The Archipelago Capitalism of Citizenship-By-Investment

Abstract
Citizenship-by-investment (CBI) programs, granting citizenship in return for financial payment or investment, have become a global phenomenon in recent years. The workings of these exceptional programs have caused controversy in real-life politics, ranging from protests, to the downfall of politicians, and to punitive bilateral and international measures. Even so, knowledge on why countries would put their citizenship up for sale has remained limited. This study combines insights from political science and legal theory to develop an original approach to understand states’ propensity to adopt investor citizenship policies as part of the offshore world, or the legal spaces of ‘archipelago capitalism’. We leverage a novel global longitudinal CBI dataset (1960–2023) to probe the empirical plausibility of this argument. In line with our expectations, we find that microstates, middle-income countries, and tax havens are more likely to implement CBI programs. CBI supply reflects a contemporary form of small state ingenuity.