What the Rise in Citizenship by Investment Means for the Economy

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(Newswire.net — March 23, 2016) — The topic of immigration and border controls is one that we encounter frequently in the news. It touches on themes such as the nature of citizenship and personal identity, and it is widely discussed in the context of its impact on single countries, entire continents, and the world as a whole. Whilst experts generally agree that the global economy benefits from immigration, the issue of whether a prosperous nation may suffer from unchecked immigration is more contentious.

On Freakonomics Radio’s Is Migration a Basic Human Right, Madeleine Albright, former United States Secretary of State, explored the reason why immigration is such a controversial issue: “The basic issue is fear, and the fear often comes from a sense that there is an economic loss; that somebody has taken your job, or your house, or married your sister.”

The fear of economic loss discussed by Dr Albright is one that is closely tied with work migrants, who are seen to compete for limited jobs. This fear should play less of a role when immigrants are high net worth individuals looking to invest part of their wealth in a new country in order to obtain citizenship rights. Unsurprisingly, second citizenship by investment programmes, also known as economic citizenship programmes, which target wealthy migrants rather than the working middle class, have risen sharply in the past three decades leading to magazines even being curated on the subject.

Citizenship by investment programmes, unlike most other immigration programmes, offer the coveted prize of citizenship in return for a significant investment in the receiving country. The Caribbean nations of Dominica and Grenada, for example, each offer citizenship in return for either a contribution to a government fund, or an investment in pre-approved real estate. This means that citizenship, and the prospect of immigration, is awarded in exchange for a tangible input in the national economy.

This input in the national economy translates into the Government having more capital to invest in social projects, infrastructure development, and the creation of sustainable jobs. The St Kitts and Nevis Government fund, known as the Sugar Industry Diversification Foundation (SIDF), for example, was established to help the economy recover after the sugar industry was closed down.

Funds gained through the Programme were used to develop new sectors, and create new jobs for the local population. Today, St Kitts and Nevis one of the fastest growing nations in the Caribbean, with 6.6 percent economic growth rate for 2015, and a 5 percent growth rate predicted for 2016. 

Citizenship by investment is also an unlikely route for those looking to new nations to obtain employment. By virtue of the fact that a significant investment is required to apply under these programmes, citizenship by investment is exclusively the domain of high net worth individuals and businesspersons with substantial personal assets. These immigrants are more likely to create jobs in their new nation, than they are to compete for them.

With the local economy receiving direct investment from immigration, and the benefits of such investments being felt at all levels of society, a large majority of the fears associated with immigration are abated. Indeed, citizenship by investment is repeatedly viewed as a mutually beneficial means of regulating immigration – with the nation benefiting from foreign financing, and individual applicants benefiting from the new freedoms afforded to them by their new citizenship, including greater mobility, safety, and business opportunities.