“Sovereign Wealth Funds in a Globalized World”
Abstract: Sovereign wealth funds (SWFs), the investment funds of sovereign governments, have created controversy in Western industrialized recipient states as foreign direct investment (FDI) flows from many emerging market economies with opaque governance and lack of transparency. In recent years, countries ranging from the oil-rich United Arab Emirates to big exporters like China have been funneling oil revenues or trade surpluses into SWFs in a bid to maximize profits on their excess currency reserves. The motives of these fund investors, many from emerging market economies and from states heretofore unfriendly to the West, has increased the desire in the West for protectionism and at the expense of free trade. There are questions as to how to regulate these funds and better understand their motives for taking investment stakes in capital markets. Some suspect that foreign governments could use SWFs as a form of power to the detriment of corporations or even conducting espionage to effectively undermine national security in the West. The combination of low transparency and government ownership has raised questions about non-commercial interests, for example, political agendas, technology transfers, and other potential threats. The objective of this paper is to examine whether or not SWFs are stabilizing or destabilizing factors for the international economy by exploring the following research questions: (1) What impact, if any, do SWFs’ investments have on publicly listed companies and how important are these government-owned funds for capital markets? (2) What effects do they have on the companies in which they invest? And (3) how if at all do they influence business practices? In sum, is our capitalistic society ready for foreigners to become major players in the global financial marketplace?
Patton, John R. (2012.). Sovereign Wealth Funds in a Globalized World. International Business – Research, Teaching and Practice, 6(1), 1-26.
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