The Economics of Humanitarian Assistance: What We’re Doing and How We Can Do Better

Entering the sixth year of the Syrian conflict, we’ve become all-too-familiar with the overtures of international NGOs and governments for humanitarian assistance to mitigate the refugee crisis. Yet such assistance, by and large oriented toward emergency, short-term, and high-impact solutions, frequently overlooks informality: economic activity that is beyond the purview of government regulation, taxation, and observation. While long-term, sustainable solutions are a standard – and important – feature of broader development strategies, such strategies tend to focus on meeting labor needs and promoting the rights of workers within existing, formal markets, without tackling shadow economic structures or those that are subject to them. To be truly effective, humanitarian relief must also take a deeper look at informality, which augments many of the economic challenges faced by the world’s most vulnerable populations.

Over 50% of the world’s labor force works within the informal sector, without a safety net or legal protection of any type. Most of them are constrained in their access to formalized markets, finance or credit, education, training, or opportunities for career advancement. Theirs is a parallel existence, operating outside both the potential and limitations of the formal sector. Yet the informal sector is a pervasive and persistent economic feature of many developing economies, often contributing to job creation, production, and income generation. Likewise, developing economies have capitalized on the existence of the informal sector to meet the demands of laborers who cannot find opportunities in the formal market. The need to meet such labor demands is of increasing importance, as global crises spike migration and force countries to expand overstretched resources to accommodate the influx.

Refugees and internally displaced persons, already economically marginalized and at risk for exploitation, become even more so when informality persists and is allowed to thrive. Informality often traps them in a cycle of poverty and social disenfranchisement. Moreover, the informal sector creates space in which human rights abuses, which humanitarian relief seeks to combat and are the core of humanitarian action, are exacerbated.

The Syrian conflict, which has spurred the worst refugee crisis since World War II, has resulted in millions fleeing to neighboring Turkey, Lebanon, and Jordan—2.5 million, 1.1 million, and roughly 0.5 million, respectively. Hundreds of thousands more have made the dangerous decision to attempt a crossing of the Mediterranean in the hopes of reaching Europe.

Country-specific humanitarian relief plans exist for five countries in the Middle East and North Africa region – Jordan, Lebanon, Turkey, Egypt, and Iraq – as part of the overall strategy for confronting the refugee crisis known at the 3RP: Regional Refugee & Resilience Plan. Economic development features prominently in the plan, and expanding opportunities for refugees within these countries’ formal markets is a priority. Yet much work remains to be done to confront the root causes of and address the consequences of informality.

On the one hand, both the regional and country-specific 3RP plans include well-developed components that focus on advancing policy reform, boosting life-skill and vocational training, and promoting job creation. While these are all positive goals that strengthen the 3RP’s potential to have a tangible impact on the lives of Syrian refugees currently working in or at risk of being absorbed by the informal sector, greater emphasis needs to be placed on creating and sustaining linkages between livelihoods and other development components. While the 3RP talks of decreasing “economic vulnerability” of refugees through subsidy programs, of “scaling up” livelihood opportunities, and of increasing the role of educated youth in the economies of host countries, it lacks a clear strategy for drawing correlations between combating human rights abuses and exploitation within the informal sector with the need to facilitate better and longer-term solutions for displaced Syrians.

To be sure, humanitarian assistance and efforts towards mitigation of economic informality are constrained by the specifics in each country. Migratory flows have introduced additional strains to the already overburdened economies and social service structures of Syria’s neighbors. Because of this, many host governments have placed limits on Syrians’ right to work or pursue economic activity within formal markets. The result is three-fold: shadow economic structures are created, providing unregulated industry competition; large numbers of refugees enter dangerous and exploitative labor situations, increasing the potential for human rights abuses; and the economic potential of refugees remains unrealized. However, greater attempts to incorporate informal workers into the economy and leverage refugees’ presence could benefit these host countries.

The 3RP is a good start for Syrians, but what about other refugees and vulnerable communities? Informality and the risks associated with it are not exclusive to displaced Syrians. What about the countries where economic development interventions don’t take informality seriously, or don’t address it in a comprehensive, intentional way? Informality is a global issue and it continues to thrive in Africa, Latin America, the Caribbean, and in other regions around the world. Only by tackling this informality will broader efforts to address human rights abuses and combat economic exploitation generate results.

Economic development is the hub around which the many spokes of development revolve; expanding opportunities in formal markets must be a foundational component of development. While humanitarian assistance can and should continue to provide for emergency relief, it must also deepen its engagement with economic development efforts by working to reform the legal and regulatory frameworks that enable informality to thrive, and promoting economic growth that expands formal markets. Ultimately, it will only be these two strategies—short-term assistance and long-term economic development interventions—working in tandem that will reduce exploitative labor, improve global value chains, achieve growth, and provide for communities in a sustainable, comprehensive way. Humanitarian aid to displaced Syrians, should it focus more heavily on tackling informality, would prove more sustainable and provide a replicable model for other humanitarian assistance efforts.


Kate Moran is a Program Assistant for the Middle East and North Africa at the Center for International Private Enterprise, an international NGO that works to strengthen democracy and promote market-oriented economic reform. She has a B.A. in Middle Eastern Studies and Arabic from Emory University, and currently serves as a Humanitarian Assistance Fellow at Young Professionals in Foreign Policy.

Originally published in The Huffington Post.

Image Credit: UK Department for International Development/Flickr

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