The investment immigration industry is flourishing despite criticism related to ‘sale’ of citizenship and programs being misused for illegal activities.
In 2019, more than 60 programs are in operation, as opposed to just a few scattered options in the 1990s.
This boom has mirrored the growing acknowledgement of foreign direct investment (FDI) as a key driver of economic growth.
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FDI has had a tremendous impact on small resource-scarce nations like St. Kitts & Nevis or emerging countries recovering from economic troubles, like Cyprus and Malta.
With even developed nations relying on investment immigration to attract FDI, it is not surprising that smaller countries have been more aggressive in using economic citizenship programs.
Insulated from economic cycles, a residence/citizenship by investment program allows countries to incorporate FDI into their immediate and long-term economic strategies.
Impact of Investment Immigration
The case of St. Kitts is a very good example of how investment immigration can be simultaneously used as a tool for conventional economic planning as well as an innovative solution to tackle emergencies, including environmental disasters.
The contribution of the country’s CBI program to its GDP rose from 1 per cent in 2008 to 25 per cent in 2014. Even the IMF has acknowledged the importance of the contribution of foreign investment inflows.
In 2018, St. Kitts announced a temporary reduction in its minimum investment requirement to fund recovery efforts after a series of devastating hurricanes.
For a country with scarce natural resources and heavy reliance on tourism, hurricane damage is a double blow keeping tourists away as precious resources get used for repairs.
By leveraging the strength of its passport, the country has created a new revenue channel open to all other countries seeking innovative solutions to economic problems.
The Malta Individual Investor Program is another example of the transformative impact of investment immigration.
From running fiscal deficits for decades at a stretch, Malta became a fiscal surplus nation in 2017. At 3.9 per cent of its GDP, it was the best and strongest performance by any EU member nation.
The impact is even clearer in case of Greece. Influx of €1.5 billion into the country’s real estate sector, primarily through its golden visa program, has helped stem nine consecutive years of decline in real estate prices.
Beyond the Investment in Investment Immigration
Aside from foreign investment, such programs can also help countries attract foreign talent and entrepreneurship.
Lacking the infrastructure necessary to attract skilled workers in large numbers, small countries can customize their programs to attract talent in the form of dependents and children of high net-worth investors.
A badly-designed CBI program will pose an inherent risk to global immigration. Yet, this would be true for any and every poorly-managed immigration program or initiative.
Future efforts should focus on improving the quality of background checks and plugging loopholes. Simply doing away with investment immigration will end up doing more harm than good to global immigration and the global economy.