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Residence and Citizenship by Investment

Prepare for a Seismic Shift in Global Migration

Dr. Christian H. Kaelin

Dr. Christian H. Kaelin

Dr. Christian H. Kaelin is Chairman of Henley & Partners. He is an expert in investment migration and the inventor of the passport index concept.

It is undeniable that before the pandemic struck, it had become substantially easier to travel, study, work, do business, and settle abroad. Two years later, much of humanity is aching to get moving again, and not just in response to Covid. Economic opportunity, political tensions, and climate change all play a role. We do not get to pick from among crises when they all strike at the same time and collectively have significant potential to induce a broad reordering of the world’s population.

Particularly, people with talent and means are less and less restricted by geography and will increasingly relocate to countries with better business, work, and education opportunities, more robust health systems, better fiscal environments, and more sustainable infrastructure. They desire locations that are more stable socially and economically and that are less affected by armed conflicts and climate change. After witnessing and experiencing the devastating effects of the pandemic on the countries most impacted by coronavirus and its consequences, people now also look for the countries with the most stable and sensible governments. Residence and citizenship diversification has become a must for global entrepreneurs and investors.

This movement of people will be life changing for many and will prove to be an exceptional opportunity both for individuals and for countries. If managed positively, it could also provide a solution to the growing refugee crisis. As a rising number of people are forced to leave their birth countries, some nations, in fact, need to increase their populations — particularly in Europe — to maintain an optimum workforce and adequate social services.

States can grow their sovereign equity through positive immigration 

The unfolding increase in migration presents a unique window of opportunity to redistribute human resources on our planet. Countries that need to boost their workforces should be able to integrate people forced to flee their homes, but there is more: the nations willing to adopt the most effective migration policies are bound to improve their own sovereign equity — a new term we introduced in Davos in 2019. The competition to attract assets and talent is accelerating — Australia, Egypt, Italy, Jordan, New Zealand, Russia, the UAE, the UK, and the US are all examples of countries that are creating or improving existing residence and citizenship by investment programs to attract and retain investors, talent, and skills.

GMR - Kaelin

The future of the world’s economy will, one way or the other, be shaped by the realization of this unstoppable trend. The locations of major business and financial hubs — as well as the best places to live — are anticipated to shift and redistribute globally at an accelerated speed.

The Great Climate Migration is underway

Along with Covid-19, climate change is becoming a key driver of global mobility in the 21st century. The growing mass movement of people is referred to as ‘The Great Climate Migration’, with those forced to move due to climate disasters known as ‘climate refugees’. Call it what you will, it has begun, and it will grow dramatically in the near future.

Today, the UN puts the figure of forcibly displaced people at over 80 million; by 2050,  the Institute for Economics and Peace predicts at least 1.2 billion people could be displaced by climate-related events. Startlingly, at the COP26 talks in Glasgow in November 2021, Simon Kofe, foreign minister of the South Pacific island nation of Tuvalu, gave a virtual address wearing a suit and waist-deep in the ocean due to rising sea levels. He used the language of global mobility in his message to world leaders, saying “climate mobility must come to the forefront”. There is a threat that entire countries, such as Tuvalu, will disappear altogether. People will need new homelands, and even countries will need new territories.

There are other major concurrent demographic and economic drivers at play, including the ageing societies of the global north and the need for new, young talent. As Dr. Parag Khanna writes in his recent ground-breaking book MOVE: “aging countries are now staring down the barrel of economic stagnation unless they attract migrants and investors.”

A new generation of digital nomads

There is clearly a global mismatch between where the resources are and where people are. Individuals should be allowed to move to where the need for work is. An early signal of this is the rise of digital nomads. Young people are thinking increasingly globally, and this mindset — and movement of people — has been accelerated by the pandemic. As recently as 2019, Estonia’s digital nomad visa became the world’s first. By March 2021, the number of countries offering nomad visas had grown to 17 and to 24 by mid-2021.

Nomad visa offerings continue to grow as countries once dependent on tourism replace lost income by offering short-term residence to global workers in the digital economy. Historically, rural exodus was driven by the unavailability of jobs. Now, thanks to remote working, individuals can choose where to locate themselves and their families. Better than tourists, they stay beyond the traditional holiday season and spend regularly on goods and services.

