Sovereign Wealth Funds and Long-Term Development Finance : Risks and Opportunities
Sovereign wealth funds 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 stabi...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2014/02/18930592/sovereign-wealth-funds-long-term-development-finance-risks-opportunities http://hdl.handle.net/10986/17313 |
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okr-10986-17313 |
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oai_dc |
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Digital Repository |
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Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
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World Bank |
| language |
English en_US |
| topic |
ACCOUNTING AFFILIATED ORGANIZATIONS ALTERNATIVE ASSET ALTERNATIVE INVESTMENT ASSET CLASS ASSET CLASSES ASSET MANAGEMENT ASSET MANAGERS AUDIT COMMITTEE AUDIT COMMITTEES BANK POLICY BONDS BORROWING COSTS BUDGETING CAPACITY CONSTRAINTS CAPITAL INVESTMENTS CAPITAL MARKET CAPITAL MARKETS CAPITAL STOCK CAPITAL STOCKS CENTRAL BANK CHECKS COMMERCIAL BASIS COMMERCIAL INVESTMENT COMMERCIAL INVESTMENTS COMMERCIAL LOANS COMMERCIAL TERMS COMPANY LAW CONFLICT OF INTERESTS CONFLICTS OF INTEREST CONTINGENT LIABILITIES CORPORATE GOVERNANCE CREDIBILITY DEBT MANAGEMENT DEBTS DEGREE OF RISK DERIVATIVES DEVELOPING COUNTRIES DEVELOPMENT BANK DEVELOPMENT FINANCE DEVELOPMENT FINANCING DIRECT INVESTMENT DIRECT INVESTMENTS DISBURSEMENTS DIVESTMENT DOMESTIC CAPITAL DOMESTIC INVESTMENT DOMESTIC MARKET DOMESTIC STOCK EXCHANGE DUE DILIGENCE ECONOMIC DEVELOPMENT EFFICIENT PORTFOLIOS EMERGING MARKETS EQUITIES EQUITY INVESTMENTS EQUITY MARKET EXCHANGE RATE EXPECTED RETURNS EXPENDITURE EXPENDITURES EXPORTERS EXTERNAL ASSETS FINANCIAL ASSETS FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL MANAGEMENT FINANCIAL MARKET FINANCIAL PERFORMANCE FINANCIAL STATEMENTS FINANCIAL SUPPORT FINANCIAL SUSTAINABILITY FISCAL DEFICIT FISCAL POLICY FIXED INCOME FIXED INCOME PORTFOLIO FLOW OF INVESTMENT FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVE FOREIGN INVESTORS FOREIGN NATIONALS FRAUD GOVERNANCE ISSUES GOVERNMENT OWNERSHIP HEDGE FUNDS HOLDING HOLDINGS HOST COUNTRY ILLIQUIDITY INCOME FLOW INFLATION INFRASTRUCTURE FINANCING INFRASTRUCTURE INVESTMENT INFRASTRUCTURE INVESTMENTS INSTITUTIONAL INVESTORS INTERNAL AUDIT INTERNATIONAL BANK INTERNATIONAL FINANCE INTERNATIONAL INVESTMENT INTERNATIONAL INVESTORS INTERNATIONAL PORTFOLIOS INTERNATIONAL STANDARDS INVESTABLE FUNDS INVESTING INVESTMENT ACTIVITIES INVESTMENT BANKS INVESTMENT CAPITAL INVESTMENT CORPORATION INVESTMENT CRITERIA INVESTMENT DECISION INVESTMENT DECISIONS INVESTMENT FLOWS INVESTMENT FUNCTION INVESTMENT FUND INVESTMENT FUNDING INVESTMENT HORIZON INVESTMENT HORIZONS INVESTMENT INSTITUTIONS INVESTMENT MANAGEMENT INVESTMENT NEEDS INVESTMENT OPPORTUNITIES INVESTMENT POLICIES INVESTMENT POLICY INVESTMENT PORTFOLIO INVESTMENT PROCEDURES INVESTMENT PROCESS INVESTMENT PROGRAMS INVESTMENT PROJECTS INVESTMENT RETURN INVESTMENT RETURNS INVESTMENT SERVICES INVESTMENT SPENDING INVESTMENT STRATEGIES INVESTMENT VEHICLE JOINT STOCK COMPANY LENDERS LIABILITY LIQUIDITY LOCAL ECONOMY LONG TERM INVESTMENT LONG-TERM INVESTMENT LONG-TERM LIABILITIES LOW RISK INVESTMENTS MACROECONOMIC FLUCTUATIONS MACROECONOMIC MANAGEMENT MACROECONOMIC POLICY