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Creative construction

Mar 30,2015 - Last updated at Mar 30,2015

The majority of Jordanians, including the vast majority of officials, has underscored the cost to Jordan from hosting the Syrian refugees. Few have come up with arguments stating that the refugees have brought economic benefits to Jordan.

I am, therefore, in a very small minority that argues for a more balanced look at the refugees’ contributions to Jordan.

People use the argument that refugees take away jobs from Jordanians, an argument that is bogus on many fronts.

Below are some rebuttals to such thinking based on Jordanian and international evidence.

First, according to the Department of Statistics, only 4 per cent of Jordanian labour competes for the menial jobs that the refugees are employed to perform.

Therefore, even if there is competition, it is in a tiny niche of the Jordanian labour market, and the primary competition is mainly between guest workers themselves.

Let me demonstrate with evidence from the field: in Mafraq, Egyptian guest workers are the ones who tell labour inspectors and police about their Syrian competitors, who are working without permits and at a much lower rates (as low as JD4 per an eight-hour day).

Second, many think that refugees simply increase the supply of labour and thus take away jobs from locals, which is a fallacy known in economics as the “lump of labour fallacy”, as pointed out in a recent New York Times article.

The lump of labour fallacy is that if the refugee has a job, someone else, who is Jordanian, could have had this job.

It is a fallacy because refugees do not only increase the supply of labour but also demand — of goods and services, or to rent apartments — putting factories and retailers to work.

If refugees are stealing jobs from Jordanians, then our young Jordanian graduates who leave schools and universities also steal jobs from the older Jordanian labour force once they enter the labour market.

In Jordan, every wave of refugees was always followed by an unprecedented economic boom.

For my third argument I will venture into the concept of “creative destruction” and claim that refugees bring in many pioneering and innovative ideas that are beneficial to the growth and development of the economy, which I call “creative construction” instead of the “creative destruction” concept of Joseph Schumpeter.

The concept of “creative destruction”, coined by Schumpeter in his work “Capitalism, socialism and democracy” (1942), denotes a “process of industrial mutation that incessantly revolutionises the economic structure from within, incessantly destroying the old one, incessantly creating a new one”.

An example of this is how the success of Microsoft led to the destruction of many mainframe computer companies.

In doing so, Microsoft created one of the most important inventions of this century.

Thus, as Schumpeter says, the “process of creative destruction is the essential fact about capitalism”.

Refugees bring with them new, complementary, skills, and at times higher skills; they infuse innovations that were not born in the host economy but from the homeland.

Such contribution is what I call the concept of “creative construction”.

This injection of innovative processes and creativity leads to long-term benefits that can be gained by the host country.

The speed at which these benefits are secured depends on how open minded and welcoming the institutions of the host country are.

Policy makers and donors should revise their strategies. Instead of simply viewing refugees as a liability, they should view them as an asset. 

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