Visa openness and mounting global competition

Given the rise in global competition for talented youth, the economic benefits of visa openness and the free movement of people are evident. It is important to note that the overall trend we have witnessed each year (prior to the temporary travel restrictions relating to Covid-19) was towards greater overall travel freedom, with far more visa-waivers being signed than revoked. Countries tend to make travel easier for those states that have made travel easier for them.

According to historical data from the Henley Passport Index, today’s global citizens can, on average, visit 107 destinations without a short-term visa, compared to just 57 when I first created the index in 2006.

The most remarkable turnaround story by far is the UAE, which continues its stellar ascendance on the index, which ranks all the world’s passports according to the number of destinations their holders can access without a prior visa and is based on exclusive official data from the International Air Transport Association (IATA). In 2011, the UAE was ranked 65th with a visa-free/visa-on-arrival score of 67, but today, thanks to the Emirates’ ongoing focus and effort to strengthen diplomatic ties with countries across the globe, it is ranked a very high 15th place globally, with a score of 175. This is an unprecedented achievement thanks to the remarkable focus of the UAE to take its place among the top nations in the world in almost every respect.

Mobility and opportunity at an impasse

Despite the apparent increase in global mobility, the gap in between those at the top of the Henley Passport Index and those at the bottom is at its widest in the index’s 17-year history. Passport holders from top-ranking Japan and Singapore — subject to Covid-entry restrictions — are able to travel visa-free to 166 more destinations than Afghan nationals, who sit at the bottom of the index with access to just 26 countries without requiring a visa in advance. This increasing gap in mobility inequality, between the global haves and the have nots, has been exacerbated by the pandemic

This echoes what Kwame Anthony Appiah, professor of philosophy and law at New York University, wrote in a recent essay:

…disparities between the global north and south are likely to be a feature of crises to come. The tale of two pandemics…is a tale of two international orders. The post-pandemic challenge, in turn, is to take seriously the rhetoric of an ‘international community’, and integrate the two into one.

The number of people in extreme poverty around the world, wrote Prof. Appiah, has risen for the first time since 1997: “the story of rising global interdependence is also one of rising equality among the nations”.

Viewed through an economic prism, the re-emergence of populist, nationalist politics is a hindrance. Closing borders and restricting visas will cause a drag effect on economic growth. The German labor force expanded between 2015 to 2017 not least because of the integration of refugees and migrants from Syria and beyond, and their contribution should be noted and welcomed, not shunned. As former Chancellor Angela Merkel knew all too well, Germany has one of the oldest populations in Europe. Politicians need to talk openly and honestly about their need for migrant labor if they are going to succeed in the competition for global citizens and mobile talent. Open, positive immigration policies such as those in Canada should become the norm, not the exception.

Allowing the wheels of migration to turn

I have long argued that a person’s right to live and work in a given country are a critical determinant of your lifetime opportunities. Citizenship, passports, and visas are among the most important instruments of global social, legal, and economic inequality. The borders within which we happen to be born, and the documents we are entitled to carry, are no less arbitrary than our skin color or who our parents are. Residence and citizenship by investment programs allow individuals and families who are exposed to potential hazards in their home countries — including political persecution and war — to enter a new state with the secure status of being permanent residents or citizens. The programs — alongside digital nomad visas and, at the other end of the scale, asylum seeker and refugee permits — are available levers for individuals to acquire and states to extend residence or citizenship rights. It is good to see that residence and citizenship by investment, a concept we pioneered, is becoming a mainstream concept with which now even large states operate to attract talent and investment and to offer individuals all over the world the opportunity to increase their mobility and life options.

Developed economies can no longer rest on their laurels. Unattractive politics and restrictive border policies may well see them miss out, and even experience brain drain as domestic talent leaves in search of more appreciative and welcoming shores. As we have already seen, climate change will cause exoduses from wealthy states too. As Kofe pointed out at COP26, Tuvalu is sinking. But so is almost everywhere else, just in different ways. Wealthy nations must encourage positive inward migration if they aim to improve, or at the very least maintain, their social model, standards of living, and the size and quality of their populations.

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