The Impact of Refugees on Economic Growth in Latin America and the Caribbean

Abstract: The aim of this article is to explore the relationship between refugees and the host country’s economic growth in Latin America and the Caribbean using a simulation modeling approach. There is a large body of work on the topic using statistics. However, one big challenge of conducting econometrics methods to unveil any correlation is that regressions are data dependent. Since the current available refugee data doesn’t truly represent the reality as there has been a quite substantial number of unregistered Venezuelan refugees in Latin America and Caribbean region since 2015. Using agent-based simulation modeling approach overcomes the challenges of data issue and passes by strict assumptions for an OLS regression to produce BLUE outcomes. In our ABM model, agents represent labors, defined as age between 16 and 65, and Venezuelan refugees. To evaluate the impact on gender inequality on employment in the host country, despite of age, agents also carry the attributes of gender, work capability, average education years, birth (matured female only), and death. Three countries Venezuela, Colombia, and Chile are modeled as patches in Netlogo . Countries own the attributes of GDP and GDP per capita at macro level. The simulated result based on the initial values suggests that in Latin America and the Caribbean, refugee growth and host country’s economy are positively correlated. In contrast, the simulated results suggest that the higher fertility rate negatively affects the labor value added outcomes. It could imply the more female refugees in the host country, the lower GDP will be. We also found that the life expectancy is correlated to economic growth, labor’s work capacity, and education years. Life expectancy could be an indicator of the overall quality of human capital. In brief, the findings might imply labor value added output or labor capacity is the driver of economic growth.

Keywords: Agent-Based Modeling, Refugees, Economic Growth

DOI: 10.54941/ahfe1002294

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