Capitalizing Economic Development Through Sovereign Investment: A 'Paradox of Scarcity'?

26 Pages Posted: 3 May 2017 Last revised: 7 Jun 2017

See all articles by Patrick Schena

Patrick Schena

The Fletcher School, SovereigNET; The Fletcher School, Tufts University

Juergen Braunstein

London School of Economics & Political Science (LSE)

Asim Ali

SovereigNET

Date Written: May 1, 2017

Abstract

Traditionally the creation of sovereign wealth funds (SWFs) was “supply-driven”, the result of excess reserves from natural resources (e.g. Norway, Qatar, Kuwait, etc.) or non-commodity capital flows (e.g. South Korea, China, Singapore, etc.). More recently we observe many newly established or announced funds to be “demand-driven”, motivated by domestic development objectives (including infrastructure development). This transition from supply-driven to demand-driven SWF creation is most starkly manifested in SWF capitalization. This paper outlines recent developments on SWF creation – especially by countries that are neither endowed with oil wealth nor possess sizeable export surpluses to create SWFs with a development mandate. While contextualizing this study in the broader SWF literature, the aim is to provide a comprehensive overview on how funding sources impact achieving long-term financial and socio-economic development objectives.

Keywords: Sovereign wealth, private equity, direct investment, co-investment

JEL Classification: E60, E61

Suggested Citation

Schena, Patrick and Braunstein, Juergen and Ali, Asim, Capitalizing Economic Development Through Sovereign Investment: A 'Paradox of Scarcity'? (May 1, 2017). Available at SSRN: https://ssrn.com/abstract=2962509 or http://dx.doi.org/10.2139/ssrn.2962509

Patrick Schena (Contact Author)

The Fletcher School, SovereigNET ( email )

Medford, MA 02155
United States

The Fletcher School, Tufts University ( email )

Medford, MA 02155
United States

Juergen Braunstein

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Asim Ali

SovereigNET ( email )

Medford, MA 02155
United States

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