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Emergence of sovereign wealth funds

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  • Carpantier, J.-F.
  • Vermeulen, W.N.

Abstract

In this paper we show that domestic economic and political characteristics can explain why some countries established a Sovereign Wealth Funds (SWFs) and others not. We find that 1) the existence of natural resources profits, 2) the government structure and 3) the ability to invest in a socially beneficial way in the domestic economy can explain this choice. At the same time these same factors do not relate to the size of the national savings. We use a sample of countries that established a SWF in the period 1998–2008 and compare them to those that did not set up a fund in the same period. The results suggest that SWFs tend to be established in autocratically run countries that have difficulties finding suitable opportunities for domestic investments.

Suggested Citation

  • Carpantier, J.-F. & Vermeulen, W.N., 2018. "Emergence of sovereign wealth funds," Journal of Commodity Markets, Elsevier, vol. 11(C), pages 1-21.
    • Handle: RePEc:eee:jocoma:v:11:y:2018:i:c:p:1-21
    DOI: 10.1016/j.jcomm.2018.01.002
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    Cited by:

    1. Amar, J. & Lecourt, C. & Carpantier, J.F., 2022. "GCC Sovereign Wealth Funds: Why do they take control?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 77(C).
    2. Megginson, William L. & Gao, Xuechen, 2020. "The state of research on sovereign wealth funds," Global Finance Journal, Elsevier, vol. 44(C).
    3. Gangi, Francesco & Mustilli, Mario & Varrone, Nicola & Graziano, Domenico, 2023. "Target firms’ characteristics and the effects of sovereign wealth funds’ investments: Does cultural context of SWFs matter?," Research in International Business and Finance, Elsevier, vol. 65(C).
    4. Jeanne Amar & Christelle Lecourt & Valerie Kinon, 2018. "Is the emergence of new sovereign wealth funds a fashion phenomenon?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(4), pages 835-873, November.
    5. Heffron, Raphael J, 2018. "The application of distributive justice to energy taxation utilising sovereign wealth funds," Energy Policy, Elsevier, vol. 122(C), pages 649-654.
    6. Grira, Jocelyn, 2020. "Back to government ownership: The Sovereign Wealth Funds phenomenon," Finance Research Letters, Elsevier, vol. 34(C).
    7. Gouett, Matthew, 2020. "New wealth, New wisdom: Updating the narrative of sovereign wealth fund creation," Resources Policy, Elsevier, vol. 65(C).
    8. Cody D. Eldredge, 2019. "Capability and need: A framework for understanding why states create sovereign wealth funds," The World Economy, Wiley Blackwell, vol. 42(5), pages 1495-1519, May.

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    More about this item

    Keywords

    Sovereign wealth fund; Institutions; Natural resources;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F39 - International Economics - - International Finance - - - Other
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education

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