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Ayşe Cebeci
Erika Torres
H. Gülçin Beken
London Istanbul
Edited By
Ayşe Cebeci
Erika Torres
H. Gülçin Beken
Current Debates in Economics
(Edited by: Ayşe Cebeci, Erika Torres, H. Gülçin Beken)
London Istanbul
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Current Debates n Economcs
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IJOPEC Publication No: 2018/09
ISBN: 978-1-912503-30-8
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Orhan imek (Artvin Çoruh University), Ahmet Arif Eren (Niğde Ömer Halisdemir University)
In this study, we examine sovereign wealth funds are state owned institutions which have various
macroeconomic purposes. ese funds make signicant investments in the current global economy both in
the real and nancial sectors. eir main objectives are capital accumulation, macroeconomic stability
and development. SWFs have been the focus of state-centered economic debates since the 2008 crisis. ese
funds have recently been used for development purposes. In this context, global competitiveness is oriented
towards domestic investments in line with targets such as industrialization and economic growth.
Key Words: Sovereign Wealth Funds, Development, Globalization
e beginnings of the twenty rst century is especially important for the debates about the Global Capitalism. It
regain attention after the studies about the sovereign wealth funds (SWFs) and their impact on both national and
international levels. Global nancial crisis of 2008 had a vital role in the debates about the future of capitalism.
According to Öni (2017) “2008 crisis has been accepted as a breaking point” because market failure became
important and it generates the debates about the Anglo-Saxon Liberal Capitalism and its institutions. is
breaking point is attracted the alternative models for capitalism. ese models try to solve the market failure and
their aim is more importantly to improve the living standards of the household and increase the welfare. is can
be attained with an increase of gross national product (GNP). Obviously, this will become by building a path
to development. Nowadays this new development path seems as a Southern Type Strategic Capitalism and it is
called as Global South.
According to this model state is indispensable in attaining economic growth and development. e intervention
of state to economy but especially nancial and real sectors will have a snowball eect and generates higher
growth rates. As seen we turn back to the old problem: Market vs State. To put it briey the Anglo-Saxon Liberal
Capitalism which became hegemonic power after the Washington consensus advocated less state and more market.
On the contrary Global South defended more state in the nancial and real sectors. Governments’ intervention to
the economy will led to industrial and nancial objectives which will generate development. (imek et. al. 2017).
e competition between the socialist and free market political economist are not as popular as it used to be. e
debates and competition among the dierent types of capitalism have become more fashionable after the post-
war period. Furthermore, as of the moment, BRICS-type capitalism has gained momentum against welfare and
Orhan imek (Artvin Çoruh University), Ahmet Arif Eren (Niğde Ömer Halisdemir University)
the Anglo-Saxon capitalism. Within this scope, state capitalism based on Chinese mercantilist approach has been
received signicant attention since China became the world’s largest exporter by virtue of the implementation of
Chinese State Capitalism and its institutions which are in harmony with its capitalism (O’Brien and Williams,
2016, pp. 91-92).
e 2008 global crisis is a turning point in these debates. Neoliberal consensus has been discarded as pointed
above. e Kuhnian paradigm has changed. According to neoliberal consensus state is the troublemaker. So,
minimizing the state and let the market work freely will have positive eects on all economic variables. But
after the 2008 crisis state is called back as the trouble shooter. e approach to state became reversed as from
troublemaker state to trouble shooter state. Neo-liberal consensus is based on deregulation, privatization and
minimized state which result in the most ecient and sustainable means for economic growth and development.
All the conventional wisdom connected with Washington Consensus has been supported and implemented by
Neo-liberal organizations like the International Monetary Fund (IMF), the World Trade Organization (WTO),
and World Bank. Developing countries has operated and changed their economic and political structure through
the conventional wisdom since nearly 30 years to catch up developed nations (Kutlay and Karaoğuz, 2017).
