Foreign Aid and Asylum Immigration. Does Development Matter?

Marina Murat

RECent Center for Economic Research, Working Paper 133, December 2017


This paper tests the influence of aid from rich to developing economies on bilateral asylum inflows, by measuring the impact of bilateral aid on asylum seeker applications from 113 sending countries in 14 OECD destination economies for each year over the period 1993-2013. There are mixed views on the impact of aid on refugee flows: on one hand aid may help countries to overcome the political and economic crises at the root of the flows of refugees, and hence deters them, and on the other hand aid may enable resource-constrained people in the recipient country to afford the costs of migration, and hence increases asylum applications. The author’s hypothesis is that either effect depends on the level of development of the recipient country. Results show that aid effects on asylum applications are significant, but vary with the level of development of the recipient country. Aid to poor economies—especially in Sub-Saharan Africa—deters asylum inflows to OECD countries by improving living conditions and providing individuals with incentives and resources to stay, or to move—perhaps temporarily—to a nearby location. This is consistent with empirical data showing that most movements of refugee people in Sub-Saharan Africa remain within the region. However, aid to medium-income developing countries can increase asylum applications (aid transfers have a lower impact on living conditions). Further findings are that:

  • Both refugees and immigrant networks exert a pull effect on asylum seeker inflows.
  • Aid leads to negative spillovers on applications across donors, i.e. more aid from other countries decreases the number of asylum inflows in the OECD destination. This implies that a potential donor can find free riding convenient.
  • Distance between origin and destination or the level of political terror do not influence the effect of aid on asylum inflows.
  • Foreign aid has no incidence on voluntary immigration, therefore aid provided with the goal of influencing asylum inflows will affect just these inflows, and not those of immigrants.
  • Political terror and lack of civil liberties in the origin country have strong and robust push effects on asylum flows, therefore aid transfers made conditional on improvements in the economic and political institutions of the developing country will have stronger overall effects on asylum inflows.

Overall, the deterring effects of aid on inflows from poor countries are stronger when transfers are coordinated across donors and are made conditional on economic and institutional improvements in the recipient economy.