MACROECONOMIC STABILIZATION MARKET CONDITIONS MARKET DISCIPLINE MARKET PRICE MARKET REGULATOR MARKET RETURN MARKET RETURNS MINORITY SHAREHOLDERS MULTIPLIER EFFECT OIL PRICES OPERATIONAL INDEPENDENCE PENSION PENSION FUND PENSION FUNDS PENSIONS POLITICAL ECONOMY POLITICAL RISK PORTFOLIO PORTFOLIO MANAGEMENT PORTFOLIOS PRICE MOVEMENTS PRIVATE CAPITAL PRIVATE CREDIT PRIVATE EQUITY PRIVATE INVESTMENT PRIVATE INVESTORS PRIVATE PARTIES PRIVATE RETURNS PRODUCTIVE INVESTMENT PROFITABILITY PUBLIC DEBT PUBLIC DISCLOSURE PUBLIC FINANCE PUBLIC FUNDS PUBLIC INVESTMENT PUBLIC INVESTMENT PROGRAM PUBLIC INVESTMENT PROGRAMS PUBLIC INVESTMENTS PUBLIC SPENDING RATE OF RETURN REAL EXCHANGE RATE REAL PROPERTY REGULATORY FRAMEWORKS RESERVE RESERVE FUND RESERVES RETURN RETURN ON INVESTMENT RISK ADJUSTED RATE RISK DIVERSIFICATION RISK MANAGEMENT SECURITIES SHAREHOLDER STANDARD ASSET STATE BANK STATE OWNED ENTERPRISES TRADE UNION TRADING TRANSACTION TRANSPARENCY TREASURY TRUSTEE TRUSTEES VALUATION |
| spellingShingle |
ACCOUNTING AFFILIATED ORGANIZATIONS ALTERNATIVE ASSET ALTERNATIVE INVESTMENT ASSET CLASS ASSET CLASSES ASSET MANAGEMENT ASSET MANAGERS AUDIT COMMITTEE AUDIT COMMITTEES BANK POLICY BONDS BORROWING COSTS BUDGETING CAPACITY CONSTRAINTS CAPITAL INVESTMENTS CAPITAL MARKET CAPITAL MARKETS CAPITAL STOCK CAPITAL STOCKS CENTRAL BANK CHECKS COMMERCIAL BASIS COMMERCIAL INVESTMENT COMMERCIAL INVESTMENTS COMMERCIAL LOANS COMMERCIAL TERMS COMPANY LAW CONFLICT OF INTERESTS CONFLICTS OF INTEREST CONTINGENT LIABILITIES CORPORATE GOVERNANCE CREDIBILITY DEBT MANAGEMENT DEBTS DEGREE OF RISK DERIVATIVES DEVELOPING COUNTRIES DEVELOPMENT BANK DEVELOPMENT FINANCE DEVELOPMENT FINANCING DIRECT INVESTMENT DIRECT INVESTMENTS DISBURSEMENTS DIVESTMENT DOMESTIC CAPITAL DOMESTIC INVESTMENT DOMESTIC MARKET DOMESTIC STOCK EXCHANGE DUE DILIGENCE ECONOMIC DEVELOPMENT EFFICIENT PORTFOLIOS EMERGING MARKETS EQUITIES EQUITY INVESTMENTS EQUITY MARKET EXCHANGE RATE EXPECTED RETURNS EXPENDITURE EXPENDITURES EXPORTERS EXTERNAL ASSETS FINANCIAL ASSETS FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL MANAGEMENT FINANCIAL MARKET FINANCIAL PERFORMANCE FINANCIAL STATEMENTS FINANCIAL SUPPORT FINANCIAL SUSTAINABILITY FISCAL DEFICIT FISCAL POLICY FIXED INCOME FIXED INCOME PORTFOLIO FLOW OF INVESTMENT FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVE FOREIGN INVESTORS FOREIGN NATIONALS FRAUD GOVERNANCE ISSUES GOVERNMENT OWNERSHIP HEDGE FUNDS HOLDING HOLDINGS HOST COUNTRY ILLIQUIDITY INCOME FLOW INFLATION INFRASTRUCTURE FINANCING INFRASTRUCTURE INVESTMENT INFRASTRUCTURE INVESTMENTS INSTITUTIONAL INVESTORS INTERNAL AUDIT INTERNATIONAL BANK INTERNATIONAL FINANCE INTERNATIONAL INVESTMENT INTERNATIONAL INVESTORS INTERNATIONAL PORTFOLIOS INTERNATIONAL STANDARDS INVESTABLE FUNDS INVESTING INVESTMENT ACTIVITIES INVESTMENT BANKS INVESTMENT CAPITAL INVESTMENT CORPORATION INVESTMENT CRITERIA INVESTMENT DECISION INVESTMENT DECISIONS INVESTMENT FLOWS INVESTMENT FUNCTION INVESTMENT FUND INVESTMENT FUNDING INVESTMENT HORIZON INVESTMENT HORIZONS INVESTMENT INSTITUTIONS INVESTMENT MANAGEMENT INVESTMENT NEEDS INVESTMENT OPPORTUNITIES INVESTMENT POLICIES INVESTMENT POLICY INVESTMENT PORTFOLIO INVESTMENT PROCEDURES INVESTMENT PROCESS INVESTMENT PROGRAMS INVESTMENT PROJECTS INVESTMENT RETURN INVESTMENT RETURNS INVESTMENT SERVICES INVESTMENT SPENDING INVESTMENT STRATEGIES INVESTMENT