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The domestic drivers of state finance institutions: evidence from sovereign wealth funds

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  • Juergen Braunstein

Abstract

Sovereign wealth funds – large state-owned investment funds – are key players in international finance, but little is known about their underlying political drivers. Why do some states with surpluses choose to create sovereign wealth funds, while others advocate private finance institutions instead? This article speaks directly to this question by investigating the variation in sovereign wealth fund choices across nations with excess reserves. Thereby it contributes to an emerging stream of social network analysis within the international political economy literature. It develops an argument in least likely cases (i.e. Hong Kong and Singapore) about how the structure of domestic state-society relations – in form of policy networks – explains variation in sovereign wealth fund choices, which benefits some actors over others. By analysing primary archival material and through interviews with former policy-makers, this article opens the black box of policy-making behind the choices of state finance institutions.

Suggested Citation

  • Juergen Braunstein, 2017. "The domestic drivers of state finance institutions: evidence from sovereign wealth funds," Review of International Political Economy, Taylor & Francis Journals, vol. 24(6), pages 980-1003, November.
    • Handle: RePEc:taf:rripxx:v:24:y:2017:i:6:p:980-1003
    DOI: 10.1080/09692290.2017.1382383
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    References listed on IDEAS

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    1. Joshua Aizenman & Reuven Glick, 2009. "Sovereign Wealth Funds: Stylized Facts about their Determinants and Governance," International Finance, Wiley Blackwell, vol. 12(3), pages 351-386, December.
    2. Edwin M. Truman, 2010. "Sovereign Wealth Funds: Threat or Salvation?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4983, October.
    3. Barry Eichengreen, 2004. "Capital Flows and Crises," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550598, December.
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    Cited by:

    1. Oliver McPherson‐Smith, 2021. "Diversification, Khashoggi, and Saudi Arabia’s Public Investment Fund," Global Policy, London School of Economics and Political Science, vol. 12(2), pages 190-203, April.
    2. Cody D. Eldredge, 2019. "Capability and need: A framework for understanding why states create sovereign wealth funds," The World Economy, Wiley Blackwell, vol. 42(5), pages 1495-1519, May.

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