Crisis of 1990s were mostly felt in developing and least developed countries. e reason of this crisis was mostly
banking sector, and the crisis process began with the short-term capital inows. Speculative hot money is the
ow of funds and capital between nancial markets as investors attempt to ensure to get the highest prot as
possible. But the direction of the ow unknown and it could get in to the country or get out from country as
fast as possible according to the interest rate. Speculators are seeming as a cocker smelling the highest interest rate
in order to gain as much as possible. is movement of speculators generates systematical crisis. From rst global
crisis namely South Sea Bubble to the 2008 crisis, the time gap between the crises decreases. e increase in the
number of crisis and the decrease in the time gap have made nations to prevent them from crisis. Believe in the
free market economy decreases with the 2008 crisis. is process has witnessed the increase in the power of China
and BRICS economies. In particular, China has shifted its attention to strengthening its foreign investments in
the framework of its “go global” strategy, which is the world’s largest exporter country and as a result of its well-
being of “globalization”. In this context this question will be meaningful. What happened to the western liberal
capitalism in this context?
Developing nations try to prevent them from the impacts of crisis by giving state a new role totally dierent from
the neoliberal era. In the neoliberal period the state activity is limited. State in the neoliberal period is minimal
and market friendly. But this kind of state is open to uctuations from the global crisis. And in order to prevent
themselves developing nations had a change in the role of the state. State has evolved into an entrepreneurial role,
especially in the southern countries. SWF’s has become a tool for this role.
2.Sovereign Wealth Funds
SWFs, which have been increasing rapidly since the early 2000s, are now a major player in international economic
and nancial order. ese state funds, which were established to assess the revenues from more natural sources and
export revenues, have become the instruments used for national development strategies in recent years as well as
having the purpose of making foreign investments. As a result, the number of SWFs oriented towards domestic
investments also increased.
Ayşe Cebeci, Erika Torres, H. Gülçin Beken
SWFs, which have become increasingly painful in the world economy, have begun to transform after the 2008
crisis. Priority is mainly attributed to the number of developing country SWFs, mainly emerging countries, which
have shifted to strategic investments as a means of increasing national competitiveness and the competitiveness of
the country in recent years, while the transfer of savings to future generations is predominantly outsourced SWFs.
In this period, cooperation between SWFs of dierent countries has also increased. erefore, national asset funds
have become only an investment vehicle and have become part of the countries’ economic cooperation processes.
Table 1. Macroeconomc Purposes of SWFs
Economic Objectives Specic Objectives Description Examples
Capital maximisation
Building a risk-adjusted
capital base for the
growth and preservation
of national wealth
Investing to create intergenerational
equity e.g. transforming non-renewable
assets into diversied nancial assets for
future generations
Funding future
Growing and preserving the real value of
capital to meet future liabilities, such as
contingent liabilities like pensions
Australia Future
Fund, New
Zealand Super
Investing reserves Investing excess reserves in potentially
higher-yielding assets via nancial
strategies aiming at higher long-term
returns, and reducing the negative carry
costs of holding reserves
China Investment
Korea Investment
management and
economic smoothing
Facilitating scal
Using counter-cyclical scal tools to
insulate the economy from internal
and /or external shocks, e.g. changes
in commodity prices to smooth
Chile Economic
and Social
Stabilisation Fund
Stabilising the exchange
Using the fund’s resources to balance
large capital inows and outows in the
short term (which may be caused by
commodity price volatility) to prevent
asset price bubbles and reduce price
Russia Reserve
Using the fund to manage the amount
of capital entering the domestic
economy over the long run to ensure the
exchange rate is maintained at a level
that allows for other export activities,
e.g. to prevent Dutch Disease
Mexico Oil
Stabilisation Fund
Orhan imek (Artvin Çoruh University), Ahmet Arif Eren (Niğde Ömer Halisdemir University)
Economic Objectives Specic Objectives Description Examples
Economic development
Investment to boost
a country’s long-term
Investing in hard
Domestic development in capital
assets, including but not limited to
transport, energy, water management and
Infrastructure Fund
Investing in social
Domestic development in soft
infrastructure: human capital and the
institutions that cultivate it. is includes
socio-economic projects such as education
and health
Pursuing industrial
Creating a diversied economy in
order to reduce dependency on one
resource or source of funding. Ocial,
strategic eorts by governments to boost
productivity in specic sectors
Temasek, BPI
PWC, 2015
e literature about the history and conception of SWF’s is not complete. ere are dierent denitions about
SWF’s. e source and purpose of SWF’s are all dierent from each other and this makes it dicult to dene.
