Foreign Investor Visas: Policies and Issues
Publication Date: February 2009
Publisher(s): Library of Congress. Congressional Research Service
In the 110th Congress, issues surrounding the entry of foreign investors into the United States are likely to spark legislative debate as Members contemplate comprehensive immigration reform. Congress may face decisions regarding the possible renewal of the immigrant investor visa pilot program, as well as the expansion of the E-2 nonimmigrant treaty investor visa.
There are currently two categories of nonimmigrant investor visas and one category of immigrant investor visa for legal permanent residents (LPR). The visa categories used for nonimmigrant investors are: E-1 for treaty traders; and the E-2 for treaty investors. The visa category used for immigrant investors is the fifth preference employment-based (EB-5) visa category. According to Department of Homeland Security (DHS) statistics, there were 192,843 nonimmigrant investor visa arrivals in the United States in FY2005. For the same time frame, DHS reported the arrival of 346 LPR investors.
When viewed from a comparative perspective, the investor visas of the United States are most closely mirrored by those of Canada. The LPR investor visa draws especially strong parallels to the Canadian immigrant investor visa, since the latter served as the model for the former. Comparing the admissions data between these two countries, however, reveals that the Canadian investor provision attracts many times the number of investors of its United States counterpart. Yet, both countries showed an upward trend in immigrant investor visas in the last two years.
The investor visas offered by the United States operate on the principle that foreign direct investment into the United States should spur economic growth in the United States. According to the classical theory, if these investments are properly targeted towards the U.S. labor force's skill sets, it should reduce the international migration pressures on U.S. workers. To attract foreign investors, research indicates that temporary migrants are motivated most significantly by employment and wage prospects, while permanent migrants are motivated by professional and social mobility. Theoretically, however, it is unclear to what extent potential migration provides additional incentive for investment activity. Investors from developed countries may sometimes lack incentive to settle in the United States since they can achieve foreign direct investment (FDI) and similar standards of living from their home country. Yet, in cases where foreign investors have been attracted, the economic benefits have been positive and significant.
Immigrant investors have been subject to notable administrative efforts in the past couple of years. Attention has been focused on immigrant investment projects, which DHS has sought to expand. In 2005, DHS developed the Investor and Regional Center Unit (IRCU) to govern matters concerning LPR investor visas and investments to better adjudicate petitions and coordinate investments. In part because of these efforts, working with foreign financing from the immigrant investor program has become highly attractive for many domestic investors, particularly through limited partnerships. This report will be updated as warranted.