Sovereign Wealth Funds

There has been a ton of attention lately to sovereign wealth funds, with demands for greater transparency and concern about political use of the funds in potentially disruptive ways.  Richard Komaiko has a lucid editorial here in the Asia Times, in which he points out that, in the case of China at least, many of the concerns are misplaced. If nothing else, the scale of the sovereign wealth fund is relatively small. At the same time, he links up the SWFs with domestic development concerns.  An alternative use of the money would be to invest in poverty eradication inside China.

One can also think about SWFs in the context of Trubek's New Developmental State.  Much of the concern about SWFs is about strategically placed investments; but the right kind of strategic investments may in fact have a positive developmental role.  Can states pick such investments in the 21st century? Do SWFs have the right institutional structure to do so?  Hopefully we will learn more about this this week at the Center on Law and Globalization meeting in Chicago.

     -TG