Are refugees a blessing or a curse for receiving countries? A study on inward FDI using panel data through the lens of natural resource dependence

Dalal Mansouri (), Jihad Ait Soussane (), Amine Chentouf () and El Mehdi Ferrouhi
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Dalal Mansouri: Ibn Tofail University- Kenitra-Morocco
Jihad Ait Soussane: Ibn Tofail University- Kenitra-Morocco
Amine Chentouf: Ibn Tofail University- Kenitra-Morocco

SN Business & Economics, 2025, vol. 5, issue 12, 1-19

Abstract: Abstract This study investigates the impact of refugee inflows on inward Foreign Direct Investment (FDI) in host countries using a panel dataset of 190 countries from 1987 to 2020. We construct two competing hypotheses: the “Bless Hypothesis”, which posits that refugee inflows enhance FDI by expanding labor supply, human capital, and market size, and the “Curse Hypothesis”, which suggests that refugee inflows may deter FDI due to increased socio-economic vulnerabilities, political instability, and institutional strain. In this regard, we divide the panel into two sub-groups: natural resource-dependent and independent economies. Our results indicate a heterogeneous impact: in natural resource-dependent economies, a 1% increase in refugees reduces inward FDI by 0.06–0.086%, supporting the “Curse Hypothesis”, whereas in natural resource-independent economies, a 1% increase in refugees raises FDI by 0.0068–0.0087%, validating the “Bless Hypothesis”. These findings highlight that the effect of refugee inflows is contingent on structural characteristics of host economies. Policy implications suggest that natural resource-independent countries can leverage refugee inflows to enhance investment attractiveness, while resource-dependent countries should adopt strategies to mitigate potential socio-economic and institutional pressures.

Keywords: Refugees; Foreign direct investments; natural resource dependence; Panel econometric (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s43546-025-00984-8

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