IDEAS home Printed from https://ideas.repec.org/a/eco/journ1/2016-04-49.html
   My bibliography  Save this article

The Role of the Gulf Cooperation Council's Sovereign Wealth Funds in the New Era of Oil

Author

Listed:
  • Hanan Naser

    (Department of Business Studies, Arab Open University, Bahrain.)

Abstract

Sovereign wealth funds (SWFs) are investment vehicles by which governments invest some of a nation's wealth in domestic and international financial markets. They are important for savings and stabilization economies, where long-term investments are key feature of successful SWFs' investment strategies. Successful SWFs do not seek only for financial returns, but also social returns are critically considered as they play a vital role in their countries' socioeconomic development. Considering the amount of capital accumulated in the global SWFs in general and the Gulf Cooperation Council (GCC) funds in particular, oil prices plunge has forced the GCC's to reassess income sources and spending. Precisely, extra attention has been paid for not only further investment plans, but also for developing critical strategies that aim to diversifying the GCC economies through the efficient allocation for resources and thereby provide economic development and independency. Therefore, this paper aim to analyse the current status of GCC's SWFs and provide further suggestions in the new era of oil prices to enhance their role in the region. To do so, insights from other global successful SWFs, such that of Norway, have been considered. The main findings reveal that transparency is a key feature for SWFs growth and the gradual movement towards better practices in structure, governance, and investment behaviour. Knowledge transfers and foreign direct investment are also significant factors for local economic growth.

Suggested Citation

  • Hanan Naser, 2016. "The Role of the Gulf Cooperation Council's Sovereign Wealth Funds in the New Era of Oil," International Journal of Economics and Financial Issues, Econjournals, vol. 6(4), pages 1657-1664.
    • Handle: RePEc:eco:journ1:2016-04-49
    as

