 in aid each refugee receives. Trade between the local economy and the rest of Rwanda increases by $49 to $55. The impacts are lower for in-kind food aid, a finding relevant to development aid generally.

Footnotes Author contributions: J.E.T. and E.G.-E. designed research; J.E.T., M.J.F., M.A., A.G., and R.I.R.V. performed research; J.E.T., M.J.F., and R.I.R.V. contributed new reagents/analytic tools; J.E.T., M.J.F., M.A., and A.G. analyzed data; J.E.T., M.A., A.G., and R.I.R.V. conducted field work; and J.E.T., M.J.F., M.A., A.G., and R.I.R.V. wrote the paper.

The authors declare no conflict of interest.

This article is a PNAS Direct Submission.

This article contains supporting information online at www.pnas.org/lookup/suppl/doi:10.1073/pnas.1604566113/-/DCSupplemental.