Are golden visas a golden opportunity? Assessing the economic origins and outcomes of residence by investment programmes in the EU

Good detailed study. Money quote: “our analysis suggests that wealthy investor migrants may be better conceptualised as mobile, profit-oriented populations akin to tourists and businesspeople, rather than as long term-oriented immigrants.” Conclusion below:

The twentieth century saw a remarkable shift from screening new immigrants based on racial origins to screening based on human capital contributions (Joppke 2005; FitzGerald and Cook-Martín 2014). The spread of RBI programmes in the twenty-first century adds a new dimension: screening new residents by economic capital contributions only. The results of this investigation suggest an upper limit on Ellerman’s (2019) finding that western countries now devalue the economic offerings of foreigners when selecting new members. In contrast to the policies aimed at workers that she examines, here we see that countries are indeed supplying pathways to long-term residence and citizenship for those making economic contributions – as long as they are very sizeable. Notably, the injections are one-off and the new residents are not expected to continue to contribute to economic growth in the same way that migrant workers might; they must simply maintain the original investment. The trend suggests a short-term calculation on the part of states, seeking to plug economic gaps, as our analysis finds, rather than a longer-term orientation of crafting a middle-class national identity (cf. Elrick and Winter 2018; Ellerman 2019). If social capital (Portes 1998), human capital (Stark, Helmenstein, and Fürnkranz-Prskawetz 1998; Ellerman 2019), and ethnic capital (Mateos and Durand 2012; Kim2018) have captured the attention of social scientists analysing migration, the developments tracked here suggest that a renewed focus on economic capital may be warranted. We find that states continue to harness mobility policies in service of economic objectives, now in a more starkly transactional manner, and – as we show – no matter what the political orientation of the government may be.

If RBI programmes are becoming an increasingly popular policy option, not all countries see the same uptake. Demand in Europe is concentrated in a handful of pro- grammes: just four countries represent 75 percent of all investor residents. The programmes now bring nearly €3.5 billion to the Union annually, yet the economic benefits are uneven. Indeed, only in two countries, Latvia and Portugal, are the economic injections large enough to represent a significant proportion of FDI. However in no country do they represent a substantial proportion of GDP, suggesting that concerns about macroeconomic destabilisation are unwarranted.

Our analysis reveals that economic decline leads to a greater likelihood that countries will start programmes, and that if the economic decline occurred during the Eurocrisis, the likelihood is yet greater – an argument proposed but not demonstrated by the literature (e.g. Parker 2017; Holleran 2019; Dzankic 2018; Veteto 2014). The choice of investment options, too, is largely responsive to economic need when governments implement real estate and business investment options, though not government bond options. Furthermore, the spread of programmes itself does not lead to more programmes: there is no contagion effect. As such, driving the onset of RBI programmes is more than mere client politics or neo-liberal ideology (cf. Mavelli 2018); economic need is a significant factor behind them. However, investors may stymie government intentions to use programmes to boost several areas of the economy, for they overwhelmingly invest in real estate if given the option.

Furthermore, our analysis suggests that wealthy investor migrants may be better conceptualised as mobile, profit-oriented populations akin to tourists and businesspeople, rather than as long term-oriented immigrants. The results lend support to qualitative work that identifies such mobile populations as ‘flexible citizens’ (Ong 1999), who use investment to multiply their options and secure additional bases, rather than to pack up and immigrate or invest in a growing economy (see also Ley 2010; Surak 2020a). We also find that countries with strong tourism sectors can charge more for their programmes as well. Yet they are not merely profit maximisers, choosing a price that will attract the most applicants; they respond to internal issues too, changing price in accordance with economic growth and employment rates.

A number of analysts have raised warning flags that investor migrants may price locals out of real estate (Scherrer and Thirion 2018; Holleran 2019). Our analysis shows the concern is unwarranted: the proportion of RBI real estate transactions in the national market is miniscule in nearly all cases. Notably, these programmes attract more distant and often ‘browner’ others than the fellow Europeans who constitute the greatest proportion of foreign real estate buyers and raise less media hype, suggesting that xenophobia may lie behind the concern. Greece is the sole, but significant, exception where the scale of the programme could indeed destabilise the property market. As real estate investment tends to be concentrated in specific locales (Friedland and Calderon 2017; Viesturs, Pukite, and Nikuradze 2017), regional and city-level data are necessary to further identify whether more limited destabilisation is occurring in particular areas.

What has been the impact of Covid-19 on these programmes? The sudden hardening of borders across the world has sent many wealthy people looking for ways to hedge their risks by securing mobility options and a Plan B (Surak 2020b, 2020c). To date, as we show, national-level healthcare statistics have been insignificant, but Covid-19 may encourage wealthy investors to select countries that have handled the pandemic well or that offer state-of-the-art healthcare. Covid-19 may also bring a shift away from a short-term ‘tourist-like’ calculation to a medium-term calculation preferring a place for longer-stint stays.

Regarding supply, Covid-19 is likely to increase the attractiveness of RBI programmes as a way to draw in foreign investment. Our study found that countries are more prone to start programmes after a period of slowed economic growth, particularly after a systemic recession. If the economic downturn spurred by the pandemic continues, it is likely that new countries will start their own programmes, replicating the pattern we found, and that countries with RBI offerings already in place will attempt to develop them further to address deepening economic need. Even if the schemes to date have been small, they still offer a means to attract additional resources at little cost. With real estate the most popular qualifying option, the investment boost is likely to be concentrated in the property and construction sector, which itself is transforming as the pandemic reconfigures work patterns and the desirability of urban living. Even if the European Commission continues to call for ending the programmes, countries are more likely to adapt their RBI offerings – perhaps by shifting them closer to, or even transforming them into, entrepreneurial options – rather than do away with them entirely.


About Andrew
Andrew blogs and tweets public policy issues, particularly the relationship between the political and bureaucratic levels, citizenship and multiculturalism. His latest book, Policy Arrogance or Innocent Bias, recounts his experience as a senior public servant in this area.

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