(2018) puts Syria’s real GDP at about USD 27 billion in 2017 – some 55 percent below the 2010 level and close to the level in the early 1990s. Our central projection of Syria’s potential GDP level in Section 3, at USD 21.2 billion in 2018, is 65 percent below the GDP level in 2010, close to the loss experienced by Lebanon.

To analyze the outlook for growth in Syria, we first consider a voluntary mobility case within which our projections for the growth drivers are guided by three plausible political settlement/security outcomes (baseline/moderate, optimistic, and pessimistic). These settings are associated with varying levels of reconstruction assistance, which in turn influences the voluntary mobility of refugees residing in neighboring countries.<sup>40</sup> With regard to linkages to the drivers of growth, the amount of reconstruction funds directly affects public and private investment.

Refugee returns, meanwhile, affect the size of the labor force. We also build in variation in human capital growth based on different assumptions for enrollment rates and vary the projections for TFP growth across the three scenarios. We then look at a second broad case of forced repatriation of refugees. Forced repatriation would contravene UN principles that care for the safety and welfare of refugees,<sup>41</sup> but it may be instigated by local and international voices eager for a quick resolution of the refugee issue.<sup>42</sup> Under forced repatriation, refugee returns are disconnected from the size of the reconstruction program, and instead, a “full” rate of refugee returns is assumed across the three scenarios. We thus have six scenarios in total – three for each of the two different broad cases (voluntary mobility and forced repatriation respectively). These are summarized in Table 5. We discuss the projections for the growth drivers in detail in Section 4.1 below. Then, we present the resulting simulations for Syria’s growth over the next 30 years in Section 4.2.

# **4.1 Prospective developments in growth drivers**

## _4.1.1 Physical investment_

The reconstruction and expansion of Syria’s physical capital will largely depend on the extent of foreign funds made available since its self‐financing capacity is likely to be limited, especially in the near term. We use Equation (7), a slight variant of the saving/investment ‐ balance of payments accounting identity, to link �� to the inflow of foreign funds.<sup>43</sup> �� (Note: S� = saving _excluding_ net current transfers, CAB� = current account balance _excluding_ net current transfers, TB� = trade balance, IB� = income balance, NCT� = net current transfers, ∆NFL� = change in net foreign liabilities.)

> 40 World Bank (2019) finds that pull factors, of which two prominent ones are security and infrastructure, have unambiguous effects on return behavior, in contrast to push factors in countries of asylum which have mixed implications.

> 41 The UN principle of non‐refoulement, codified in Article 33 of the 1951 UN Refugee Convention, requires that “no contracting state shall expel or return a refugee in any manner whatsoever to the frontiers of territories where his life or freedom would be threatened.”

> 42 The limitations that the UN non‐refoulement principle places on repatriation is frequently resented by states. Host countries are often impatient to see uninvited refugees leave. Countries of origin are sometimes impatient to see them return and signal the end of conflict. Moreover, donor states are eager to bring an end to the long‐term refugee assistance programs that they fund.

> 43 The standard identity has net current transfers as a component of the current account balance.

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