The Design and Governance of Sovereign Wealth Funds: Principles & Practices for Resource Revenue Management

15 Pages Posted: 31 Oct 2011

See all articles by Adam D. Dixon

Adam D. Dixon

Maastricht University

Ashby H. B. Monk

Stanford University - Global Projects Center

Date Written: October, 30 2011

Abstract

The discovery of natural resources in a developing country is not always the good news it appears to be. Resource-rich countries, particularly emerging and developing economies, face the significant challenge of using their natural wealth to improve the living standards of average citizens. Too often the wealth is wasted through weak institutions and corruption, a phenomenon referred to as the ‘resource curse’. One increasingly popular mechanism for dealing with the curse is the commodity-based sovereign wealth fund (SWF). While it is not a panacea, in the right circumstance SWFs can be a very useful tool for managing resource revenues and facilitating long-term economic development. However, SWFs will achieve these lofty objectives only if the appropriate design and governance systems are in place. In this paper we illustrate the design principles and governance practices required to set up a successful SWF.

Keywords: sovereign wealth fund, resource management, resource curse, finance

Suggested Citation

Dixon, Adam D. and Monk, Ashby H. B., The Design and Governance of Sovereign Wealth Funds: Principles & Practices for Resource Revenue Management (October, 30 2011). Available at SSRN: https://ssrn.com/abstract=1951573 or http://dx.doi.org/10.2139/ssrn.1951573

Adam D. Dixon

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

Ashby H. B. Monk (Contact Author)

Stanford University - Global Projects Center ( email )

United States

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