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Emergence of Sovereign Wealth Funds

Jean-François Carpantier and Wessel Vermeulen

No 148, OxCarre Working Papers from Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford

Abstract: This paper tests the theoretically founded hypothesis that the surge of SWF establishments is determined by three main factors: 1) the existence of natural resources profits, 2) the government structure and 3) the ability to invest usefully in the domestic economy. We test this hypothesis on a sample of 20 countries that established an SWF in the period 1998-2008 by comparing them to the roughly 100 countries that did not set up a fund in the same period. We find evidence for all three factors. The results suggest that SWFs tend to be established in countries that run an autocratic regime and have difficulties finding suitable opportunities for domestic investments. We do not find the net foreign asset position of a country to be similarly related to the explanatory variables, indicating that the establishment of an SWF is distinct from a national accounting result. We argue that our results indicate that it is relevant to study how an SWF interacts with the domestic economy and government policy.

Keywords: Sovereign Wealth Fund; Institutions; natural resources (search for similar items in EconPapers)
JEL-codes: E21 E62 F39 G23 H52 (search for similar items in EconPapers)
Date: 2014-11-14
New Economics Papers: this item is included in nep-fmk and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Emergence of sovereign wealth funds (2018) Downloads
Working Paper: Emergence of sovereign wealth funds (2018)
Working Paper: Emergence of Sovereign Wealth Funds (2014) Downloads
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