Integration of Migrants, Refugees, and Returnees: A Driver for Improving Well-being and the Economy

Published for the first time in Revista Summa.

Did you know that the well-being generated by the gains from crossborder mobility far outweigh those from trade liberalization? This is because facilitating the movement of persons encourages the exchange of knowledge, skills, and cultures, which can improve productivity and innovation. On this day, which is celebrated as International Migrants Day, I would like to take this opportunity to reflect on the importance of integrating migrants, refugees, and returnees in order to strengthen value chains and ensure sustainable development in Central America.

Examples in Latin America confirm this. In Colombia, the integration of migrants generates double the tax return, and in Peru, up to four times the amount invested. In Costa Rica, Nicaraguan migrants contribute at least 6.5 percent of GDP; while, in Panama, Venezuelans' tax contribution could surpass US$283 million if their status is regularized. These data reflect the positive impact that the integration of migrants and refugees can have on local and regional economies.

Central America can replicate and leverage these benefits, but to do so it must invest in people and adopt inclusive policies that combine both public and private sector efforts.

Necessary thrust from the private sector

The private sector can play a leading role in supporting an integrated and sustainable development model. How can it do this? By strengthening the economic future of its own companies by expanding its base of workers, customers, and markets. This has already been demonstrated in experiences documented by the World Bank, which shares its learning through the free virtual course "Private Sector for Refugees (PS4R): Understanding the Private Sector/Refugees Link."

Gabriela Roca, Corporate Affairs and Sustainability Director of Grupo AG, has recognized that there is a shortage of human capital in key sectors and that the private sector can be a catalyst and promoter of dialogue to bring solutions to the table to address the current reality.

Societies have made progress in recognizing the positive impact of including all population groups in development models and more and more sectors are willing to learn and engage in this agenda. A past that leaves many without opportunities is being left behind, and today we understand that inclusion is essential for sustainable economic growth that is based on shared prosperity.

Salomón Kattan, Executive Director of Fecarroz, highlights the labor shortage as a key challenge for rice production in Central America, a sector that is vital to food security and regional identity. Although most of the rice consumed is imported, strengthening local production not only generates income, but also improves democratic governance, reduces social tensions, and combats irregular and unsafe migration. In addition, integrating migrants, returnees, and displaced persons into the production and consumption processes benefits communities of origin, transit, and destination.

Three ideas from the private sector for investing in human mobility

Whether in countries of origin, transit, or destination, the World Bank proposes three ideas to guide decision-makers, companies, chambers of commerce, and business associations so that they can respond to migratory flows in a more inclusive manner:

1. Invest in the regularization of companies and individuals

Although there is global consensus on the benefits of business formalization, the same logic is rarely applied to the regularization of individuals, which is paradoxical in light of the fact that companies are made up of individuals. Formally incorporating migrant, refugee, or returnee workers makes it possible to expand the labor force and eliminate legal barriers, as well as improve the quality of those jobs and their security, thereby also strengthening the legal security of companies.

This presents us with the challenge of improving coordination between national and local government. While municipalities manage a lot of the formalization of businesses through permits, licenses, and subsidies, the regularization of people is often done at the national level, where political considerations predominate. If both processes are not aligned, important economic and social benefits that arise with the arrival of new inhabitants are lost, weakening both value chains and opportunities for inclusive development.

Formalized companies and individuals mean stronger value chains, opportunities for access to finance, and a greater ability to participate in more competitive markets.

2. Invest in the growth of MSMEs that show potential for inclusion

National and local governments must facilitate a robust institutional ecosystem in order for businesses to grow, create jobs, and invest. This can be achieved by making the requirements for opening a business or even a bank account more flexible.

For example, many local banks do not recognize the legal documentation that gives refugees, returnees, or migrants protection status or places them in special migration categories, which therefore limits their ability to operate formally and access credit, suppliers, or customers. Others report barriers of a social nature, as in the case of security personnel who, perhaps out of ignorance, prevent people without "traditional" documentation from entering bank branches or public buildings, thus creating a barrier to access and losing potential customers.

3. Invest in social cohesion bearing in mind the specific economic vocation of the host communities

Lastly, social cohesion is a critical element for business success. Integrated communities are more stable and create environments that are conducive to investment and business development. In his book Arrival City, Doug Sanders documents how neighborhoods like Washington Heights in New York, Pilsen in Chicago, and Columbia Heights in Washington D.C. play a crucial role in the integration and "graduation" of migrants and refugees coming from Central America and other Latin American countries. These neighborhoods serve as a springboard that can help the newcomers settle in at a relatively low cost, with support networks and possibilities for integration.

The integration of migrants is not just a social responsibility: it is a smart investment strategy. Our job is to help more actors learn about and emulate these successful experiences. On this International Migrants Day, let us lead the change toward a more prosperous Central America!

Public link

Please use the above public link if you want to share this noodl on another website.