Beyond the Immediate Crisis: The Economic Costs of Hosting Rohingya Refugees in Bangladesh

Abstract

This study employs an ARDL model to assess the short- and long-term effects of the Rohingya refugee crisis on Bangladesh's economic growth. While Bangladesh's GDP has shown consistent growth, the financial demands of accommodating refugees pose a threat to the nation’s sustainable development. The findings indicate that, despite short-term economic advantages stemming from the refugee influx—such as temporary job creation and increased consumer demand—serious long-term challenges remain. Over time, the strain on public services, infrastructure, and government resources has intensified issues like rising inequality, job competition, and increased pressure on public services, hindering sustained economic growth. Moreover, critical indicators such as labor force participation and educational investment have declined, further compromising long-term growth potential. Although the economy displays resilience, adjusting to shocks at a rate of 61%, the detrimental long-term impacts are projected to outweigh temporary benefits. The analysis underscores that while Bangladesh's economy can adapt relatively quickly, persistent adverse effects will continue without significant reforms. Therefore, the study calls for policies aimed at refugee repatriation, enhanced international aid, infrastructure development, and labor market reforms to address these challenges and foster sustainable economic growth.

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