Chapter 19: Sovereign wealth and the nation-state
No comprehensive treatment of wealth and the super-rich would be complete without a presentation and analysis of sovereign wealth. Indeed, the great fortunes of high-tech entrepreneurs, hedge fund managers, and industrialists and their descendants, often pale in comparison to the assets controlled by some countries whose sovereignty is embodied by a single and often autocratic or quasi-autocratic ruling dynasty. For the most part, these great fortunes are found in the Gulf States of the Middle East and Saudi Arabia – the product of vast natural resource wealth that has ballooned almost exponentially in the last decade from booming world commodity prices. Although such fortunes have existed for more than a generation now – being recycled through international banks in the major financial centres of New York and London (Momani, 2008) – their organizational form and function have become more defined as established institutional investors, with a presence and self-awareness not seen previously. Even if much of the management of many of these great fortunes is still delegated to portfolio managers and private equity shops in the capitals of finance, these fortunes are not simply an accounting entry in the national treasury or a section of the central bank’s balance sheet. Keeping pace with the globalization of financial services, and all that brings in terms of common practices and organizational forms, these great fortunes are increasingly represented by state-sponsored institutional investment funds, or what are now commonly referred to as sovereign wealth funds (SWFs).
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