Weekend Reading

Ashby Monk

Roland Beck and Michael Fidora have a new paper out in the European Business Organization Law Review entitled, “Sovereign Wealth Funds – Before and Since the Crisis”. The paper provides a “reassessment of the growth prospects of sovereign wealth funds.”

The authors say that, despite the lower estimates for assets under management, “there are no grounds to believe that sovereign wealth funds will become less important players in global financial markets over the future, as the structural drivers behind the accumulation of large foreign assets in emerging economies remain in place. Hence, sovereign wealth funds are likely to continue growing and increase their relative importance in global financial markets. Therefore, it remains imperative to resume the efforts – that seem to be partly halted by the current economic and financial crisis – to build a global governance framework for sovereign wealth funds.”

1 Response to “Weekend Reading”

  1. 1 rien huizer October 31, 2009 at 12:04 am

    Seems there are two things here: (a) SWFs will become relatively more important market participants and (b) this will necessitate some change in their governance. As to (1) this implies continued misalignment in exchange rates and/or lack of local pressure to direct export revenues towards local consumption and/or reform taxation to the effect that local gvts do not produce persistent surpluses. Given the apparent fact that democracies tend to redistribute or at least collect the minimum necessary to support gvt and the equally apparent fact that democracy is the preferred regime, a steady increase in SWF share of world savings seems to run against these “facts”. Either primitive democratization got stuck or certain gvts have found a way to motivate voters to prefer different policies within formally democratic structures. As to (2) a movement that would make non citizen-oriented modes of public financial management relatively more prevalent should, by itself, provoke a response on the part of the world’s custodians of citizen-regarding government to the effect that their governance should become more in line with their model or face sanctions. The question is, will the citizen-regarding country gvts do their duty?

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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