VEHICLE JOINT STOCK COMPANY LENDERS LIABILITY LIQUIDITY LOCAL ECONOMY LONG TERM INVESTMENT LONG-TERM INVESTMENT LONG-TERM LIABILITIES LOW RISK INVESTMENTS MACROECONOMIC FLUCTUATIONS MACROECONOMIC MANAGEMENT MACROECONOMIC POLICY MACROECONOMIC STABILIZATION MARKET CONDITIONS MARKET DISCIPLINE MARKET PRICE MARKET REGULATOR MARKET RETURN MARKET RETURNS MINORITY SHAREHOLDERS MULTIPLIER EFFECT OIL PRICES OPERATIONAL INDEPENDENCE PENSION PENSION FUND PENSION FUNDS PENSIONS POLITICAL ECONOMY POLITICAL RISK PORTFOLIO PORTFOLIO MANAGEMENT PORTFOLIOS PRICE MOVEMENTS PRIVATE CAPITAL PRIVATE CREDIT PRIVATE EQUITY PRIVATE INVESTMENT PRIVATE INVESTORS PRIVATE PARTIES PRIVATE RETURNS PRODUCTIVE INVESTMENT PROFITABILITY PUBLIC DEBT PUBLIC DISCLOSURE PUBLIC FINANCE PUBLIC FUNDS PUBLIC INVESTMENT PUBLIC INVESTMENT PROGRAM PUBLIC INVESTMENT PROGRAMS PUBLIC INVESTMENTS PUBLIC SPENDING RATE OF RETURN REAL EXCHANGE RATE REAL PROPERTY REGULATORY FRAMEWORKS RESERVE RESERVE FUND RESERVES RETURN RETURN ON INVESTMENT RISK ADJUSTED RATE RISK DIVERSIFICATION RISK MANAGEMENT SECURITIES SHAREHOLDER STANDARD ASSET STATE BANK STATE OWNED ENTERPRISES TRADE UNION TRADING TRANSACTION TRANSPARENCY TREASURY TRUSTEE TRUSTEES VALUATION Gelb, Alan Tordo, Silvana Halland, Havard Arfaa, Noora Smith, Gregory Sovereign Wealth Funds and Long-Term Development Finance : Risks and Opportunities |
| relation |
Policy Research Working Paper;No. 6776 |
| description |
Sovereign wealth funds 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 sovereign
wealth funds to invest domestically. This paper proposes
some basic elements of a conceptual framework to create a
system of checks and balances to help ensure that the
sovereign wealth funds do not undermine macroeconomic
management or become a vehicle for politically driven
"investments." First, the risks and opportunities
of domestic investment by sovereign wealth funds are
analyzed. Central issues are the relationship of sovereign
wealth fund financing to the budget process and to the
procurement systems of sector ministries, as well as the
establishment of appropriate benchmarks and safeguards to
ensure the integrity of investment decisions. The paper
argues that a well-governed sovereign wealth fund, with a
sound mandate and professional management and staffing, can
possibly improve the quality of the public investment
program. But its mandate should not duplicate that of other
government institutions with investment mandates, such as
the budget, the national development bank, the investment
authority, and state-owned enterprises. Establishing rules
on the type of investment (for example, commercial and/or
quasi-commercial) and its modalities (for example, no
controlling stakes, leveraging private investment) is one
way to ensure separation between the activities of the
sovereign wealth fund and those of other institutions. The
critical issue remains that of limiting the sovereign wealth
fund's investment scope to that appropriate for a
wealth fund. If investments that generate quasi-market
returns are permitted, the size of the home bias should be
clearly stipulated and these investments should be reported separately. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Gelb, Alan Tordo, Silvana Halland, Havard Arfaa, Noora Smith, Gregory |
| author_facet |
Gelb, Alan Tordo, Silvana Halland, Havard Arfaa, Noora Smith, Gregory |
