Citizenship by Investment and Golden Visa programs attract high-net-worth individuals seeking residency or citizenship in desirable locales. While such programs undoubtedly offer an extensive range of benefits for the investor, they also unlock a wide range of opportunities for the host country.
These programs entice affluent individuals to channel their funds into the local economy by offering residency or citizenship in exchange for investment. Whether through real estate investments, business ventures, or job creation initiatives, Citizenship by Investment and Golden Visa investors infuse capital into the community, bolstering its economic foundation and injecting vitality into local businesses.
All in the numbers
The benefits of these programs have been proven in the numbers. Malta’s economy, for instance, faced serious challenges during the global financial crisis. However, only a few years after launching the citizenship program in 2014, the country experienced one of the highest growth rates and lowest unemployment levels among EU member states. Between 2017 and 2019, Malta reported annual budget surpluses for the first time in decades. By the end of June 2019, Malta had generated nearly EUR 835 million in direct revenue, property sales surpassed EUR 141 million, rental income reached EUR 90 million, and investments in government bonds exceeded EUR 160 million.
The same trend can be seen in Caribbean nations such as Antigua & Barbuda, Grenada, Dominica, St. Lucia, and St. Kitts & Nevis, home to the most popular, sought-after, and established Citizenship by Investment programs globally. Reports highlight that Citizenship by Investment programs constituted 25% of Dominica‘s GDP in 2019, accounting for half of the government’s total revenue. Reports have also shown that in 2019, the revenue raised by Antigua and Barbuda’s Citizenship by Investment program grew by 66% yearly to USD98.9m – approximately 12% of total government revenue. The country’s prime minister, Gaston Browne, was quoted as saying: ‘Our non-tax revenues, principally the earnings from the Citizenship by Investment programme, performed much better than our tax revenues. This underscores the vital importance of Citizenship by Investment to our economy.’
Development of infrastructure
The story remains the same in St. Kitts and Nevis, where these inflows have benefited real estate and tourism development and fueled a pickup in construction, thereby stimulating local economic activity. This, coupled with government initiatives to boost employment through public employment programs, contributed to lowering the unemployment rate in St. Kitts and Nevis to well below the Caribbean average. Because of the strong Citizenship by Investment flows, the debt-to-GDP ratio of St Kitts and Nevis is also one of the lowest in the Caribbean region.
These nations have also funneled much of the money towards their infrastructure. Dominica is building a USD 370 million international airport funded by its Citizenship by Investment Program. The government has commenced construction and delivered part of its plan to provide 5,000 hurricane-resistant, affordable homes to its citizens, funded by its resources. With a population of approximately 71,000 residents and around 26,000 households, the Citizenship by Investment-funded housing project has the potential to offer affordable, high-quality housing to roughly 20% of Dominica’s households.
Robust infrastructure and more stable communities enhance residents’ overall quality of life. It also means government funding can be directed towards more initiatives to help strengthen tourism, which can further boost local businesses. This is especially critical for smaller countries that face major natural catastrophes like annual hurricanes. This influx of money can make a significant difference, often being a lifeline, in ensuring the resilience and independence of the government.
Creating Jobs
Job creation is one of the most tangible benefits of Citizenship by Investment and Golden Visa programs for local businesses. The Caribbean nations all boast a real estate option within their Citizenship by Investment programs. As investors inject funds into various sectors such as real estate, hospitality, and technology, they fuel demand for goods and services, leading to a surge in employment opportunities.
From construction workers building new developments to service industry professionals serving affluent residents, the impact of Citizenship and Golden Visa investments is felt across the local job market, creating livelihoods for residents and promoting economic prosperity. The construction of these resorts requires hiring construction workers, engineers, designers, and other professionals. Local businesses can supply materials for these large projects, and once completed, the resorts need to be managed and staffed by local workers.
These frameworks have also benefited EU member countries that offer Golden Visas. For example, under the Portuguese Golden Visa program, investors can qualify for residency by investing in a business that creates at least ten full-time jobs, adhering to Portugal’s labor laws and social security regulations. According to a report by the Organisation for Economic Cooperation and Development (OECD), foreign-owned companies in Portugal, which accounted for only about 2% of all companies in 2020, played a crucial role in the country’s economy by employing 18% of the national workforce, generating 28% of the total added value, and being responsible for 46% of all exports.
Stimulating local economies and the entrepreneurial spirit
Beyond job creation, Citizenship by Investment and Golden Visa programs stimulate local economies through increased consumer spending and tax revenue generation. With affluent investors settling or visiting to fulfil residency requirements or simply seeking to establish a connection with the nation, demand for luxury goods, upscale services, and premium experiences escalates, supporting local businesses catering to a discerning clientele.
Citizenship by Investment and Golden Visa programs not only attract passive investors but also nurture entrepreneurial talent within local communities. These programs incentivise establishing startups and small businesses by offering a pathway to residency or citizenship for entrepreneurs with innovative business ideas, driving innovation and diversification within the local economy. According to the OECD report, in Portugal, foreign companies contribute significantly to the country’s Research and development efforts, representing 25% of total R&D. Whether through technology incubators, co-working spaces, or mentorship programs, Citizenship by Investment and Golden Visa initiatives foster an ecosystem conducive to entrepreneurial success, cultivating the next generation of local business leaders.
The economic impact of Citizenship by Investment and Golden Visa programs on local businesses is undeniable. These programs catalyse economic growth and prosperity by attracting investors who infuse capital, create jobs, stimulate spending, and foster entrepreneurship. As governments worldwide continue to embrace these initiatives as a strategic tool for economic development, local businesses stand to reap the rewards of a vibrant and resilient economy fueled by international investment and innovation.
