Madeleine Sumption is the Director of the Migration Observatory at the University of Oxford, in Oxford, UK
A wide range of countries now offer investment migration programs, exchanging residence rights or citizenship for a sizeable investment in their economies. From ‘cash‑for‑citizenship’ to incentives to invest in private‑sector businesses or property, the market for investment migration has become increasingly diverse.
But how much value are governments getting from these programs? In theory, the benefits of investment migration programs for the countries that offer them are straightforward. Destination governments can use them to generate revenues for social programs, infrastructure, or paying down the deficit. They can also use them to attract job‑creating investments in the private sector. For small countries, the proceeds from investment migration programs can be considerable.
In practice, policymakers have often found the results disappointing. While small countries with large investment migration programs can raise substantial funds, investors’ activities in larger countries that have also embraced the programs — such as the USA or the UK — are a drop in the ocean compared to the size of their economies.
Designing programs to maximize economic benefits can be a challenge, and rigorous empirical evidence of their impact is usually absent. For many years, the UK gave residence rights to investors who purchased ordinary, interest‑bearing government bonds — a transaction of which benefits to the UK economy were close to zero. Several European countries, such as Portugal and Spain, simply require applicants to purchase residential property. The impact of these transactions is also likely to be quite limited (barring some concentrated benefits for realtors and agents). Programs that require private‑sector business investments, such as the US EB‑5 Immigrant Investor Program, are somewhat more promising in theory, but have been difficult to implement. Policies have only limited influence over how money is invested and whether investments actually create the expected number of jobs — especially since applicants can withdraw their investments as soon as they qualify for permanent residence or citizenship.
The clearest economic benefits come from programs that encourage cash payments to the government or to national development funds. While there is no guarantee that governments will spend this money wisely, this model has two advantages over the alternative options. Governments know exactly where the money is going and what is being done with it, and non‑refundable donations cannot be withdrawn a few years later. However, the simple transparency of this model makes it controversial and unpopular, accentuating public concerns about whether it is appropriate to ‘sell citizenship’.
Not all investment migration programs can accurately be described as ‘immigration’. Some impose no requirement to spend time in the country, while others require only minimal visits of a few days per year. Such programs are often marketed for the access they provide to visa‑free travel in other countries. Notable examples include the citizenship by investment programs in St. Kitts and Nevis and a handful of other Caribbean countries, which have relatively good access to visa‑free tourist and business travel worldwide. Most programs would struggle to attract applicants if they required investors to live in their country.
Countries with minimal residence requirements need to protect the reputation of their programs. Screening procedures to weed out applicants with criminal backgrounds or illegally obtained wealth help to reduce reputational risks, which — in a worst‑case scenario — could make other countries unwilling to offer visa‑free travel to said country’s citizens. This screening is much more thorough than that which most countries require for their tourist or business visas, but has inherent limits, and the risk of bad apples gaining entry through such a program cannot be eliminated entirely.
Where to next for residence and citizenship programs? Growing demand from the world’s new wealthy classes means that the flow of applicants is unlikely to vanish any time soon. As governments continue to develop their programs, learning from other countries’ experiences will be important. Popular destinations with longstanding programs, such as Australia and Canada, have recently reassessed their policies for good reasons, including looking for ways to admit immigrants who make more active economic contributions. The challenge will be to maintain the integrity and reputation of programs while more clearly demonstrating the economic value.
Madeleine Sumption is the Director of the Migration Observatory at the University of Oxford. The Migration Observatory provides impartial, independent, authoritative, evidence‑based analysis of data on migration and migrants in the UK. Before joining the Observatory, she was Director of Research for the international program at the Migration Policy Institute in Washington, DC. She remains a non‑resident fellow with the Migration Policy Institute Europe.
Her research interests include the design and implementation of work‑based visa policies; investor residence and citizenship programs; and the economic effects of immigration policies in Europe, North America, and other high‑income countries. Her publications include, among many others, Selling Visas and Citizenship: Policy Questions from the Global Boom in Investor Immigration and The Economic Value of Citizenship for Immigrants in the United States.