Refugee-Host Proximity and Market Creation in Uganda

Many refugees remain for long time in host countries and to assess their impact on the welfare of local communities is essential for policy design. We focus on Uganda, a country that hosts the largest number of refugees in SSA. We analyse whether and to what extent the proximity to refugees increases the welfare and the level of economic activity of hosting-community households by generating incentives for economic exchanges. To measure the potential of interaction we use the distance between hosting-community and refugee households and we test the robustness of our results by implementing different approaches. We conclude that, beyond the possible effects due to the benefits provided by the agencies caring for refugees, the direct interaction between them and the hosts generates an increase in both the level and the types of the economic activity carried out by the hosts. However, the market creation is limited to a radius of approximately 5 kilometres.