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Sovereign Wealth Funds and Domestic Investment in Resource-Rich Countries: Love Me, or Love Me Not?

Author

Listed:
  • Gelb, Alan

    (Center of Global Development)

  • Tordo, Silvana

    (World Bank)

  • Halland, Havard

    (World Bank)

Abstract

Sovereign wealth funds (SWFs) represent a large and growing pool of savings. An increasing number of these funds are owned by natural resource–exporting countries and have a variety of objectives, including intergenerational equity and macroeconomic stabilization. Traditionally, these funds have invested in external assets, especially securities traded in major markets. But the persistent infrastructure financing gap in developing countries has motivated some governments to encourage their SWFs to invest domestically. Is it appropriate to use SWFs to finance long-term development needs? Does it matter whether such investments are domestic or foreign-held assets? This note considers these issues, particularly the controversial question of using SWFs to finance domestic projects, motivated partly by SWFs’ perceived importance for development.

Suggested Citation

  • Gelb, Alan & Tordo, Silvana & Halland, Havard, 2014. "Sovereign Wealth Funds and Domestic Investment in Resource-Rich Countries: Love Me, or Love Me Not?," World Bank - Economic Premise, The World Bank, issue 133, pages 1-5, January.
    • Handle: RePEc:wbk:prmecp:ep133
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    References listed on IDEAS

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    1. Paul Collier & Anthony Venables & Rick Van der Ploeg & Michael Spence, 2009. "Managing Resource Revenues in Developing," OxCarre Working Papers 015, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    2. Edwin M. Truman, 2011. "Sovereign Wealth Funds: Is Asia Different?," Working Paper Series WP11-12, Peterson Institute for International Economics.
    3. Andrew Berg & Rafael Portillo & Shu-Chun S Yang & Luis-Felipe Zanna, 2013. "Public Investment in Resource-Abundant Developing Countries," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(1), pages 92-129, April.
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    Cited by:

    1. Leonardo STANLEY & Francisco CASTAÑEDA & Nassib SEGOVIA, 2024. "Sovereign Wealth Funds’ investments and climate change," CIRIEC Working Papers 2406, CIRIEC - Université de Liège.

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    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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