Generally, SWFs are dierent from each other but a great number of SWFs are associated with funds based on
the value of one commodity such as petroleum, natural gas or gold. In other words, most of the SWFs have been
created in countries which have important natural resources such as oil. Oil related SWFs are composed of Arab
Gulf countries, Russia, Norway and the former Soviet Republics. A second considerable group of SWFs have been
established with their large net exports and these countries are mostly from Asian countries such as Singapore,
Korea, China, and other East-Asian exporters. ese all play a vital role in the second signicant group of SWFs
(Bortolotti, et al 2015, p. 298).
As seen above, SWFs have been largely established by two occasions. Countries which either rich in natural resources
or have large and net exports could establish SWF’s in order to reach diversied macroeconomic purposes (See
Table 1). SWF data emphasized that total market value of SWFs in 2018 is 7.6 billion dollar and SWFs play an
important role in nancial market in terms of both nancial and development purposes. With respect to the aims
of SWFs, countries which normally depends on one natural resources will be able to gain competitive power and
generate diversied economic eld which lead to sustainable growth and more competitive economy in the long run.
Table 2. Largest Fve SWFs by assets
Country SWF Name Assets USD-
Establshment Orgn
Norway Government Penson Fund-Global 1032.69 1990 Ol
Chna Chna Investment Corporaton 900 2007 Non-
UAE-Abu Dhab Abu Dhab Investment Authorty 828 1976 Ol
Kuwat Kuwat Investment Authorty 524 1953 Ol
Saud Araba SAMA Foregn Holdngs 494 - Ol
Source: SWFI, https://www.swfnstgn-wealth-fund-rankngs/
Ayşe Cebeci, Erika Torres, H. Gülçin Beken
SWF’s are mainly divided to ve categories namely, stabilization funds, saving funds, reserve investment funds,
pension reserve funds and development funds. Development funds is dierent from the other four types of funds.
Development funds, generally are not included in the SWFs due to their incompatibility with the denition of the
SWFs as they are directed to domestic investments. Development funds are a type of fund preferred by countries
such as Russia, Singapore, Malaysia, Kazakhstan, Brazil and Venezuela. In some context Turkiye Wealth Fund is
thought to be belonged to development funds. But according to the denition of TWF it is a stabilization fund.
e source of SWFs are mainly trade and exchange surpluses. But it changes from country to country. Also, the
aim of the nation states diers. Some countries exports of produced goods and services has created public and
private wealth, some of which has been diverted from consumption to capital appreciation. For yet other countries
with high levels of domestic saving and a geopolitical location at the interstices of global trade, SWFs have been
created to smooth the ups and downs of the global economy. For some countries, their SWFs are at the very heart
of their long-term plans for economic development; the assets held and invested by their SWFs are a means of
reconciling current generations’ commitment to sovereign autonomy and the welfare of future generations. For
other countries, however, their SWFs might as well be savings banks rather than strategic instruments bound up
with the aspirations of their political masters (Clark, Dixon and Monk, 2013, pp. 152-153). All these changes are
important. But the main dierence among the countries depends on their interest from SWF’s. SWF’s is both an
important economic and political tool. And when SWF used as a political instrument, the competitor nation is
really hurt from this usage. But this study does not focus on the usage of SWF as an instrument.
3.Developmental SWFs: Sovereign Development Funds
is study focuses on the increase in the number of developmental SWFs. is will be considered as a new phase
in the SWFs history. SWF’s have two aims. One is economic and the other is politic as mentioned above. To have
nancially strong gives SWF’s a political power which belong to the nation of the SWF. But in the new phase
politic aim is not as important as the economic one. In addition to contributing to both industrial policies and
infrastructure investments as a core feature of developmental national asset funds, attracting foreign investment
to the country is also considered. Nowadays neither political regime nor the balance of payments is important to
establish a SWF. SWF’s are found in varieties of political regime including social democracies to autocracies and
developed countries as well as low income countries are determined to establish their SWFs based on their own
macroeconomic objectivizes and country’s economic situations (Dixon, 2017, p. 279).
ere were ve types of SWF’s as mentioned above. ese ve types were generated through their function.
