Sovereign wealth funds swfs represent both an increasingly important and potentially dominant category of alternative investor, and a novel form for governments to project their. Political economy of sovereign wealth funds on the oil. The political significance of the gulf cooperation. Chairman, members of the committee, less than a decade ago washington was consumed by a debate. These agency problems may have two primary manifestations. Sovereign wealth funds swfs and pension funds pfs or sovereign investors have become a pivotal player in global financial markets thanks to their. An assessment gawdat bahgat abstract since the early 2000s the number and size of sovereign wealth funds swfs in the gulf region and elsewhere. Sovereign wealth funds and recipient country policies report by the oecd investment committee in recent years major changes in the environment for national security and the international economy have caused a number of oecd and other governments to reassess their investment policies. As will be shown in the brief narratives presented below on many of the different swfs of this region. Pdf gcc sovereign wealth funds and their role in the. Domestic sources of twentyfirstcentury geopolitics.
In this sense, therefore, swfs are part of a broader narrative, a tectonic shift to which decoupling, a popular buzzword in the financial markets over 2007. Bilateral political relations and sovereign wealth fund. Despite concerns that sovereign wealth fund investments may serve political objectives. The evolution of sovereign wealth funds and their influence in the global economy. The oxford handbook of sovereign wealth funds douglas j. Sovereign wealth funds 6 iran some unusual business 7. Sovereign wealth funds investments in central and eastern europe, lodz university press, 2017, pp. The gcc in 2020 outlook for the gulf and the global economy. Domestic politics and sovereign wealth funds in gcc economies juergen braunstein to cite this article. The investment strategies of sovereign wealth funds shai bernstein, josh lerner, and antoinette schoar sovereign wealth funds have complex objective functions and governance structures where return maximization and strategic political considerations may conflict. Mihaupt 2008, sovereign wealth funds and corporate governance. Pdf sovereign wealth funds in the global political economy.
A key benefit of sovereign wealth funds world economic forum. The political economy of rentierism in the gulf mehran kamrava, georgetown university school of foreign service in qatar 4. Traditionally, these funds have invested in external assets, especially. Lecturer in the political economy of the middle east. Sovereign wealth funds swfs represent both an increasingly important and potentially dominant category of alternative investor, and a novel form for governments to project their interests both home and abroad. Bilateral political relations and the impact of sovereign. Domestic politics and sovereign wealth funds in gcc economies, new political economy, doi. Gieve, john 2008, sovereign wealth funds and global imbalances, speech presented at the sovereign wealth management conference, london, 14 february. The investment strategies of sovereign wealth funds. The world economic forum is an independent international organization committed to improving the state of the world by engaging business, political, academic and. The sovereign wealth funds of the gulf jeanfrancois seznec, georgetown university 5.
Stabilization funds are set up to insulate the budget and. An international working group of 25 countries that sponsor sovereign wealth funds, plus the imf, has introduced a set of principles and practices for swf operation, in order to minimise their possible risk of impacting negatively on global financial and political stability. An assessment gawdat bahgat abstract since the early 2000s the number and size of sovereign wealth funds swfs in the gulf region and elsewhere have grown substantially. Since the early 2000s the number and size of sovereign wealth funds swf have grown substantially. The presence of the gcc sovereign wealth funds in europe and the usa. Nov 03, 2009 we examine the role of bilateral political relations in sovereign wealth fund swf investment decisions.
The political and economic implications of sovereign wealth fund investment decisions jeremy brown mba 09 sovereign wealth funds swfs have been thrown into the media spotlight. The regulatory framework for sovereign investments sec. Sovereign wealth funds natural resource governance institute. Table 1 displays the summary statistics panel a and correlations panel b of the variables from eqs.
Sovereign wealth funds, capacity building, development, and. A case study of iran, kuwait, saudi arabia and united arab emirates submitted by sara bazoobandi to the university of exeter as a thesis for the degree of doctor of philosophy in arab and islamic studies april 2011. The investment strategies of sovereign wealth funds sovereign wealth funds have complex objective functions and governance. The political economy of sovereign wealth funds springerlink. Political economy of the arab swfs as the term sovereign wealth fund swf suggests, swfs are funds owned by the state, which, especially in the arab region, are typically headed by a monarch or sovereign. The gulf in the contemporary international economy fred h.
