In democratic countries, a high number of individuals become very engaged in politics/economics in election times. They often see hope, a path for change, or improvement. Empirical evidence, however, strongly suggest that there is no hope. Sustainable economic growth is highly correlated with domestic institutions, which are almost always changed every couple of centuries through external shocks (e.g. wars). Overall, Latin American countries have been poor for the last 500 years. Southern US have been poorer than the north for more than 300 years. Eastern Europe have been poorer than western Europe for 600+ years. People are not stupid in these less developed places since once they migrate they do as well as natives if not better, multiple studies indicate. It is also not that people are not voting well. Hundred of elections have happened throughout multiple generations and nothing fundamental really change. Sometimes, countries break this path but that's almost always due to external factors. The Koreans, for example, were pretty similar before the War. After the separation between South and North Korea, their domestic institutions diverged as well as their development path. The same happened for Taiwan after the Chinese Revolution. Singapore became independent after pretty much being kick out of Malaysia. None of these states became rich due to "smart" election choices. A few countries managed to change the class structure with revolution, but those were probably only 5 in the last 5000 years, historians say. So, I also do not recommend trying a revolution. Empirical evidence says that it is probably not going to work either. Ask some Iranians how they are doing after the Iranian Revolution or some Egyptian if they are rich after the Arab Spring, if you have questions. Of course people are getting richer but that is because capitalism is a pretty remarkable system. By making you better off you tend to make others better involuntarily. By expanding your company to get richer, e.g., you are giving more jobs to other people, making them better off also (i.e. the invisible hand). But capitalism do not change institutions. Inequality is not something that capitalism change fundamentally. Multiple studies managed to trace back wealth in Italy using last names and they suggest that families who were rich 500 years ago are still rich today. The poor families 500 years ago are still poor in relation to the rich. On average, Latin American will always be poorer than US-Europe; the US will always be an unequal society; eastern Europe will always be poorer than western Europe; until some major external shock happens. Elections will not change that. In fact, elections are pretty useless. If structural issues bother you, data strongly suggest that you should move to another country. No, your country will not fix itself. There is no hope from the beginning.
How to gain fiscal residency somewhere? Usually, you need to be able to legally stay in the country for more than 3 or 6 months to gain local fiscal residency and this is not possible to do, in most cases, without a visa or local citizenship. You will probably need to find a job, register for classes, or marry a local. Exceptions are made for a few multilateral treaties, such as the Schengen Agreement. If you hold one of the 26 Schengen area passports, you can move for good to any of these 26 European states without much problem. If you have 1,2, and sometimes up to 3 generations ascentry from an European country you may be eligible for double citizenship.
If you have some capital saved, several countries also legally sell permanent visas (e.g. Portugal, Cyprus, Bulgaria, and dozens or others) and even passports (e.g. Malta, St Kitts and Nevis, Bulgaria). If you have enough capital to buy a passport those are specially interesting as it can be used for extra benefits, such as visa-free travel to a larger number of countries or territories
Citizenship and residency by investment programs
Citizenship and residency by investments programs can be divided in 2 groups: citizenship by investment programs and residency by investment programs.
Citizenship schemes give a fast option for wealthy individual to acquire an extra citizenship/passport after the investment of a large amount of money in the local economy. They also provide citizenship/passport for the family, i.e. husband/wife and children. However, inclusion of relatives sometimes requires a higher investment. These schemes were created to stimulate the economy through the creation of jobs, improvements in infrastructure, revitalization of the real estate market, etc. The first citizenship by investment program, also known as “Golden Passport,” was created in the 80’s in St Kitts and Nevis. Wealthy individuals interested to apply to these programs usually have two options: (1) provide an investment that can later be redeemed or (2) offer non-refundable financial contribution to the local government. However, the values in (1) and (2) are rarely the same. In St Kitts and Nevis, for example, the minimum investment value in real state is $400,000, while the contribution is $250,000. There are also high fees not included in this “investment” amount. In St Kitts and Nevis, the application fee for one individual (i.e. not including families) is $50,000 and $35,000, depending in the “investment” option you choose.
The other type of scheme, i.e. residency by investment programs, give wealthy individuals and their families the right to reside in a certain country indefinitely without the need to have any other type of visa, e.g. student or work visa. To do so, however, they also must donate a large amount of money to the government or investment even higher amounts in the local economy. Usually, residency schemes provide a clear path to citizenship since after a predetermined amount of years the applicant and his/her family are allowed to apply for the local nationalization. The oldest residency schemes (e.g. Canada, US, UK, Australia and New Zealand) require individuals to spend a significant part of their time in the respective country of application, which usually means a new tax residence and new life for the applicant and his/her family. Applicants from such “Golden Visas” are especially prone to become migrants. On the other hand, more recent residency schemes (and all citizenship by investment programs) do not require applicants to spend more than 1 week per year in the country of investment. Many of them, in fact, do not require not even 1 day of physical residency. In other words, despite having the right to live in the country of application, wealthy individuals often choose to not do so. In fact, Estonia pioneered an e-Residency program in 2014, which does even give right to enter the country.