But primarily SWF’s are divided in to two groups. ese types are commodity-based SWFs and reserve-based
SWFs. Commodity-based SWFs have become an important tool for resource-rich countries, particularly in the
Middle East, in seeking to manage and diversify resource revenues. Over the last decade commodity prices have
been higher than the historical average, leading to signicant growth in the number of these funds and in their
assets under management. High commodity prices reect, in part, the rapid growth and expansion of East Asian
emerging market economies, namely China. e rapid growth of many of these economies reects an export-led
development model, which has resulted in the accumulation of massive foreign exchange reserves. As there is a
cost to holding, some governments have chosen to establish a SWF to invest these funds in order to achieve higher
returns (Dixon, 2017, p. 280).
Orhan imek (Artvin Çoruh University), Ahmet Arif Eren (Niğde Ömer Halisdemir University)
In the new phase of global capitalism (maybe age of information) the wealth and as a consequence power shifted
from OECD countries to some economies which are not member to OECD such as China, Russia and Iran.
Truman (2010) mentions this shift boldly. Statistics show that there is a rapid growth of SWFs. And according
to Helleiner (2009) this growth signals not only the rise of non-OECD economies but also a reassertion of
state authority in the markets. is combined with the lack of transparency among SWFs poses – according to
commentators, such as former US Treasury Secretary Summers (2007) – geopolitical challenges, such as the use
of their SWFs to pursue strategic goals (Braunstein, 2018).
Although western nancial capitalism appears biased against more statist and interventionist forms of capitalism,
the state is still a crucial actor in the construction and maintenance of the global capitalist market economy
(Wallerstein, 1983). As such, states in various ways engage with global capitalism, such as through supporting
industrial development, nancing R&D, or protecting intellectual property. e SWF can be classed as another
tool for engaging the global political economy. Notwithstanding the underlying intent of the engagement via the
SWF, the engagement ensures, in abstract terms, a certain degree of proximity for the state (Dixon, 2017, p. 281).
Table 3: Functons of SWFs as strategc nvestor
SWFs are a means of realizing a long-term premium on a nations wealth over and above the projected real rate of national
economic growth. is premium is realized through nancial assets invested in a broad portfolio of assets, representing
the potential of global economic integration rather than the potential of one country or region.
SWFs are a means of separating a portion of a nation’s accumulating wealth from the real economy by placing those assets
outside the economy so as to promote long term macroeconomic stability.
SWFs are a means of insuring the future economic prosperity of a sovereign entity in the context of global economic and
nancial instability and the limits of nation-state power in the international community of nations.
SWFs are a means of storing a nation’s wealth separate from the short-term exigencies and political commitments that
characterize the life of a sovereign nation; in this sense, SWFs are an endowment fund for the conservation of wealth.
SWFs are means of distributing current national wealth, often due to the exploitation of nite resources, to future
generations either through discounting the value of accumulated liabilities or by maximizing the future value of current
Clark, Dxon and Monk, 2013, p. 149
As seen on the above Table 3, SWF’s are a means for the nation to gain prosperity and wealth. As Santiso (2009)
mentioned, “economic development at home and abroad should be a key competency and focus for SWFs of
any kind”. Some examples indicate the importance of SWF’s in development. Mubadala is such an example.
