The Case for Refugee Cities

How proprietary jurisdictions can solve the refugee crisis.

The global refugee crisis has reached an unprecedented scale. Governments spend billions trying to manage migration flows, often warehousing displaced people in camps where they remain idle, dependent on aid, and unable to contribute to their host communities or their own futures. This approach fails everyone: refugees languish without opportunity, host countries bear costs without benefits, and donor nations pour money into systems that produce no sustainable outcomes.

There is a better way. Refugee cities—purpose-built settlements governed as proprietary jurisdictions—can transform what governments currently treat as a burden into an engine of economic growth. Michael Castle-Miller has developed the most comprehensive framework for this approach, arguing that designated zones where refugees can live, work, start businesses, and build communities would simultaneously improve the lives of displaced people, generate returns for host countries, and reduce the burden on international aid systems.¹ The analysis that follows draws substantially on his work.

The Failure of Traditional Approaches

The traditional response to mass displacement—refugee camps managed by international organisations and host governments—has fundamental structural problems that no amount of additional funding can fix.

First, camps systematically waste human capital. Refugees and migrants are often among the most motivated and enterprising workers, yet camps confine them to spaces without economic opportunities.² Those who work in the informal sector after leaving or avoiding camps have less positive impact on the economy than if they were allowed to work legally. The psychological toll of enforced idleness compounds the trauma of displacement.

Second, camps drain public resources rather than generating returns. Host countries bear the costs of housing and feeding refugees while capturing none of the value these individuals could create. This makes refugees politically toxic—citizens understandably resent bearing costs without receiving benefits.

Third, camps often fail at their basic purpose. Host countries use them to cluster refugees for aid distribution, avoid job competition, and facilitate eventual repatriation. But refugees frequently avoid camps precisely because of the limited economic opportunities there.³

The Proprietary Solution

Refugee cities governed as proprietary jurisdictions solve these problems by aligning incentives correctly. Under proprietary governance, the jurisdiction operator profits by attracting residents and investment, which means they have strong reasons to provide efficient administration, secure property rights, and a business-friendly regulatory environment.

This creates a fundamentally different dynamic than traditional camps or even conventional special economic zones. The operator’s revenue depends on creating conditions where businesses want to invest and people want to live. Every inefficiency, every unnecessary regulation, every failure of basic services costs the operator directly. This produces governance quality that current bureaucracies rarely match.

For refugees, proprietary governance offers what camps cannot: the chance to earn income, experience the psychological benefits of meaningful work, and build skills and savings that serve them whether they eventually return home, move to a third country, or remain in the host nation.

Benefits for Stakeholders

Host countries often cannot keep migrants outside their borders for both practical and political reasons. The real choice is not between accepting and rejecting refugees—it is between housing them in ways that drain resources versus ways that generate returns. Refugee cities create new economic space where refugees can work and start businesses, and where foreign investment can flow, without competing for existing resources.⁴ Host populations can also live and work in these developments, benefiting from the infrastructure and opportunities created there. This addresses the politically potent fear that refugees will take jobs from citizens—in a new jurisdiction built for the purpose, jobs are created rather than redistributed. Governments can capture value through lease payments, taxes on economic activity or land values, and profit-sharing agreements.

Developed countries currently spend heavily on two related but conflicting goals: limiting migration to their own territories while funding humanitarian assistance for displaced people abroad. When refugees have access to real economic opportunities closer to home, they have less reason to undertake dangerous journeys to Europe or North America. Rather than attempting to find opportunities in an advanced economy—with all the dangers of irregular migration and the adjustment difficulties of arriving in an unfamiliar culture—displaced people can find meaningful work in environments more similar to their origins.⁵ This means developed countries could redirect spending on border enforcement and traditional humanitarian aid toward facilitating refugee cities.

The international community traditionally responds to mass migration with food aid, tents, water, basic security, and emergency medical care—services that keep people alive but do nothing to help them become self-supporting. Refugee cities offer a more cost-effective alternative: essential services combined with a platform for migrants to become self-sufficient. Private capital can be invested in real estate, businesses, and infrastructure, generating returns from productive assets. Donor institutions can provide technical assistance, investment guarantees, and monitoring rather than funding consumption indefinitely.

For investors, refugee cities open new markets and untapped talent pools. Businesses operating in these jurisdictions benefit from the regulatory reforms characteristic of special economic zones, plus access to a motivated workforce whose abilities have been artificially withheld from the labour market.

Political Viability

Perhaps most importantly, the refugee city model is politically viable in ways that other approaches are not. Efforts to allow refugees to work anywhere in a host country face overwhelming political resistance, driven by legitimate fears about job competition and cultural disruption. These concerns cannot simply be dismissed as prejudice—they reflect real distributional consequences of immigration policy.

Designated zones sidestep this opposition by creating new economic space rather than inserting refugees into existing communities. Citizens who might strongly oppose refugee settlement in their neighbourhoods may accept or even support development of new jurisdictions elsewhere, particularly when they see those zones generating tax revenue and economic spillovers rather than requiring subsidies.

Governments of immigration countries may prove willing to finance refugee cities and support enabling legislation in potential host countries, particularly if doing so reduces migration pressure on their own borders. This creates a coalition of interest—host country governments, developed country governments, private investors, and refugees themselves—that makes implementation feasible.

Conclusion

The elements for refugee cities already exist. Special economic zones have proven the viability of autonomous jurisdictions with distinct regulatory environments. Proprietary jurisdictions like Próspera and Morazán demonstrate that proprietary governance can deliver public services efficiently. Refugee populations themselves have shown repeatedly that given opportunity, they create value rather than consume it.

What remains is to combine these elements deliberately. Governments, investors, and operators should work together to create the legal frameworks, financial instruments, and initial developments that prove the concept. The potential gains—for refugees, for host countries, for the international community, and for the cause of better governance more broadly—justify the effort many times over.

1. Michael Castle-Miller, “Refugee Cities: Expanding Options for Refugees and Hosts,” 2018. See also Pieter Cleppe, “Refugee Cities: A Possible Solution to the Migrant Crisis,” 2016; and Noah Smith & Pieter Cleppe, “Refugee Cities,” 2015.

2. Castle-Miller (2018).

3. Ibid.

4. Ibid.

5. Ibid.