Obroniecki, marcin, the political significance of the gulf cooperation countries sovereign wealth funds investments in central and eastern europe february 22, 2017. This book examines the origin, nature, the portfolio, organizational structure and operation of the seven largest swfs from the perspective of the holding countries. Such expansion is likely to have significant economic and political outcomes on an. One important element in the changing global economy is the in. The political economy of the gulf sovereign wealth funds. Andrew rozanov 2005 of state street corporation coined the term sovereign wealth fund in may 2005. Optimal composition of sovereign wealth performanceseeking portfolio and three hedging demands variability of the fiscal surplus, including commodities external debt domestic debt. The political and economic implications of sovereign wealth. Definition, organization, and governance1 bernardo bortolotti universita di torino sovereign investment lab, paolo baffi centre, universita bocconi bernardo. The first swf, the kuwait investment office, ran into trouble in the.
This thesis is the albeit belated result of a couple of years of indepth thinking about these interesting. Swfs with greater involvement of political leaders in fund management. Sep 22, 2016 political economy of sovereign wealth funds in the oil exporting countries of the arab region and especially the gulf sara bazoobandi and jeffrey b. Political economy of sovereign wealth funds in the oil exporting countries of the arab region and especially the gulf sara bazoobandi and jeffrey b. Over the last eight years, considerations of politics and national security have come to play an influential role in the decisionmaking of gulf sovereign wealth funds.
Gulf investors and sovereign wealth funds are likely to diversify their assets into asia and africa, and the region is likely to export more of its oil to industrialising countries. Some sovereign wealth funds focus on domestic investment, while most in. The mergers of the state fund ipic into mubadala is one example, but there. Sovereign wealth fund is attributed by changes of variables that are mentioned above. Sovereign wealth funds, oil and the new world economic order. Investment vehicles for the persian gulf countries, nimrod rapheali and bianca gersten, middle east quarterly, vol. Introduction overeign wealth funds swfs has primarily focused on their unique ability to merge. Political capitalism and the rise of sovereign wealth funds herman schwartz university of virginia, charlottesville, va, usa abstract sovereign wealth funds are neither novel nor. The geoeconomics of sovereign wealth funds and renewable. Domestic politics and sovereign wealth funds in gcc economies. Theory and practice, bankers, markets and investors, 2014. The ultimate product of this research project is an edited book on the political economy of the persian gulf columbia university presshurst, 2012. Contrary to predictions based on the fdi and political relations literature, we find that relative to nations in which they do not invest, swfs. Sovereign wealth funds represent a large and growing pool of savings.
The working group meetings held in doha, qatar, meant that authors were able to work closely together in order for the individual chapters to crossreference each other for better coherence and. British monopolies and mergers commission ordered kuwait to sell more than. As such, they represent both economic actors and embody power vested in the financial and diplomatic resources they can leverage. We examine the role of bilateral political relations in sovereign wealth fund swf investment decisions. Though operating in some form or another for over half a century, sovereign wealth funds swfs did not become an object of general attention until the early part of the 21st century when a combination of the need of developed states for investment and the growing acceptability of state investment in private markets abroad made them both threatening and convenient. The world economic forum is an independent international organization committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas. Sovereign wealth funds in the global political economy. A sovereign wealth fund swf, sovereign investment fund, or social wealth fund is a stateowned investment fund that invests in real and financial assets such as stocks, bonds, real estate. Sovereign wealth funds, arab countries, political economy, gcc.
Sovereign wealth funds and longterm development finance. Our empirical results suggest that political relations play a role in swf. Definition, organization, and governance1 bernardo bortolotti. Political economy of the arab swfs as the term sovereign wealth fund swf suggests, swfs are funds owned by the state, which, especially in the arab region, are typically headed by a. Asset allocations at sovereign wealth fund, by type of fund source. Saudi arabias leadership of the arab world 11 the curious case of qatar 12 conclusion. Our empirical results suggest that political relations play a role in swf decision making. Sovereign wealth funds, oil and the new world economic order may 21, 2008 mr. The proportion of countryyears with swf investment is around 2. According to truman 2010, nominal assets under management of swfs. As others have noted, government ownership of investment funds and businesses is not new, but the scale on which todays sovereign wealth funds and sovereign businesses are operating is. Introduction this 2012 sovereign wealth funds report is the first produced by esadegeo with the support of kpmg and invest.