Mubadala is the poioneering investor with the vision scale and expertise to make a global impact. As a SWF focuses
on commercial gains, helps to accelerate the UAE’s economic growth with an innovative approach to strategic
investment. Mubadala, for example, has actively invested in aerospace rms to develop production and services
capabilities in the UAE region (Haberly, 2011). But Mubadalas are not limited with aerospace industry. Capital
investments, defense services, healthcare, information technologies, metals and mining are some of the strategic
investment areas of Mubadala’s. On this context development is an important issue for Mubadala. Temasek, likewise,
is charged with nurturing economic development, industrialization, and nancial diversication of Singapore by
making commercially driven strategic investments in and around the region (Yeung, 2011). In the denition
Temasek saw itself as an active investor and shareholder. Again, it would seem that Temasek leads economic
Aye Cebec, Erka Torres, H. Gülçn Beken
development, rather than following it. But, and notwithstanding the fact that it follows an active investment
strategy. It is purpose is to create and maximise risk-adjusted returns over the long term. Temasek began as a
nancial holding company of the Singapore government’s shares in state-owned enterprises, start-ups, and joint
ventures. In that respect, Temasek could be seen as following developments in the national economy, rather than
being a direct catalyst thereof. Hence, when arguments are made regarding the catalyzing e ects that SWFs can
bring to economic growth and development, caution is required (Dixon, 2017, p. 292).
Free market capitalism versus states is an important issue in the debates between liberal academicians and left wing
academicians.  e history of this debate goes back to 18th century. James Steuart starts this debate. Free market
seems to win this historical debate.  e SWF is one way in which states have sought to engage with global market
capitalism, but also a way of resisting its predatory tendencies (Clark, Dixon, and Monk, 2013).  e geography of
capitalism has moved from an international economy distinguished by national borders to a global economy driven
by powerful cities and regions interconnected through complex global production networks and global value chains,
and where value is captured by and concentrated in the spaces and places of  nance (Dixon, 2014).  e SWF, in
providing a means of accessing  nancial markets, is a response to this changing geography (Dixon, 2017, p. 294).
In this new geography SWF’s could be accepted as an important supplement for the nation’s economic development
strategy. But it is di cult to  nd this strategy in SWF’s purpose list alone.  e SWF’s are aimed to ful ll lots of
purposes such as smoothing the volatility of resource revenues to support government spending over time, managing
currency appreciation, developing local economic capacity,  nancing social services (e.g. health and education),
reducing the sovereign risk pro le in global capital markets, facilitating inter-generational wealth transfers, and as
a tool for restricting the misappropriation and misallocation of state resources. Development strategy was just one
of these purposes but it is an important part for SWF’s. Given this potential many governments are considering
or are already setting up state-sponsored investment institutions.  is is particularly the case in sub-Saharan Africa
(Bachher et al, 2016, p. 97).
Fgure 1.  e Change n Sector Base Investments of SWFs, %
Schena and Jung, 2017, p.19
Orhan imek (Artvin Çoruh University), Ahmet Arif Eren (Niğde Ömer Halisdemir University)
Figure 1 shows that the total deals has changed importantly in a year time. e share of technology, real estate and
nance has increased on the contrary share of industry, services and others has decreased from 2016 to 2017. e
increase in nance and decrease in industry is dramatic. To put it briey the monetization and nancialization of
world economy is increasing and production is decreasing.
Currently, there are 92 active sovereign wealth funds. 57 countries have established at least one SWF. Middle East,
China, Southeast Asia and Norway are the four most active poles of SWFs. Assets under management exceed 7.5
trillion dollars. SWFs have widely spread in recent years: since 2010, 26 new funds were established. Other 24
countries are considering establishing a SWF. Debates over new SWFs are growing in East and South Africa and
in Latin America. us, in 2017, there are more than 115 operating or prospective-SWFs. ere are 33 funds
members of the International Forum of Sovereign Wealth Funds (Capape and Santiso, 2017).
With 31 publicly reported deals, worth $13.4 billion, SWF investment in high-tech companies accounted for
33.6 per cent of investment value and 19.6 per cent of total investments. After gradually increasing their exposure
in technology in the last three years, it is now safe to say that SWFs have nally decided to join the party. Since
technology investing is a rather risky game and is not a SWF’s natural habitat, one may wonder why they are
increasingly attracted to it (SIL, 2017). After the 2008 crisis economic growth is not enough for many of the
countries and the yields in traditional sectors are not risky but also low. So, SWF’s in order to gain much they
need to choose risky methods, and try to get higher returns from their investment to such risky sectors. Risk and
return is co-related. Potential return rises with an increase in risk. In this context SWFs investment decreases in
the traditional sectors such as industry because the returns are low. On the contrary investments to technology
sector increases because to increase the benets.
