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Residence and Citizenship by Investment

The Benefits of Investment Migration Programs are Cumulative and Reinforcing

Dr. Juerg Steffen

Dr. Juerg Steffen

Dr. Juerg Steffen is CEO of Henley & Partners and author of definitive books on high-net-worth relocation to Austria and Switzerland.

Contrary to what many believe, residence and citizenship by investment programs are not the exclusive domain of small island nations. Nineteen of the Group of 20 nations have mechanisms to attract inward investment in exchange for residence rights. Sixty percent of EU member states host investment migration programs. Highly developed nations design and implement them for the same reasons small and developing nations do — to attract foreign capital, skills, and knowledge to stimulate their domestic economies.

Macro-economic benefits of migration

Migration is often described as having tremendous potential in the face of many challenges that will have to be addressed at a global scale in the 21st century. In his book Move, Dr. Parag Khanna demonstrates that over time, economic, cultural, and demographic factors have engendered a mismatch between the distribution of people and the situation of resources on the planet. Current geopolitical tendencies — whether deep trends such as wars, political instability, and climate change or ad-hoc occurrences such as a political crisis or a pandemic — have already prompted thousands to relocate to countries that offered safer or more profitable living conditions. According to Dr. Khanna, this context naturally leads to an increased circulation of population until the imbalance between people and assets, between needs and abilities, is settled.

GMR - Steffen

There are well-documented examples of communities that earn more in countries they emigrate to than if they had remained in their countries of birth. Some diasporas have a higher income than the national averages of their homelands. The case of Indian and Lebanese nationals who have emigrated to the USA is particularly striking, suggesting that there were pressing needs both in countries and populations.

This state of affairs is a fortunate coincidence that is confirmed for people from various backgrounds and socio-economic status, and it has emerged from traditional migration programs. Investment migration programs, per contra, provide immigration channels and alluring opportunities for wealthy, well-educated, highly skilled individuals whose activity and investments have a direct influence on swathes of the global economy.

In fact, migration policies in general can prove to be an alluring means to galvanize economies, mitigate global, regional, and national risks, and improve the lives of many individuals.

Boosting national prosperity via sovereign equity 

The movements of populations, when they are well supervised and voluntary, hold considerable gains for individual countries. Specifically, investment migration programs allow host countries to increase their sovereign equity, a concept innovated by Henley & Partners at Davos just before the pandemic took hold. The premise of this approach, via residence and citizenship by investment programs, is to improve a country’s public finances and support its economic growth and employment creation without increasing its debt.

In the context of the Covid-19 pandemic and repeated economic crises, which have slowed the world’s economy and affected the fiscal balances of many nations, it is unsurprising that governments’ interest in investment migration has spiked. Over the last two years, various countries have either created new programs or improved existing options in a bid to attract high-net-worth individuals, investors, or talented persons. And now, the invasion of Ukraine is likely to slow economic growth and damage the global economy further, and we will no doubt see further enquiries from governments wishing to set up programs.

During a December panel discussion at Henley & Partners’ 15th Global Citizenship Conference, the Hon. Mark Brantley, Premier of Nevis, stated: “If you were to ask what saved St. Kitts and Nevis during the pandemic, I would say citizenship by investment. This experience has demonstrated that citizenship by investment has a place in this world, particularly for small countries like ours, and for countries that do not have access to vast resources.”

Large or small – all states stand to benefit from investment migration

The Caribbean is not the only region to have benefited from embracing investment migration. Studies consistently reveal that programs can be a net plus, even in advanced economies. The not-for-profit trade association, Invest in the USA, has measured that between 2008 and 2021, the single US EB-5 Immigrant Investor Program drew USD 41 billion in capital investment, prompting the creation of hundreds of thousands of jobs and yielding billions in tax revenue. These figures do not take into account the many successful entrepreneurs, academics, artists, and athletes that also contributed to enhance the USA’s international presence, as well as the investments generated by the country’s other investor visa programs — especially the E-2 program.

With its good reputation and advanced economy, the USA generally attracts more skilled immigrants than other nations, but statistics show that all countries with active investment migration programs garner rewards from them. Malta, for instance, drew over EUR 1 billion from the Malta Individual Investor Programme between 2014 and 2020, and Cyprus earned nearly USD 8 billion between 2012 and 2019, while their GDP amounted to averages of USD 13 billion and USD 23.4 billion, respectively, for these periods. Supporting these trends are families and individuals who, as they attempt to improve their quality of life and enhance their possibilities, are the driving forces of investment migration.

Investment migration programs provide a boost for host nations and investors in the new world order

The benefits of investment migration tend to be cumulative and reinforcing. For the sovereign state, they create interconnected positives such as increased tax revenues, infrastructure development, better fiscal performance, and reduced dependence on debt and aid. For the investor, in addition to the traditional benefits of enhanced global mobility, residence and citizenship by investment programs offer a proven diversification strategy in terms of wealth and legacy management and domicile optionality, and many include the option to invest in real estate, which itself has multiple yields.

It is evident that investment migration programs offer many positive opportunities across the full spectrum of stakeholders and are in line with the fundamental principles of freedom of movement and national sovereignty. The movement is simply unstoppable. Nations without investment migration programs will find themselves increasingly handicapped in the global competition for investment and talent.

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