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Peer-Reviewed Study Finds Dramatic Increase in Economic Impact of U.S. EB-5 Immigrant Investor Program for 2012
A new economic impact study commissioned by the Association to Invest in the USA (IIUSA) finds that the U.S. EB-5 immigrant investor visa program contributed $3.39 billion to U.S. GDP and supported over 42,000 U.S. jobs during fiscal year 2012. This is more than a 2-fold increase from the average annual impact result reported in 2011.
Congress created the EB-5 program in 1990 to benefit the U.S. economy by attracting investments from qualified foreign investors. Under the program, each investor is required to demonstrate that at least 10 new jobs were created or saved as a result of the EB-5 investment, which must be a minimum of $1 million, or $500,000 if the funds are invested in certain high-unemployment or rural areas.
“As the industry trade association for the EB-5 Regional Center Program, IIUSA is committed to accurately measuring the positive impacts of the EB-5 Program in terms of job creation, GDP growth, and tax revenue,” said IIUSA Executive Director Peter Joseph. “The results of the 2012 assessment unequivocally demonstrate that the EB-5 Program is delivering on its promise of regional economic development and U.S. job creation at no cost to the taxpayer.”
The report uses a comprehensive dataset on EB-5 investor applications and EB-5 Regional Center investments along with well-established economic modelling methods to determine overall positive impacts on GDP and job growth as well as federal, state, and local tax revenue from EB-5 investments in U.S. economic development projects, household spending by immigrant investors and other EB-5 related spending. Economic benefits are measured by state and by impacted industry sector.
Key findings of the report include:
• Total economic impact, combining the benefits of EB-5 investments, household spending of immigrant investors and other EB-5 related spending, was $3.39 billion to U.S. GDP and supported over 42,000 U.S. jobs.
• Investment represents the largest component of EB-5 spending, with approximately $1.8 billion invested by EB-5 Regional Center investors. These investments contributed $2.5 billion to U.S. GDP and supported 33,134 American jobs.
• Over 85 percent of EB-5 investment capital – $1.55 billion – was invested in the construction sector. Other sectors seeing EB-5 investments include chemical manufacturing, mining, manufacturing and power generation.
• Pennsylvania, New York, California and Illinois top the list of states with the largest level of investment, and these saw the largest investment impacts. For example, more than 8,000 jobs were supported in California.
• Household spending by immigrant investors and their families contributed approximately $383 million to US GDP and supported more than 4,700 jobs in 2012. The economic impact of household spending represents a permanent impact on the U.S. economy, as these families maintain spending patterns year after year.
• Spending on EB-5 related immigration services contributed approximately $477 million to U.S. GDP and supported nearly 5,000 jobs in 2012. These expenditures include spending on flights, moving services, cars, investment and legal services and government fees.
The study, which was conducted by David Kay of IMPLAN Group, LLC and peer-reviewed by Professors Eric Thompson and Hart Hodges of Association for University Business Economic Research (AUBER), was commissioned by the Association to Invest in the USA (IIUSA), the national trade association representing EB-5 Regional Centers that account for 95 percent of the capital flowing through the EB-5 program.
This is the second comprehensive economic impact report commissioned by IIUSA based on comprehensive data-sets of I-526 and I-829 approval/denial statistics for each Regional Center in the country for fiscal years 2010-2012, obtained through a vigorous process of data collection and subsequent analysis of I-924A filings. A breakdown of the “new commercial enterprises” and “job creating enterprises” that Regional Centers fund throughout the year, along with North American Industry Classification System (NAICS) codes to track industry sector impacts adds further context to the data.