Weekend Reading

Ashby Monk

Are SWFs ambiguous (in that there is sometimes confusion over their intentions) because they are geopolitical threats trying to hide their true motivations? Or, rather, are these funds ambiguous because they are simply being pulled in many directions by domestic constituencies? It’s a good question, which Saadia M. Pekkanen and Kellee S. Tsai look to answer in a new paper entitled “The Politics of Ambiguity in Asia’s Sovereign Wealth Funds.” Here’s a blurb:

“We contend that the ambiguity that Asia’s SWFs present to the external world is an inadvertent outcome of complex domestic political dynamics rather than a cloak for geopolitics…Whether in a democratic or authoritarian context, the interactive expressions of various societal and intra-state interests are not easily aggregated into coherent state-level preferences about SWFs serving the national interest. Although much work remains to be done on the domestic politics of Asia-related SWFs, our point remains: What external observers perceive as a deliberate effort to maintain institutional ambiguity for strategic purposes is in fact inadvertently constructed by diverse and conflicting expectations on the part of domestic actors about sovereign wealth management. Ironically, this suggests that even though strengthening the international governance of SWFs could alleviate external concern about their intentions, such efforts may well be thwarted by the dynamics of domestic politics.”

 It’s an interesting read. Have a nice weekend!

2 Responses to “Weekend Reading”

  1. 1 MMcC October 24, 2011 at 2:16 am

    It may be the case, to borrow from Wikipedia, that China will try to “disambiguate” CIC’s reputation as a strategic investor in the next couple of weeks by hiving off Huijin. Unfortunately, local rumor has it that they’ll do so by introducing PBoC as CIC International’s – the new offshore-only branch of CIC – (possibly) majority shareholder. The paper hints at the fact that time sometimes dilutes ambiguity’s irritations, especially those of foreign market regulators. We may be restarting the clock on CIC’s irritation timer very shortly.

  2. 2 Ashby Monk October 24, 2011 at 3:51 am

    Interesting. Thanks, Mike. Ash

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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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