The purpose of the chapter is to assess whether and to what extent SWFs can be considered tools of development. In literature the presumption often stands that the establishment of a sovereign fund by an emerging or developing economy helps wealth diversification for the benefit of future generations. Clearly, SWFs are set up to contribute to a country’s own macroeconomic growth by stabilizing prices and revenue and by cushioning the impact of economic turbulence. However, SWFs can promote development not only in the country setting up the fund, but also in the countries where the investments will be made. In this sense, SWFs can be treated as development funds. Starting from this assumption, the chapter analyses what set of factors and rules related to the functioning of SWFs would better achieve the objective of promoting development. In particular, for an SWF to be an effective instrument for the development of the home country, attention should be paid to: the SWF’s institutional independence from the government; the scope of its mandate; and the rules on portfolio allocation. Similarly, the rules on portfolio allocation and the adoption of ethical guidelines are determining factors for an SWF to be considered a development tool also for host countries. The chapter concludes by considering the relationship between SWFs and the World Bank or regional development banks.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.