    Download full text from publisher

    File URL: http://www.econjournals.com/index.php/ijefi/article/download/2760/pdf
    Download Restriction: no
    File URL: http://www.econjournals.com/index.php/ijefi/article/view/2760/pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Murtinu, Samuele & Scalera, Vittoria G., 2016. "Sovereign Wealth Funds' Internationalization Strategies: The Use of Investment Vehicles," Journal of International Management, Elsevier, vol. 22(3), pages 249-264.
    2. Abdullah Al-Hassan & Mr. Michael G. Papaioannou & Martin Skancke & Cheng Chih Sung, 2013. "Sovereign Wealth Funds: Aspects of Governance Structures and Investment Management," IMF Working Papers 2013/231, International Monetary Fund.
    3. Shai Bernstein & Josh Lerner & Antoinette Schoar, 2013. "The Investment Strategies of Sovereign Wealth Funds," Journal of Economic Perspectives, American Economic Association, vol. 27(2), pages 219-238, Spring.
    4. Dewenter, Kathryn L. & Han, Xi & Malatesta, Paul H., 2010. "Firm values and sovereign wealth fund investments," Journal of Financial Economics, Elsevier, vol. 98(2), pages 256-278, November.
    5. Shams Butt & Anil Shivdasani & Carsten Stendevad & Ann Wyman, 2008. "Sovereign Wealth Funds: A Growing Global Force in Corporate Finance," Journal of Applied Corporate Finance, Morgan Stanley, vol. 20(1), pages 73-83, December.
    6. William L. Megginson & Veljko Fotak, 2015. "Rise Of The Fiduciary State: A Survey Of Sovereign Wealth Fund Research," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 733-778, September.
    7. Bernardo Bortolotti & Veljko Fotak & William L. Megginson, 2015. "Editor's Choice The Sovereign Wealth Fund Discount: Evidence from Public Equity Investments," Review of Financial Studies, Society for Financial Studies, vol. 28(11), pages 2993-3035.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bahoo, Salman & Alon, Ilan & Paltrinieri, Andrea, 2020. "Sovereign wealth funds: Past, present and future," International Review of Financial Analysis, Elsevier, vol. 67(C).
    2. Arouri, Mohamed & Boubaker, Sabri & Grais, Wafik & Grira, Jocelyn, 2018. "Rationality or politics? The color of black gold money," The Quarterly Review of Economics and Finance, Elsevier, vol. 70(C), pages 62-76.
    3. Gangi, Francesco & Meles, Antonio & Mustilli, Mario & Graziano, Domenico & Varrone, Nicola, 2019. "Do investment determinants and effects vary across sovereign wealth fund categories? A firm-level analysis," Emerging Markets Review, Elsevier, vol. 38(C), pages 438-457.
    4. Murtinu, Samuele & Scalera, Vittoria G., 2016. "Sovereign Wealth Funds' Internationalization Strategies: The Use of Investment Vehicles," Journal of International Management, Elsevier, vol. 22(3), pages 249-264.
    5. Boubakri, Narjess & Cosset, Jean-Claude & Grira, Jocelyn, 2017. "Sovereign wealth funds investment effects on target firms' competitors," Emerging Markets Review, Elsevier, vol. 30(C), pages 96-112.
    6. Gangi, Francesco & Mustilli, Mario & Varrone, Nicola & Graziano, Domenico, 2023. "Target firms’ characteristics and the effects of sovereign wealth funds’ investments: Does cultural context of SWFs matter?," Research in International Business and Finance, Elsevier, vol. 65(C).
    7. Ciarlone, Alessio & Miceli, Valeria, 2016. "Escaping financial crises? Macro evidence from sovereign wealth funds' investment behaviour," Emerging Markets Review, Elsevier, vol. 27(C), pages 169-196.
    8. Boubakri, Narjess & Cosset, Jean-Claude & Grira, Jocelyn, 2016. "Sovereign wealth funds targets selection: A comparison with pension funds," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 42(C), pages 60-76.
    9. Alvaro Cuervo-Cazurra & Anna Grosman & William L. Megginson, 2023. "A review of the internationalization of state-owned firms and sovereign wealth funds: Governments’ nonbusiness objectives and discreet power," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(1), pages 78-106, February.
    10. Alvaro Cuervo-Cazurra & Anna Grosman & Geoffrey T. Wood, 2023. "Cross-country variations in sovereign wealth funds’ transparency," Journal of International Business Policy, Palgrave Macmillan, vol. 6(3), pages 306-329, September.
    11. Mehmet AKYOL & Barýþ YILDIZ, 2017. "Impact of size of the National Asset Funds on Economic Development: Panel Data Analysis on Select Nations," Journal of Economics Library, KSP Journals, vol. 4(2), pages 194-205, June.
    12. Park, Raphael Jonghyeon & Xu, Simon & In, Francis & Ji, Philip Inyeob, 2019. "The long-term impact of sovereign wealth fund investments," Journal of Financial Markets, Elsevier, vol. 45(C), pages 115-138.
    13. Amar, J. & Lecourt, C. & Carpantier, J.F., 2022. "GCC Sovereign Wealth Funds: Why do they take control?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 77(C).
    14. Bernardo Bortolotti & Veljko Fotak & Giacomo Loss, 2017. "Taming Leviathan: Mitigating Political Interference in Sovereign Wealth Funds’ Public Equity Investments," BAFFI CAREFIN Working Papers 1764, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    15. Boubaker, Sabri & Boubakri, Narjess & Grira, Jocelyn & Guizani, Asma, 2018. "Sovereign wealth funds and equity pricing: Evidence from implied cost of equity of publicly traded targets," Journal of Corporate Finance, Elsevier, vol. 53(C), pages 202-224.
    16. Francesco Baldi & Davide Ciferri, 2016. "State-owned private equity funds investing in "national champions": The case of Italy," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2016(3), pages 177-218.
    17. William L. Megginson & Asif I. Malik & Xin Yue Zhou, 2023. "Sovereign wealth funds in the post-pandemic era," Journal of International Business Policy, Palgrave Macmillan, vol. 6(3), pages 253-275, September.
    18. Paul Calluzzo & G Nathan Dong & David Godsell, 2017. "Sovereign wealth fund investments and the US political process," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(2), pages 222-243, February.
    19. Peng Liu & Nathan Mauck & S. McKay Price, 2020. "Are Government Owned Investment Funds Created Equal? Evidence from Sovereign Wealth Fund Real Estate Acquisitions," The Journal of Real Estate Finance and Economics, Springer, vol. 61(4), pages 698-729, November.
    20. Aggarwal, Raj & Goodell, John W., 2018. "Sovereign wealth fund governance and national culture," International Business Review, Elsevier, vol. 27(1), pages 78-92.

    More about this item

    Keywords

    Economic Growth; Sovereign Wealth Funds; Investment; Oil Prices;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • H6 - Public Economics - - National Budget, Deficit, and Debt

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ1:2016-04-49. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.