Migration and Knowledge Diffusion: The Effect of Returning Refugees on Export Performance in the Former Yugoslavia
Dany Bahar, Andreas Hauptmann, Cem Özgüzel, Hillel Rapoport
Key Findings
- Countries export more of products in which their returned refugees gained experience abroad
- A 10% increase in returning refugees from a specific German industry raises home-country exports in that industry by 5-8%
- The effect is strongest for complex manufacturing products requiring tacit knowledge transfer
- Returnees create entrepreneurial ventures in their home countries using skills learned abroad
About This Research
Can refugees who return home after a conflict bring back valuable knowledge that transforms their country's economy? This paper exploits the tragic but analytically valuable natural experiment of the Yugoslav Wars to study how returning refugees affect the export capabilities of their home countries.
During the 1990s, hundreds of thousands of Bosnians, Croats, and Kosovars fled to Germany, where many worked in manufacturing industries. After the wars ended, significant numbers returned. We track these returnees and examine whether the industries where they worked in Germany subsequently experienced export growth in their home countries. The pattern is striking: countries developed comparative advantage precisely in the products that their returned refugees had learned to make abroad.
This research demonstrates that human capital acquired during displacement can be a powerful driver of economic development. The findings have important implications for refugee policy: rather than viewing refugees solely as a humanitarian burden, host countries should recognize that the skills refugees acquire during their stay can eventually benefit their countries of origin—turning potential brain drain into brain gain.