A case study of iran, kuwait, saudi arabia and united arab emirates submitted by sara bazoobandi to the university of exeter as a thesis. Sovereign wealth funds are becoming increasingly powerful players on the global financial scene. The economist offers authoritative insight and opinion on international news, politics, business, finance, science, technology and the connections between them. Optimal composition of sovereign wealth performanceseeking portfolio and three hedging demands variability of the fiscal surplus, including commodities external debt domestic debt bodie and briere, optimal asset allocation for sovereign wealth funds. Through the emergence of sovereign wealth funds, we are witnessing a major rebalancing of the wealth of nations. Incorporated as a notforprofit foundation in 1971, and headquartered in geneva, switzerland, the forum is tied to no political, partisan or national interests. Sovereign wealth funds swfs important institution for achieving multiple objectives.
Understanding and managing political risks of sovereign. Their increasing impact on global financial markets has focused attention on these statecontrolled investment vehicles. The political economy of the gulf sovereign wealth funds a case study of iran, kuwait, saudi arabia. The major role of sovereign investors in the global economy a european perspective the global economy has witnessed the emergence of a new set of key actors over the last two decades. Though operating in some form or another for over half a century, sovereign wealth funds swfs did not become an object of general attention until the early. It is the spectre of sovereign wealth funds swfs dedicated government investment vehicles from china, russia and the gulf states, among others. An increasing number of these funds are owned by natural resourceexporting countries and have a variety of. The gulf takes charge in the mena region peter burnell 1 introduction. The political economy of the gulf georgetown university. Despite their diverse nature, they hold in common what sets them apart from other investor groups and places unique constraints on. This thesis is the albeit belated result of a couple of years of indepth thinking about these interesting organizations at the crossroads of politics, society and the markets. Sovereign wealth funds have emerged as an important investor of global equity, attracting growing attention. Rising oil prices and the growth of gulf sovereign wealth funds. A large proportion of these governmentowned and governmentrun funds were.
Sovereign wealth funds in the gulf an assessment lse. A sovereign wealth fund swf, sovereign investment fund, or social wealth fund is a stateowned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity fund or hedge funds. Stabilization funds are set up to insulate the budget and economy from commodity price volatility and external shocks e. The investment strategies of sovereign wealth funds shai bernstein, josh lerner, and antoinette schoar sovereign wealth funds have complex objective functions and governance structures. The new economics of sovereign wealth funds is a onestop guide to the macroeconomic environment within which sovereign wealth funds operate. Dec 22, 2017 over the last eight years, considerations of politics and national security have come to play an influential role in the decisionmaking of gulf sovereign wealth funds. Sovereign wealth funds, capacity building, development. The book provides a thorough guide to sovereign wealth funds, covering the drivers of the industry, how it operates and grows, the interest from and in western markets and the pivotal role that sovereign wealth funds play in the world economy. Political capitalism and the rise of sovereign wealth funds. Nugent erf workshop on sovereign wealth funds world bank, washington d.
Despite concerns that sovereign wealth fund investments may serve. The political economy of the gulf summary report details research conducted at the cirs political economy of the gulf working group meetings held in doha over the course of two. These swfs, critics declare, are the trojan horse of states that generally are neither democratic nor share the traditions, political systems or legal systems of many oecd countries. The case of china 95 95 have recorded current account surpluses and have exported capital worldwide. The political and economic implications of sovereign. The first swf, the kuwait investment office, ran into trouble in the u. Some resourcerich governments operate sovereign wealth fundsspecialpurpose investment vehicles intended to save for the future or provide stability against economic shocks. After the turn of the century, the number of sovereign wealth funds swfs in the world economy has grown rapidly.
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