| author_sort |
Gelb, Alan |
| title |
Sovereign Wealth Funds and Long-Term Development Finance : Risks and Opportunities |
| title_short |
Sovereign Wealth Funds and Long-Term Development Finance : Risks and Opportunities |
| title_full |
Sovereign Wealth Funds and Long-Term Development Finance : Risks and Opportunities |
| title_fullStr |
Sovereign Wealth Funds and Long-Term Development Finance : Risks and Opportunities |
| title_full_unstemmed |
Sovereign Wealth Funds and Long-Term Development Finance : Risks and Opportunities |
| title_sort |
sovereign wealth funds and long-term development finance : risks and opportunities |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2014/02/18930592/sovereign-wealth-funds-long-term-development-finance-risks-opportunities http://hdl.handle.net/10986/17313 |
| _version_ |
1764436858400407552 |
| spelling |
okr-10986-173132021-04-23T14:03:37Z Sovereign Wealth Funds and Long-Term Development Finance : Risks and Opportunities Gelb, Alan Tordo, Silvana Halland, Havard Arfaa, Noora Smith, Gregory ACCOUNTING AFFILIATED ORGANIZATIONS ALTERNATIVE ASSET ALTERNATIVE INVESTMENT ASSET CLASS ASSET CLASSES ASSET MANAGEMENT ASSET MANAGERS AUDIT COMMITTEE AUDIT COMMITTEES BANK POLICY BONDS BORROWING COSTS BUDGETING CAPACITY CONSTRAINTS CAPITAL INVESTMENTS CAPITAL MARKET CAPITAL MARKETS CAPITAL STOCK CAPITAL STOCKS CENTRAL BANK CHECKS COMMERCIAL BASIS COMMERCIAL INVESTMENT COMMERCIAL INVESTMENTS COMMERCIAL LOANS COMMERCIAL TERMS COMPANY LAW CONFLICT OF INTERESTS CONFLICTS OF INTEREST CONTINGENT LIABILITIES CORPORATE GOVERNANCE CREDIBILITY DEBT MANAGEMENT DEBTS DEGREE OF RISK DERIVATIVES DEVELOPING COUNTRIES DEVELOPMENT BANK DEVELOPMENT FINANCE DEVELOPMENT FINANCING DIRECT INVESTMENT DIRECT INVESTMENTS DISBURSEMENTS DIVESTMENT DOMESTIC CAPITAL DOMESTIC INVESTMENT DOMESTIC MARKET DOMESTIC STOCK EXCHANGE DUE DILIGENCE ECONOMIC DEVELOPMENT EFFICIENT PORTFOLIOS EMERGING MARKETS EQUITIES EQUITY INVESTMENTS EQUITY MARKET EXCHANGE RATE EXPECTED RETURNS EXPENDITURE EXPENDITURES EXPORTERS EXTERNAL ASSETS FINANCIAL ASSETS FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL MANAGEMENT FINANCIAL MARKET FINANCIAL PERFORMANCE FINANCIAL STATEMENTS FINANCIAL SUPPORT FINANCIAL SUSTAINABILITY FISCAL DEFICIT FISCAL POLICY FIXED INCOME FIXED INCOME PORTFOLIO FLOW OF INVESTMENT FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVE FOREIGN INVESTORS FOREIGN NATIONALS FRAUD GOVERNANCE ISSUES GOVERNMENT OWNERSHIP HEDGE FUNDS HOLDING HOLDINGS HOST COUNTRY ILLIQUIDITY INCOME FLOW INFLATION INFRASTRUCTURE FINANCING INFRASTRUCTURE INVESTMENT INFRASTRUCTURE INVESTMENTS INSTITUTIONAL INVESTORS INTERNAL AUDIT INTERNATIONAL BANK INTERNATIONAL FINANCE INTERNATIONAL INVESTMENT INTERNATIONAL INVESTORS INTERNATIONAL PORTFOLIOS INTERNATIONAL STANDARDS INVESTABLE FUNDS INVESTING INVESTMENT ACTIVITIES INVESTMENT BANKS INVESTMENT CAPITAL INVESTMENT CORPORATION INVESTMENT CRITERIA INVESTMENT DECISION INVESTMENT DECISIONS INVESTMENT FLOWS INVESTMENT FUNCTION INVESTMENT FUND INVESTMENT FUNDING INVESTMENT HORIZON INVESTMENT HORIZONS INVESTMENT INSTITUTIONS INVESTMENT MANAGEMENT INVESTMENT NEEDS INVESTMENT OPPORTUNITIES INVESTMENT POLICIES INVESTMENT POLICY INVESTMENT PORTFOLIO INVESTMENT PROCEDURES INVESTMENT PROCESS INVESTMENT PROGRAMS INVESTMENT PROJECTS INVESTMENT RETURN