New Research: Rethinking the Sovereign in Sovereign Wealth Fund

Ashby Monk

I’ve just finished a draft paper with Adam Dixon of Bristol University entitled, “Rethinking the Sovereign in Sovereign Wealth Fund.” It’s an early stage draft, so we’d appreciate any comments, critiques or criticisms you want to throw our way. My personal opinion, for what it’s worth, is that this paper offers a new appreciation for the role SWFs are playing in the evolving notion of nation-state sovereignty in an increasingly globalized world. Caveat lector: It’s a bit theoretical, but I don’t think you need to be an academic to read it. Anyway, here’s the abstract:

“Nation states are increasingly sharing sovereignty, both with other states and with supranational and non-governmental institutions. In large part, this is the result of a long period of economic and financial globalization, which has undercut territorial notions of sovereignty and varieties of capitalism. In trying to understand this phenomenon, we are drawn to sovereign wealth funds (SWF), as they offer a unique and powerful lens into the changing dynamics of contemporary capitalism, global economic integration and state sovereignty. Indeed, the SWF provides governments a tool for both engaging with new spatial forms as well as resisting them. While politicians may conceptualize the objective of such funds in the most practical terms, they serve an under-appreciated role in maintaining state sovereignty in a globalized (i.e. deterritorializing) world. In this paper, we build on emerging interdisciplinary scholarship concerning the rise of SWFs by broadening the interpretation of the utility of SWFs for the sponsoring government in relation to the practice and constitution of sovereignty. To this end, we offer an innovative, stylized typology of SWFs in relation to the state and its sovereignty. The objective is to better understand the potential long-term significance of SWFs and the factors that might underpin further development of new SWFs in different countries in the future. Moreover, we believe SWFs can be differentiated according to the role they play in sovereignty and what underlies their claims to legitimacy within their respective nation state. As such, by understanding the rise and purpose of SWFs, we hope to better understand the sovereign in SWFs.”

We hope you find it interesting and relevant! Get it here on SSRN.

3 Responses to “New Research: Rethinking the Sovereign in Sovereign Wealth Fund”

  1. 1 Mariano Browne August 6, 2010 at 9:55 am

    As I understand it the use of the term s”Sovereign” is to designate a national savings vehicle that is available to all future generations of a particular state and the terms on which those funds will be distributed to nationals.

    From that perspective it is to be seen as device to isolate and sterilise gains that can be deemed to be of a windfall nature eg rising commodity prices. It is purpose therefore is primarily economic as it terms of reference ought to be .

    the exercise of “sovereignity” is therefore limited to strict considerations of stability and economic rate of return and the direction of the investment. Accordingly , the wider considerations raised by your paper would require an examination of the investment rules and whether those terms of reference have wider implications and whether they are explicity or embeded, passive or active.


  2. 2 Rien Huizer August 7, 2010 at 3:42 am

    This paper makes a lot of sense since it suggests plausible explanations for some of the more glaring apparent irrationalities (irrationalities from the perspective of mainstream economics) that characterize many SWFs. SWFs are usually breaches of the ethos of non-discrimination against foreign actors and minimalist government, as well as commitment devices at odds with liberal notions of what constitutes democracy and as such should be judged on their “performance” against those partially non-economic intentions, and especially wrt domestic constituencies’ interests. The paper contributes to this by focusing on the domestic legitimacy of SWFs in the context of various notions of sovereignty. Highly original and useful, but not quite tractable of course.

  1. 1 Economics news headlines | Money Supply | Trackback on August 6, 2010 at 7:30 am

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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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