Putting a Price Tag on the American Dream: The Politics of the EB-5 Investor Visa

Peña-Gonzalez, Isabela [Browse]
Senior thesis
101 pages


Shapiro, Jacob [Browse]
Woodrow Wilson School of Public and International Affairs [Browse]
Class year
Summary note
As part of the Immigration Act of 1990, Congress created a new “immigrant investor” visa category. This visa, referred to as the EB-5, was intended for foreign investors coming into the country, who could stimulate the American economy through capital investment and job creation. In exchange for their investment, these immigrant investors could become eligible for United States citizenship. In recent years, however, large-scale real estate developers and other members of the American private sector have used the visa program to advance their own economic interests over those of the state. George Stigler defines “regulatory capture” as the process through which special interest groups come to control regulation. Through an in-depth analysis of the program’s twentyfive yearlong history, this thesis uses George Stigler’s theory of regulatory capture to first explain historically how the program drifted from its original policy objectives; and secondly, why today—despite this trend and numerous cases of fraud that have surfaced from within the program—EB-5 reform is not being passed. I hypothesize that the reform of the Regional Center Pilot Program in 1992 opened up the visa program to the influence of the American private sector, which in turn acquired EB-5 regulation. This has altered the visa program from one that prioritized injecting foreign capital into rural areas of the country, to one that focuses on injecting as much foreign capital into the private sector as it can. This thesis begins by filling a gap in the existing literature by providing a brief history of the program and its initial objectives. It then analyzes how the Regional Center Pilot Program pivoted the program’s legislative trajectory to align with the private sector. Next, I address why the program experienced a rise in popularity during the Great Recession in 2008, and focus on a few EB-5 funded projects as case studies for broader political patterns of regulatory capture that began manifesting themselves in regulation during that time. I then examine the resources the private sector has used to capture regulation by identifying past and present attempts at EB-5 reform. Finally, I assess the implications of the private sector’s influence over this program, including its effects in the near future, and what could be done to free this notable piece of legislation from its regulatory captors.

Supplementary Information