Central banking journal may 2005, volume 15, number 4. In no other region of the world are sovereign wealth funds swfs as numerous, longstanding and diverse as in the arab region. The political economy of the gulf sovereign wealth funds a case study of iran, kuwait, saudi arabia. Sovereign wealth funds, oil and the new world economic order. Some sovereign wealth funds focus on domestic investment, while most in. Using four gulf sovereign wealth funds as case studies iran, kuwait, saudi arabia and the uae this book examines and analyses the history, governance and structure, and investment strategies of the above mentioned funds, in the context of ongoing debates about their transparency. Political capitalism and the rise of sovereign wealth funds. Sovereign wealth funds, oil and the new world economic order may 21, 2008 mr. The political economy of the gulf sovereign wealth funds. It is a useful contribution to development, political economy and middle east studies. 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.
Sovereign wealth funds in the gulf an assessment lse. Our empirical results suggest that political relations play a role in swf decision making. Bilateral political relations and sovereign wealth fund. Gulf countries, russia, norway and the former soviet republics. Reductions in outstanding debt, tax cuts and spending increases. For example, the kuwait investment authority during the gulf war managed. Prior to that he worked at central banking publications and the official monetary and financial institutions forum in london.
As will be shown in the brief narratives presented below on many of the different swfs of this region. Over half of these economies are developing, with many in africa. Gcc sovereign wealth funds and their role in the european and. An economist trained as a political scientist, and a political scientist trained as an economist, dr. 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. Kaminski, tomasz, political significance of sovereign wealth funds february 16, 2017. The gcc in 2020 outlook for the gulf and the global economy. Role of sovereign wealth funds in the global economy. The political economy of sovereign wealth funds palgrave macmillan. Sovereign wealth funds swfs important institution for achieving multiple objectives. Political significance of sovereign wealth funds by tomasz. Lecturer in the political economy of the middle east. Swfs must be independent of political powers and economic fluctuations in.
Gulf sovereign wealth funds observatoire of arabmuslim. A large proportion of these governmentowned and governmentrun funds were created by oil producing countries in the gulf region and elsewhere. Sovereign wealth management with jennifer johnsoncalari, new perspectives on sovereign asset. 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. The political economy of rentierism in the gulf mehran kamrava, georgetown university school of foreign service in qatar 4. 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. Pdf on apr 29, 2018, orhan simsek and others published the political economy of sovereign. Download pdf the financial markets of the arab gulf free. Since the early 2000s the number and size of sovereign wealth funds swf have grown substantially. Sovereignwealth funds economist world news, politics.
Andrew rozanov 2005 of state street corporation coined the term sovereign wealth fund in may 2005. Such expansion is likely to have significant economic and political outcomes on an. The impact of sovereign wealth funds on economic success in this report we look at a different angle focussing on a funds effects on the economy of the nation which sets it up. 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 recently, with calls for the nationally controlled investment vehicles to accept or adopt some level of regulation to govern their actions and investment decisions. 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. Contrary to predictions based on the fdi and political relations literature, we find that relative to nations in which they do not invest, swfs. The political economy of sovereign wealth funds springerlink.
Political economy of sovereign wealth funds on the oil. Shemirani combines the needed tools for a lucid assessment of the many political. Using four gulf sovereign wealth funds as case studies iran, kuwait, saudi arabia and the uae this book. We examine the role of bilateral political relations in sovereign wealth fund swf investment decisions. Political economy of the gulf sovereign wealth funds. Asset allocations at sovereign wealth fund, by type of fund source. Sovereign wealth funds natural resource governance institute. Mobilization of private finance by multilateral development banks. In this study, we examine sovereign wealth funds are state owned institutions which have various. Political economy of sovereign wealth funds in the oil exporting countries of the arab region and especially the gulf sara bazoobandi and jeffrey b. He is the editor of three books on sovereign wealth funds. 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.
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. The economist offers authoritative insight and opinion on international news, politics, business, finance, science, technology and the connections between them. The rapid growth of sovereign wealth funds swfs in the last few years has. The gulf in the contemporary international economy fred h. 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. The case of china by pana stitsart a thesis submitted to the university of birmingham for the degree of. Paola subacchi, asian and gulf sovereign wealth funds. Sovereign wealth funds and international political economy. Given resource price and depletion prospects, a key annual and mediumterm choice for resourcedependent settings is.
