Temptation and the Virtues of Long-Term Commitment: The Governance of Sovereign Wealth Fund Investment

24 Pages Posted: 31 Aug 2010

See all articles by Gordon L. Clark

Gordon L. Clark

Oxford University - Smith School of Enterprise and the Environment

Eric R. W. Knight

University of Sydney Business School

Multiple version iconThere are 2 versions of this paper

Date Written: August 31, 2010

Abstract

In this article we look at the governance of SWFs from the perspective of the competing political interests embedded in the sponsor – the domestic political claims on funds and the principles and practice of governance used to discipline those interests in favour of a long-term perspective that emphasizes the conservation of wealth and the intergenerational transfer of benefits. Using the case study of the Australian SWF known as the Future Fund, we argue that SWFs can be used as legal instruments to promote the interests of future generations. In this way, it puts into action the principle of intergenerational equity which has been hereto notoriously difficult to substantively apply in international law. By invoking the intergenerational principle we argue that the Australian government not only responded to the legal challenges of implementing intergenerational equity but also contributed to its currency as a customary norm.

Keywords: Sovereign Wealth Funds, Intergenerational Equity, International Law, Domestic Law, Australia Future Fund

JEL Classification: A11; E60

Suggested Citation

Clark, Gordon L. and Knight, Eric R. W., Temptation and the Virtues of Long-Term Commitment: The Governance of Sovereign Wealth Fund Investment (August 31, 2010). Available at SSRN: https://ssrn.com/abstract=1669281 or http://dx.doi.org/10.2139/ssrn.1669281

Gordon L. Clark

Oxford University - Smith School of Enterprise and the Environment ( email )

South Parks Road
Oxford, OX1 3QY
United Kingdom
+44 1865 285197 (Phone)
+44 1865 285073 (Fax)

HOME PAGE: http://www.geog.ox.ac.uk/staff/glclark.html

Eric R. W. Knight (Contact Author)

University of Sydney Business School ( email )

Cnr. of Codrington and Rose Streets
Sydney, NSW 2006
Australia

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