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Sovereign Wealth Funds and Long-Term Development Finance: Risks and Opportunities

Author

Listed:
  • Alan Gelb

    (Center of Global Development)

  • Silvana Tordo

    (World Bank)

  • Håvard Halland

    (World Bank)

  • Noora Arfaa

    (World Bank)

  • Gregory Smith

    (World Bank)

Abstract

Sovereign wealth funds have traditionally invested in external securities but are increasingly being tapped to provide financing for domestic investments, including to help close infrastructure gaps. This opens up some potential opportunities but also a number of serious risks, including undermining hard-earned efforts to sustain macroeconomic stability and becoming a vehicle for politically driven “investments” that fail to add to national wealth. How can the opportunities be realized and the risks mitigated? The paper proposes a set of checks and balances to help ensure that domestic investments do not undermine the fund’s role in the area of sovereign wealth.

Suggested Citation

  • Alan Gelb & Silvana Tordo & Håvard Halland & Noora Arfaa & Gregory Smith, 2014. "Sovereign Wealth Funds and Long-Term Development Finance: Risks and Opportunities," Policy Papers 41, Center for Global Development.
    • Handle: RePEc:cgd:ppaper:41
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    References listed on IDEAS

    as
    1. Gutierrez, Eva & Rudolph, Heinz P. & Homa, Theodore & Beneit, Enrique Blanco, 2011. "Development banks : role and mechanisms to increase their efficiency," Policy Research Working Paper Series 5729, The World Bank.
    2. Paul Collier & Anthony Venables & Rick Van der Ploeg & Michael Spence, 2009. "Managing Resource Revenues in Developing," OxCarre Working Papers 015, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    3. Era Dabla-Norris & Jim Brumby & Annette Kyobe & Zac Mills & Chris Papageorgiou, 2012. "Investing in public investment: an index of public investment efficiency," Journal of Economic Growth, Springer, vol. 17(3), pages 235-266, September.
    4. 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.
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    Cited by:

    1. Justin Sandefur & Nancy Birdsall & James Fishkin & Mujobu Moyo, 2020. "Deliberative Democracy and the Resource Curse: A Nationwide Experiment in Tanzania," Working Papers 548, Center for Global Development.

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