Role of sovereign wealth funds in the global economy gulf sovereign wealth funds among the most powerful in the world. Gieve, john 2008, sovereign wealth funds and global imbalances, speech presented at the sovereign wealth management conference, london, 14 february. Understanding and managing political risks of sovereign. Through a variety of case studiesfrom the china investment corporation to the funds of several gulf states the authors show that the forces propelling the. This paper proposes some basic elements of a conceptual framework to create a system of checks and balances to help ensure that the sovereign wealth funds do not undermine macroeconomic management or become a vehicle for politically driven investments. The essence of a swf is that it is a vehicle for transferring sovereign wealth from now to the future. Sovereign wealth funds swfs in the middle east region have proved their influence on the international monetary and financial system. A case study of iran, kuwait, saudi arabia and the united arab emirates routledge studies in middle eastern economies pdf,, download.
Through the emergence of sovereign wealth funds, we are witnessing a major rebalancing of the wealth of nations. Unlike funds serving some of the same functions in other parts of the world, arab swfs are for the most part funds set up, and in many cases headed, by the sovereign heads of state or their family members. Sovereign wealth funds and the shifting wealth of nations. Through a variety of case studiesfrom the china investment corporation to the funds of several gulf statesthe authors show that the forces propelling the. The political and economic implications of sovereign wealth. Political economy of sovereign wealth funds in the oil. Their enormous financial power as expressed with their share of 42% in global swf assets has disturbed some political as well as financial circles and financial regulators in the west regarding their ethicality and the political and national security risks they may pose towards the host countries.
Some resourcerich governments operate sovereign wealth fundsspecialpurpose investment vehicles intended to save for the future or provide stability against economic shocks. Pdf gcc sovereign wealth funds and their role in the. It is the spectre of sovereign wealth funds swfs dedicated government investment vehicles from china, russia and the gulf states, among others. Gulf sovereign wealth funds observatoire of arabmuslim world. Their increasing impact on global financial markets has focused attention on these statecontrolled investment vehicles. The wealth arises from current account surpluses coming from natural resources, which is the case for the very first swf created by kuwait in 1953, funds resulting from the large net. Mihaupt 2008, sovereign wealth funds and corporate governance. Using as case studies three gcc commoditybased sovereign wealth funds a\u80\u93 saudi arabia, kuwait, and the uae a\u80\u93 and the swfs of iran and norway for comparison, this study examines and analyses their history, governance and structure, and investment strategies, in the context of ongoing debates about their transparency. 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. Sovereign wealth funds investments in central and eastern europe, ed. 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.
Sovereign wealth funds and longterm development finance. For over a decade, these countries have been advised to follow the norwegian model, saving resource revenues abroad, in offshore sovereign wealth funds for future generations. 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. Download political economy of the gulf sovereign wealth. The new economics of sovereign wealth funds is a onestop guide to the macroeconomic environment within which sovereign wealth funds operate. As will be shown in the brief narratives presented below on.
Highlighting a number of incidents that triggered the transparency debate, the book scrutinises the reaction of some of the gulf sovereign wealth funds to these recent regulatory codes and strategies. This paper provides a glimpse of trends and developments in the swfs of the gulf countries. Political economy of the gulf sovereign wealth funds a case. 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. Sovereign wealth funds and natural resource management in africa. Chairman, members of the committee, less than a decade ago washington was consumed by a debate on what would be the best policy to absorb the then multibillion dollar federal surplus. 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.
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. The sovereign wealth funds of the gulf jeanfrancois seznec, georgetown university 5. In a period of geopolitical transition and economic volatility, this balanced study of sovereign wealth funds is a must read for scholars and practitioners alike. Nugent erf workshop on sovereign wealth funds world bank, washington d. Rising oil prices and the growth of gulf sovereign wealth funds. Sovereign wealth fundsmaps the global footprints of these financial institutions, examining their governance and investment management, and issues of domestic and international legitimacy. Sovereign wealth funds swfs and pension funds pfs or sovereign investors have become a pivotal player in global financial markets thanks to their.
Documents and reports documents list the world bank. The impact of sovereign wealth funds on economic success. Stabilization funds are set up to insulate the budget and economy from commodity price volatility and external shocks e. Managing resource revenues is one of the most pressing challenges facing policymakers in africa. Economics of sovereign wealth funds will contribute to a further understanding of the nature, strategies and behavior of swfs and the environment in which they operate, as their importance is likely to grow in the coming years. This book examines the origin, nature, the portfolio, organizational structure and operation of the seven largest swfs from the perspective of the holding countries. The political economy of sovereign wealth funds pp 125 cite as. Liquid financial assets including sovereign wealth funds, swfs provide both a vehicle of stabilization and savings in the face of volatile resource prices and production. The financial markets of the arab gulf presents and analyzes the banks, stock markets, investment companies, money changers and sovereign wealth funds that have grown from this oil wealth and how this income has acted as a buffer between gulf society at large and the newfound cash reserves of gulf cooperation council states saudi arabia, the.
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