INVESTMENT RETURNS INVESTMENT SERVICES INVESTMENT SPENDING INVESTMENT STRATEGIES INVESTMENT VEHICLE JOINT STOCK COMPANY LENDERS LIABILITY LIQUIDITY LOCAL ECONOMY LONG TERM INVESTMENT LONG-TERM INVESTMENT LONG-TERM LIABILITIES LOW RISK INVESTMENTS MACROECONOMIC FLUCTUATIONS MACROECONOMIC MANAGEMENT MACROECONOMIC POLICY MACROECONOMIC STABILIZATION MARKET CONDITIONS MARKET DISCIPLINE MARKET PRICE MARKET REGULATOR MARKET RETURN MARKET RETURNS MINORITY SHAREHOLDERS MULTIPLIER EFFECT OIL PRICES OPERATIONAL INDEPENDENCE PENSION PENSION FUND PENSION FUNDS PENSIONS POLITICAL ECONOMY POLITICAL RISK PORTFOLIO PORTFOLIO MANAGEMENT PORTFOLIOS PRICE MOVEMENTS PRIVATE CAPITAL PRIVATE CREDIT PRIVATE EQUITY PRIVATE INVESTMENT PRIVATE INVESTORS PRIVATE PARTIES PRIVATE RETURNS PRODUCTIVE INVESTMENT PROFITABILITY PUBLIC DEBT PUBLIC DISCLOSURE PUBLIC FINANCE PUBLIC FUNDS PUBLIC INVESTMENT PUBLIC INVESTMENT PROGRAM PUBLIC INVESTMENT PROGRAMS PUBLIC INVESTMENTS PUBLIC SPENDING RATE OF RETURN REAL EXCHANGE RATE REAL PROPERTY REGULATORY FRAMEWORKS RESERVE RESERVE FUND RESERVES RETURN RETURN ON INVESTMENT RISK ADJUSTED RATE RISK DIVERSIFICATION RISK MANAGEMENT SECURITIES SHAREHOLDER STANDARD ASSET STATE BANK STATE OWNED ENTERPRISES TRADE UNION TRADING TRANSACTION TRANSPARENCY TREASURY TRUSTEE TRUSTEES VALUATION Sovereign wealth funds 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 sovereign wealth funds to invest domestically. This paper proposes some basic elements of a conceptual framework to create a system of checks and balances to help ensure that the sovereign wealth funds do not undermine macroeconomic management or become a vehicle for politically driven "investments." First, the risks and opportunities of domestic investment by sovereign wealth funds are analyzed. Central issues are the relationship of sovereign wealth fund financing to the budget process and to the procurement systems of sector ministries, as well as the establishment of appropriate benchmarks and safeguards to ensure the integrity of investment decisions. The paper argues that a well-governed sovereign wealth fund, with a sound mandate and professional management and staffing, can possibly improve the quality of the public investment program. But its mandate should not duplicate that of other government institutions with investment mandates, such as the budget, the national development bank, the investment authority, and state-owned enterprises. Establishing rules on the type of investment (for example, commercial and/or quasi-commercial) and its modalities (for example, no controlling stakes, leveraging private investment) is one way to ensure separation between the activities of the sovereign wealth fund and those of other institutions. The critical issue remains that of limiting the sovereign wealth fund's investment scope to that appropriate for a wealth fund. If investments that generate quasi-market returns are permitted, the size of the home bias should be clearly stipulated and these investments should be reported separately. 2014-03-18T20:39:29Z 2014-03-18T20:39:29Z 2014-02 http://documents.worldbank.org/curated/en/2014/02/18930592/sovereign-wealth-funds-long-term-development-finance-risks-opportunities http://hdl.handle.net/10986/17313 English en_US Policy Research Working Paper;No. 6776 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |