Advanced Search
MyIDEAS: Login

How to spend it: Commodity and non-commodity sovereign wealth funds

Contents:

Author Info

  • Reisen, Helmut

Abstract

Sovereign wealth funds have become important players in global financial markets. But their investments have repeatedly raised concerns, such as fear of industrial espionage or geopolitical threats. This paper argues that the principal motivation for setting up SWFs should put such concerns into the appropriate perspective. Development economics can explain both the funding sources and the motives that have led to the recent SWF boom, thus helping to prevent the imposition of investment restrictions in OECD countries. The basic principles of public finance and development economics leave little room for conspiracy theories, but draw attention to the fact that funding sources and economic motives differ between commodity and non-commodity SWFs. These principles point to several major motives for countries to build up sovereign wealth funds, rather than merely accumulating official foreign exchange reserves. Foreign exchange reserves can become excessively large, additional economic diversification and efficiency gains can be achieved, technology transfer and network benefits can be fostered, and demographic pressures can be tackled. When using the excess funds, governments have to take important, fundamental decisions. The Hotelling and Hartwick Rules provide theoretical guidance, demonstrating the benefits of transforming oil or other resources into other forms of wealth, rather than consuming them. This not only benefits the investing but also the recipient countries: Protectionism, such as restrictions imposed on SWFs from oil-rich countries, will tend to reduce the risk-adjusted return for oil exporters, and may well contribute to higher oil prices as oil supply is withheld. --

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://econstor.eu/bitstream/10419/40631/1/593503724.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Deutsche Bank Research in its series Research Notes with number 28.

as in new window
Length:
Date of creation: 2008
Date of revision:
Handle: RePEc:zbw:dbrrns:28

Contact details of provider:
Postal: Deutsche Bank AG, 60272 Frankfurt am Main
Phone: +49 69 910-31831
Fax: +49 69 910 31877
Email:
Web page: http://www.dbresearch.de/
More information through EDIRC

Related research

Keywords:

Other versions of this item:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Dong He & Wenlang Zhang & Jimmy Shek, 2006. "How Efficient Has Been China's Investment? Empirical Evidence from National and Provincial Data," Working Papers 0619, Hong Kong Monetary Authority.
  2. Aaditya Mattoo & Arvind Subramanian, 2009. "Currency Undervaluation and Sovereign Wealth Funds: A New Role for the World Trade Organization," The World Economy, Wiley Blackwell, vol. 32(8), pages 1135-1164, 08.
  3. van der Ploeg, Frederick, 2006. "Challenges and Opportunities for Resource Rich Economies," CEPR Discussion Papers 5688, C.E.P.R. Discussion Papers.
  4. Kenneth Kasa, 1997. "Does Singapore invest too much?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue may15.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Schalast, Christoph & Tiemann, Marcel & Tuppi, Pascal, 2009. "Staatsfonds - neue Akteure an den Finanzmärkten?," Frankfurt School - Working Paper Series 114, Frankfurt School of Finance and Management.
  2. Sun, Xiaolei & Li, Jianping & Wang, Yongfeng & Clark, Woodrow W., 2014. "China's Sovereign Wealth Fund Investments in overseas energy: The energy security perspective," Energy Policy, Elsevier, vol. 65(C), pages 654-661.
  3. Steffen Kern, 2008. "Control Mechanisms for Sovereign Wealth Funds in Selected Countries," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 6(4), pages 41-48, December.
  4. M S McKenzie, 2011. "The Macroeconomics of Sovereign Wealth Funds," Economics Series 2011_6, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  5. Gawdat Bahgat, 2011. "Sovereign wealth funds in the Gulf - an assessment," LSE Research Online Documents on Economics 55015, London School of Economics and Political Science, LSE Library.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:zbw:dbrrns:28. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.