Creating a sovereign wealth fund in a corruption-riddled country: Energizing transparency and sound governance with direct benefit-sharing

Emerson M. Sanchez and Jayson S. Lamchek

Resources Policy, 2023, vol. 81, issue C

Abstract: Empirical studies suggest two opposing outcomes of natural resource wealth, namely, resource curse and resource blessing. While the former refers to the ill effects of wealth on resource-rich countries, the latter suggests positive outcomes. Resource blessing findings suggest that a sovereign wealth fund (SWF) is an appropriate tool to conserve and distribute revenues from resource-rich countries to benefit citizens. However, scholarship on SWFs also shows that political elites can corrupt the management of SWF so that SWF primarily benefits them and bolsters their authoritarian rule. Can an SWF escape elite capture in corruption-ridden countries with weak legal institutions? How should an SWF be designed in such countries so that it is more likely to have a positive impact for citizens? Exploring these questions using the Philippines as a case study, we underline that proponents of the establishment of an SWF in the Philippines should focus on ensuring effective constraints on executives. In this regard, we argue that transparency and sound governance principles should be supplemented with provision of direct benefit to citizens to incentivize and mobilize citizen participation in the governance of an SWF. Nevertheless, even an optimally designed SWF may not work if there are insufficient pre-existing constraints.

Keywords: Sovereign wealth fund; Resource curse; Philippines; Malampaya fund; Corruption; Philippine Rise; Benefit-sharing (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301420722006870
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:81:y:2023:i:c:s0301420722006870

DOI: 10.1016/j.resourpol.2022.103244

Access Statistics for this article

Resources Policy is currently edited by R. G. Eggert

More articles in Resources Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().