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Sovereign Wealth Funds and International Political Economy

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The Palgrave Handbook of Contemporary International Political Economy

Part of the book series: Palgrave Handbooks in IPE ((PHIPE))

Abstract

Funds owned by sovereign states for long-term investment existed for over a century before they drew global attention in the early twenty-first century. Sovereign wealth funds (SWFs) face serious challenges in developing resource-based economies. Should governments invest proceeds from natural resources for future use while domestic demands for capital are high? What institutional structures can ensure both public accountability and effective fund management for the long-term benefits of the public? There is no one global institution to regulate what, where, and how SWFs can invest and how they are managed. As long as SWFs are sovereign, it is difficult for the international community to develop rules to regulate their investment objectives, tax morality, and reporting practices, all of which are increasingly important as SWFs expand.

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Notes

  1. 1.

    The initial capital of China Investment Corporation (CIC) was sourced by the government’s domestic debt issuance, which made the source and costs of the fund very explicit. That is, when the CIC was established in 2007, the Ministry of Finance issued a number of tranches of special 10–15-year treasury bonds, totalling approximately US$ 200 billion, to buy the foreign currency from the US$ 1.4 trillion in foreign exchange reserves (at rates ranging between 4.3% and 4.68%) and then injected the funds into the CIC. In so doing, the CIC has an implicit nominal hurdle rate, which is about 4.5% plus appreciation (or minus depreciation) of Renminbi (RMB).

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Author information

Authors and Affiliations

  1. School of Government and International Relations, Griffith University, Nathan, QLD, Australia

    Xu Yi-chong

Authors
  1. Xu Yi-chong
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Editor information

Editors and Affiliations

  1. University of Ottawa, Ottawa, ON, Canada

    Timothy M. Shaw

  2. Bavarian School of Public Policy, Technical University of Munich, Munich, Germany

    Laura C. Mahrenbach

  3. Centre for African Studies, University of Mumbai, Mumbai, India

    Renu Modi

  4. School of Government and International Relations, Griffith University, Nathan, QLD, Australia

    Xu Yi-chong

Appendix

Appendix

Sovereign Wealth Funds, Assets under Management

Country

Fund name

Inception year

Source of funds

AUM2016

US$ bl

Norway

Government Pension Fund—Global

1990

Commodity (oil & gas)

903.96

UAE-Abu Dhabi

Abu Dhabi Investment Authority

1976

Commodity (oil & gas)

828

China

China Investment Corporation

2007

Trade Surplus

813.76

Kuwait

Kuwait Investment Authority

1953

Commodity (oil & gas)

592

Singapore

Government Investment Corporation

1981

Trade Surplus

353.58

Qatar

Qatar Investment Authority

2005

Commodity (oil & gas)

335

China

National Social Security Fund

2000

Trade Surplus

294.85

UAE-Dubai

Investment Corporation of Dubai

2006

Commodity (oil & gas)

200.82

Saudi Arabia

Public Investment Fund

1971

Commodity (oil & gas)

190

Singapore

Temasek Holdings

1974

Trade Surplus

179.71

UAE-Abu Dhabi

Mubadala Development Company

2002

Commodity (oil & gas)

125

Russia

National Wealth Fund & Reserve Fund

2008

Commodity (oil & gas)

110.85

UAE-Abu Dhabi

Abu Dhabi Investment Council

2007

Commodity (oil & gas)

110

Australia

Australian Future Fund

2006

Non-Commodity

92.51

Republic of Korea

Korea Investment Corporation

2005

Non-Commodity

91.8

Libya

Libyan Investment Authority

2006

Commodity (oil & gas)

66

Kazakhstan

Kazakhstan National Fund

2000

Commodity (oil & gas)

65.7

Brunei

Nbrunei Investment Agency

1983

Commodity (oil & gas)

40

Malaysia

Khazanah Nasional Berhad

1993

Non-Commodity

34.95

UAE

Emirates Investment Authority

2007

Commodity (oil & gas)

34

Azerbaijan

State Oil Fun of Azerbaijan

1999

Commodity (oil & gas)

33.21

New Zealand

New Zealand Superannuation Fund

2001

Non-Commodity

21.74

Ireland

Ireland Strategic Investment Fund

2001

Non-Commodity

21.7

East Timor

Timor-Leste Petroleum Fund

2005

Commodity (oil & gas)

16.9

UAE-Dubai

Istithmar World

2003

Non-Commodity

11.5

UAE-Dubai

Dubai International Financial Centre

2002

Non-Commodity

11

Bahrain

Mumtalakat Holding Company

2006

Non-Commodity

10.51

Russia

Russian Direct Investment Fund

2011

Non-Commodity

10

Oman

State General Reserve Fund

1980

Commodity (oil & gas)

9.15

Oman

Oman Investment Fund

2006

Commodity (oil & gas)

6

Angola

Fundo Soberano de Angola

2012

Commodity (oil & gas)

4.75

UAE-Ras Al Khaimah

Ras Al Khaimah Investment Authority

2005

Commodity (oil & gas)

1.2

Nigeria

Future Generations Fund

2012

Commodity (oil & gas)

1.07

Morocco

Ithmar Capital

2011

Non-Commodity

1

Vietnam

State Capital Investment Corp.

2005

Non-Commodity

0.87

Palestine

Palestine Investment Fund

2003

Non-Commodity

0.8

Kiribati

Revenue Equalisation Reserve Fund

1956

Commodity (Phosphates)

0.65

Sao Tome & Principe

National Oil Account

2004

Commodity (oil & gas)

0.01

Total

   

5624.55

  1. Source: Universita Bocconi, Hunting Unicorns: Sovereign Wealth Fund Annual Report 2016, Baffi Carefin Centre, SIL Sovereign Investment Lab, p.8

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Xu Yi-chong (2019). Sovereign Wealth Funds and International Political Economy. In: Shaw, T.M., Mahrenbach, L.C., Modi, R., Yi-chong, X. (eds) The Palgrave Handbook of Contemporary International Political Economy. Palgrave Handbooks in IPE. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-45443-0_27

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