Fgure 2. e Proporton of Tech-IT Investments to Total Investments
SIL, 2017
Ayşe Cebeci, Erika Torres, H. Gülçin Beken
e proportion of the technology investments to total investments were really unimportant till 2013. After 2013
IT-Tech investments began to increase and in 2016, 33,7 percentiles of total investments are technology base
investments. e increase in the ratio is too high (See Figure 2).
In the transactions that are completed, non-commodity funds are 90 percent and so have the greatest share in
2016. For example, GIC and Temasek are the most important SWF investors to non-commodity transactions
such as telecom, software, e-commerce (see SIL, 2017). is is especially important because SWF’s development
purpose is not focused on traditional production sectors. It is focused on new high technology. Because in this
phase of capitalism high technology investments can generate growth and development.
e nature of SWFs are generally the state’s control and ownership. ese funds make signicant investments in
the current global economy both in the real and nancial sectors. eir main objectives are capital accumulation,
stability and development.
Countries that have SWF’s are either rich in natural resources or have a trade surplus. However, it is seen that
some countries that do not carry these features in recent period prefer to establish SWF. TWF is a good example
for such countries.
SWF have been the focus of state-centered economic debates since the 2008 crisis. ese funds have recently been
used for development purposes. In this context, global competitiveness is oriented towards domestic investments
in line with targets such as industrialization and economic growth. ese funds were established by low and
middle income countries and resource rich countries. Funds have priorities such as turning to high-risk premium
investments, making foreign investments, and attracting foreign capital investments to the country. In addition,
SWFs have also important functions for the global reputation of the countries in which they are established.
In this sense, the funds are important not only in the economic context but also in the context of international
relations. At this point, states can use SWFs not only for economic purposes but also for political purposes.
However, in geopolitical and neo-conservatism-centered debates it opens up space for these funds.
In recent times, state-centered capitalism has become important and SWFs in this context became as a means to
support the system. SWF compatible with the new system have become an important eld of study in international
political economy. At this point, it will not be surprising that the functions of SWFs increase in the face of increasing
neo-mercantilist tendencies and protectionist policies.
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nzaton, and Governance. In Publc Prvate Partnershps for Infrastructure and Busness Develop-
ment. Eds. S. Casell, G. Corbetta, V. Vecch. New York: Palgrave Macmllan, pp. 295-318.
Orhan imek (Artvin Çoruh University), Ahmet Arif Eren (Niğde Ömer Halisdemir University)
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Full-text available
The crisis of liberal democracy is closely associated with major global shifts, which have been accelerated by the global financial crisis of 2008, with its dislocating effects in the established democracies of the global centre. Relative stagnation and rising problems of inequality and unemployment, coupled with additional shocks in the form of mass migration and terrorist attacks have generated fertile grounds for the rise of right-wing radical populist sentiments, which have been turned into electoral advantage by charismatic leaders. The crisis of liberal democracy is also a global phenomenon in the sense that liberal democracy has been severely challenged by the rise of strategic models of capitalism, notably its authoritarian version represented by the growing power and influence of the China-Russia coalition. Indeed, the success of the latter has served as a kind of reference for many authoritarian or hybrid regimes in a changing global context, at a time when the key Western powers appear to be losing their previous economic and moral appeal.
While estimates vary, there are at least 60 sovereign wealth funds (SWFs) in existence around the world with more than US$5 trillion in assets under management. These numbers include SWFs from countries of different sovereign form, from social democratic Norway and its Government Pension Fund Global, to quasi-democratic city-state Singapore and its funds Temasek and GIC, and absolute monarchies like Qatar and its Qatar Investment Authority. While many SWFs are funded with the revenues from commodity production, mainly oil and gas, some SWFs, such as the China Investment Corporation are financed by balance of payments surpluses. Others are financed by the proceeds of state asset privatizations or fiscal surpluses. In this chapter we consider the rise of SWFs and their place in the global political economy and their role in national and regional economic development, unpacking their different forms and functions as institutional investors and as policy tools. We also consider the growth of SWFs as a power resource for some states to engage the global financial economy, while providing a source of resistance against the predations of the market and global economic and social change.
The present article brings domestic politics into an analysis on sovereign wealth funds (SWFs) that are relevant for the study of contemporary geopolitics. What are the domestic drivers behind SWF creation, and how does a country’s domestic political environment affect the creation of these funds? Using a comparative historical case study on sovereign funds in Gulf Cooperation Countries, this article investigates the effects of domestic state–society structures on decisions about SWF creation and their evolving structure. Thereby, this article adds to an emerging stream of literature that looks at the drivers and implications of SWFs. One of the key findings of this analysis is that there are systematic links between the sovereign fund types and domestic structures; these structures include and exclude socio-economic actors that influence policy-making decisions.
The 2008 global economic crisis galvanized the debate on neo-developmentalism as the pendulum of economic thinking began to swing away from neoliberalism. The current shift in the modalities of market governance mainly deals with the ways through which industrial policies can be crafted in a more open-economy setting. Accordingly, the post-crisis literature turns a keen eye on the state’s developmental role in the research and development (R&D) sector in an age of ‘bit-driven’ global political economy. On that note, the nature, properties, and limits of state policies of emerging powers in this particular realm are becoming increasingly central but remain an understudied theme. This article discusses the R&D policies of Turkey from a state capacity perspective and questions the rationale of those policies by linking the state’s transformative capacity to the discussions on distributive pressures. Drawing on 21 in-depth semi-structured interviews, this article assesses Turkey’s R&D policies.
This paper addresses the difficulties of accurately defining a SWF, discusses the evolution of the original SWFs from stabilization to wealth funds, and examines how SWFs are organized and funded. We also detail the key measures developed to assess the operational and informational transparency and institutional quality of different fund by comparing the organizational structures, corporate governance systems, and investment patterns observed for SWFs with those documented empirically for other internationally active institutional investors.
For some time now, the large flow of capital from the developing to the industrialised world has been the principal irony of the international financial system. In 2007 this flow will total well over half a trillion dollars, a figure that will be comfortably exceeded by the build-up in reserves and sovereign wealth funds (SWFs) in developing countries. Indeed, Morgan Stanley has estimated on reasonable assumptions that there is now close to $2,500bn (£1,200bn, €1,800bn) in SWFs and that this figure will increase to $5,000bn by 2010 and $12,000bn by 2015. Inevitably, and appropriately, countries possessed of publicly held foreign assets far in excess of anything needed to respond to financial contingencies feel pressure to deploy them strategically or at least to earn higher returns than those available in US Treasury bills or their foreign equivalents. Even without this pressure, SWFs are now growing at a faster pace than the global rate of new issuance of traditional reserve assets. There is plenty of room for debate over how large these funds should become. (Does China really need a saving rate in excess of 50 per cent that all but forces hundreds of billions of dollars in reserve growth?) But on any plausible path over the next few years, a crucial question for the global financial system and indeed for the global economy is how these funds will be invested.
This paper examines the changing role and governance of Singapore's two sovereign wealth funds (SWFs) over the past three decades – from their earlier participation in domestic national development to their more active involvement in Singapore's economic diplomacy. Based on a variety of sources and data, I argue that these two SWFs, Temasek Holdings and the Government of Singapore Investment Corporation, are state-sanctioned means to secure the economic future of Singapore; they are not strategic devices developed by the Singapore government to pose geopolitical or economic threats on other states. Over time, their economic functions and strategic orientations have evolved with the city-state's dynamic developmental trajectories in the global economy. In the post-Cold War era of global finance, these state-controlled and professionally managed financial investment vehicles are more visible and active in their global expansion and acquisition trails. There are thus significant challenges to their strategic governance and international legitimacy in this new world order. This paper considers some of these challenges in light of recent development in the two SWFs and assesses their organizational and institutional responses to such challenges in today's competitive global economy. This case study of Singapore's SWFs illustrates the critical importance for understanding the rise of SWFs from small states in the evolving global system.