New World, New Policy: Entrepreneurial Money Produces Residency Permits

A successful Chinese entrepreneur, showed me a news article. It reported that wealthy Chinese could buy an American passport and become US citizens. Is this really true? What are the implications of this visa program?

The US Employment Based Fifth Preference (EB-5) program was established by the U.S. Congress in 1990, to link investment, employment and residency. Three years later, the program language was relaxed from “to create ten direct employment opportunities”, to “directly or indirectly create 10 job opportunities.” This is broad and flexible wording. It is designed for entrepreneurial and wealthy investors outside the US, who fund a new commercial enterprise of  at least $500,000 for investments. Under the program, those entrepreneurs, their spouses and their unmarried children under 21 years old can apply for green cards permitting residency.The objective is to attract foreign investments to the U.S., and to stimulate economic development and job creation.

EB-5 demand has increased rapidly. In 2012, President Obama extended the program. In May of 2017, Congress extended the EB-5 Program until September 2017. There are many supporters.

In 2014, 10 thousand EB-5 petitions were filed with the United States Citizenship and Immigration Services (“USCIS”). Overall, 5,115 have been approved. Over $2.5 billion investments were attracted. An additional $6.2 billion are awaiting federal adjudication. EB-5 capital is also an attractive low cost funding tool for project developers in the U.S. It offers foreign investors a way to permanent residency that is not backlogged by other applications and does not require sponsorship by a US employer.

Throughout the world today,  numerous programs like the EB-5 have been established. In Australia for example, foreign investors are granted the opportunity to immigrate, but only receive temporary residency for four years. An investment of AUD $1.5 million in an Australian company ( U.S $1.2 million) is required. France allows foreign investors to obtain residency for 10 years by making a “long term  and non-speculative investment of at least € 10 million (U.S $11.8 million) in industrial or commercial assets.”

There is a standard moral objection to the EB-5 program: The United States should not be in the business of selling the right to live there. This claim suffers from a slight misunderstanding. In effect, the government gives the visas away — to profit-making businesses that have jumped through the program’s requisite bureaucratic hoops. Then the companies can solicit investment based on the promise of permanent residency. In spite of ten thousand slots a year, 40,000 investors still wait for a green card. Obviously investor needs have not been met.

Investment immigrants are in high supply. The U.S government should use the opportunity and open the gates to them. The U.S. has an immigration culture, with a spirit willing to absorb both elites and  refugees of the world.

However, change must come; the program needs to be refined in terms of size of investment, number of jobs generated, industry direction, geographic location, and job recipients. I believe that the investment minimum should be $2.5 million, and the American job creation shall be at least 25. Then we can continue this program helping both investors and employees; a noble outcome!

No More Silos! (Part 2)

Setting the Stage: Engagement in the Global Marketplace

Francisco Sanchez, the undersecretary for international trade at the Commerce Department who leads the International Trade Administration and heads up its work to improve the global marketplace and help U.S. firms compete overseas, opened the March 2013 meeting on trade policy and international marketing (View photos of the event here).

On the third anniversary of the National Export Initiative, which had anticipated a doubling of U.S. exports within five years, Sanchez told the group that everyone has to be engaged globally.

U.S. exports, with a volume of $2.2 trillion in 2012, support 10 million jobs, which typically tend to pay 18% more than jobs only for domestic production. In 2008, Sanchez stated, 47% of Americans saw trade as a major threat. In 2013, 55% see trade as a positive dimension. Sanchez sees a new U.S. trade emphasis on Africa and Brazil, and key emerging opportunities through transpacific and transatlantic partnerships. He views export promotion as a new form of economic development.

This article is a part of a series written by Michael Czinkota and Charles Skuba who report on the March 2013 meeting on trade policy and international marketing, a collaboration between the American Marketing Association, Georgetown University and the U.S. International Trade Administration. View part 1 hereGuest writer Charles Skuba teaches international business and marketing at Georgetown University. He served in the George W. Bush Administration in trade policy positions in the U.S. Department of Commerce.

What Drives Globalization? Part 3/4

Globalization is driven by four factors:

  1. Cost
  2. Market
  3. Environment
  4. Competition

Environment:

Increasing consumer wealth and mobility, rapid information transfer across borders, publicity about the benefits of globalization, and technological revolutions continue to accelerate demands for global products and services. Newly emerging markets are benefiting from advanced communications by leaping over economic development stages that others slogged through in earlier years.

A new group of global players is taking advantage of the increase in trading regions and newer technologies. These “mini-nationals” or “born globals” serve world markets from a handful of manufacturing bases rather than building a plant in every country as was the procedure in earlier years. Their smaller bureaucracies also allow these companies to move quickly to conquer new markets, develop new products, or change directions when the situation calls for it.

This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.

Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg.91-92.

 

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