New Research: The Rise of SWFs in the Gulf

Ashby Monk

With all that’s been going on in the Middle East over the past few months, you may be interested in taking a deeper dive into the region’s remarkable SWFs. After all, these funds have over a trillion dollars among them. So, for example, you may be wondering why these countries resorted to SWFs, which are inherently Western financial institutions, to manage their resource wealth in the first place.  You may be wondering whether these funds are meeting the objectives of their sponsors. You may be wondering how the norms of Western finance are matching up with the inherited traditions of the Gulf. You may be wondering what the heck I’m talking about. Well fear not, confused reader, the answers await.

It’s been a long time in coming, but Gordon and I have finally finished our highly anticipated paper (I’m referring to our anticipation here, not yours) on SWFs in the Gulf. The paper is entitled “Modernity, Institutional Innovation, and the Adoption of Sovereign Wealth Funds in the Gulf States.” It’s a working paper, so we’d appreciate any comments or critiques you’d like to share (in the comments below or via email). We hope you find it informative and thought-provoking. Here’s an abstract:

“Whereas debate about sovereign wealth funds (SWFs) often focuses upon the global significance of their investment strategies, these institutions are also emblematic of the new global order of financial capitalism. SWFs are a mechanism for states to advance their interests through global financial markets and are a switch point for the translation of resource assets into financial assets in global markets. Yet, realising the promise of SWFs is not easy. The form and functions of these institutions are typically conceived in Western terms, which means the necessary infrastructure for their effective performance may not exist in non-Western jurisdictions. Nonetheless, these funds have grown increasingly popular throughout the world. As such, this paper examines the process of SWF adoption in non-Western jurisdictions, and, in particular, SWFs’ recent rise in popularity amongst the Gulf States. These countries are particularly interesting as they face a variety of challenges due to institutional contradictions between the norms of Western finance and the inherited traditions of the Gulf. While Gulf SWFs may be limited in their effectiveness, these funds still serve as an important symbol for the region, representing a formal gesture towards ‘modernity’ in the context of nation-states’ inherited traditions.” Get it at SSRN.

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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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