Therefore, one may ask why would someone want a residency or even a citizenship from one of these countries with the applicant may not even live there? There are multiple reasons. First, different passports give visa-free travel to diverse group of countries. The Chinese passport, for example, only gives access to 65 countries in the world. For the other roughly 130 states, China’s citizens need to apply for visas in advance, pay relatively high fees, and still have the chance of having his/her approval rejected. Cyprus and St Kitts and Nevis, on the other hand, give hassle free access to 150 and 128 countries respectively, including EU and USA (Passport Index, 2018). Second, extra citizenships/passports can be used to legally avoid taxation. The United States, for example, tax its citizens based on citizenship. As long as you are American, you must pay taxes for Washington even if you live abroad and earn all your income abroad. The easiest way to go around this is to renounce the American citizenship. On the other hand, as long as your are not American, you are a permanent resident of a non-income state (e.g. Antigua and Barbuda), and all your earnings comes from investments in this country, you do not need to pay taxes. According to the US Treasury Department, the number of American renouncing citizenship has been increasing exponentially and is currently in its all time high. One example of this is Eduardo Saverin, facebook co-founder, who held double citizenship Brazilian-American and renounced American citizenship to live in Singapore. Brazil does not tax citizens working and living abroad and Singapore only tax residents for income made in Singapore. So, if Eduardo has all his money invested in a no-income tax country, like Monaco, he can possibly be paying 0% tax. Other types of taxation, such as inheritance tax, can also be legally avoided though the use citizenship and residency by investments programs in many cases.
Third, citizenship or residency gives the right to the applicant and his/her family to work or study in the local country without a visa. It is unlikely that wealthy individuals will want to work or study in Malta, but since Malta is a member of the EU and the Schengen area a passport holder of this country can work or travel in any Schengen country and his/her kids can study in any EU country without the need of a visa. Grenada citizens have the advantage that they can preferentially apply to US residency through the E2 visa scheme, which is a cheaper track to the normal American residency scheme (EB-5). Portuguese residents can apply for 10 years of territorial taxation, i.e. 0% for foreign source income. In summary, dissimilar immigration investor programs often give access to extra benefits. Forth, individuals trying to escape persecution or other political issues in their home country can also use a second citizenship to flee. Fifth, a second passport can also be seen a “plan B” in case of start of a war, economic crisis, tax law reforms, or other event that can negatively impact ones quality of life. Sixth, a specific number of jobs require citizenship. For example, to work in many of the EU institutions one must be a EU citizen. In order to get a job in the American Federal Reserve and many national security agencies one must also be American or at least a Green Cars holder. Seventh, residency (including e-Residency) allows the opening of bank accounts, online payments, and to register a company in the local country with less effort.
Although citizenship and residency by investments programs can be used for purely legal purposes, it is also possible to use it for money laundering, bribery, and corruption, among other issues. Host jurisdictions, nonetheless, have interest to maintain the integrity of their programs and the value of their citizenship in order to avoid reputational risks. Hence, individuals applying for these programs have to go through a certain level of scrutiny, which can vary from online checks to interviews, biometrics, and even live monitoring of the applicant. Most of these investors programs also have formal rules stating that clean criminal record is an irrevocable requirement. Moreover, several countries, like St Kitts and Nevis, have security ban on nationals of specific states, such as Iran and Afghanistan. Other citizenship and residency by investment programs have capped the number of applicants that can be accepted per year, e.g. Malta.
Many of the individuals interested in the Caribbean programs come from Asia and Middle East. Antigua and Barbuda Citizenship by Investment Unit has reported that something between 33% to 50% of the applicants are Chinese born, while another very significant portion comes from the Middle East. The Maltese scheme has fairly different customers with 60% of its applications coming from the former Soviet Union. In the US, and Canada at least 2/3 of the applicants are also Chinese nationals, followed by Russia and Middle Easters citizens. In Portugal, Brazilian customers are the second main nationality, after Chinese. Interestingly, China is one of the countries that do not allow double citizenship but the authorities do not strictly enforce the law. Not all persons interested in these programs come from the Global South. After the Brexit, for example, Ireland had an increase of two thousand percent in its application coming from Great Britain. In the Estonian e-Residency, most of the applicants have come from Finland. Americans, French, Germans, among others, are also relevant customers of Golden Programs. Rather than free visa pass, however, citizens of these rich countries are often more interested in tax avoidance.
Pedro Moraya Barros is the founder of Moraya Consulting. He is also a director and co-principal investigator of the Global Leadership Project (GLP), which is sponsored by the World Bank Group, and a PhD student at the University of Texas at Austin