Sovereign Wealth Funds in Resource Economies

Institutional and Fiscal Foundations

Khalid Alsweilem and Malan Rietveld

Columbia University Press

Sovereign Wealth Funds in Resource Economies

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Pub Date: October 2017

ISBN: 9780231183543

304 Pages

Format: Hardcover

List Price: $65.00£54.95

Pub Date: October 2017

ISBN: 9780231544993

304 Pages

Format: E-book

List Price: $64.99£54.95

Sovereign Wealth Funds in Resource Economies

Institutional and Fiscal Foundations

Khalid Alsweilem and Malan Rietveld

Columbia University Press

Sovereign wealth funds (SWFs) have reached a transitional moment. Created as a way to direct excess wealth toward economic development and long-term financial returns, some countries are now seeing a decline in revenue from sources such as oil. Many SWFs are now facing a new challenge—how to spend sustainably without depleting the funds. Sovereign Wealth Funds in Resource Economies explains the fiscal rules and institutional structures that can make SWFs thrive, providing a practical and theoretical guide to their optimal use in resource-revenue management.

Khalid Alsweilem and Malan Rietveld put forward an institutional perspective of SWFs as quasi-independent political and economic entities charged with managing national resource wealth, examining both investment and disbursement strategies. They advance a systematic, rule-based approach, suggesting when to accumulate and when to begin countercyclical spending based on concrete case studies. More than a mere financial portfolio, SWFs must be embedded in a credible fiscal and institutional framework if they are to contribute to improved economic performance. Alsweilem and Rietveld consider the variety of relationships that exist between SWFs and their governments, exploring the legal and policy side of the institutional approach. Their rule-based description of SWFs, since it allows tailoring and adjustment and invokes rules of thumb and best practices, is intended to be widely applicable across the diverse spectrum of global SWFs. Bringing together the practitioner perspective and scholarly expertise, this book will be invaluable for global policy makers and scholars working with sovereign wealth funds.
This is a must-read book for anyone responsible for a sovereign wealth fund, showing how the key decisions should be part of an overall fiscal policy. There is also no better guide to how sovereign wealth funds are managed around the world. Martin Feldstein, George F. Baker Professor of Economics, Harvard University
In linking the theoretical and practical issues regarding sovereign wealth funds, the authors provide insight and knowledge few others can match. This is a readable and ambitious book—a manifesto for how to think about sovereign wealth funds in the twenty-first century. Gordon L. Clark, University of Oxford
The Belfer Center has been delighted to support this significant research. Rarely has an academic research product resulted in such immediate and important impact in the real world. Gary Samore, Executive Director for Research, Belfer Center for Science and International Affairs, Harvard University
This book is the closest thing we have seen to a manual for the successful implementation of a sovereign wealth fund. It will be of great value to those thinking about how to structure and govern one. Paul Rose, Ohio State University
The authors reminds us that while sovereign funds often make headlines for their investments, it's their role in ensuring fiscal sustainability that is often the most impactful. It's through this important link to national objectives that this book guides the reader. It's a great read Ashby Monk, Stanford University
Acknowledgments
List of Tables and Figures
Introduction
Part I. An Institutional Perspective on Resource Economies and the Role of Sovereign Wealth Funds
1. The Most Disadvantageous Lottery in the World: Historic Controversies Around Natural Resources and Economic Prosperity
2. Getting to Denmark: Institutional and Political Problems of Resource-Dependent Economies
3. Guardians of the Future Against the Claims of the Present: Sovereign Wealth Funds as an Institutional Response to the Resource Curse
4. To Be Boring: Institutional Lessons from the Modern Monetary Consensus for Sovereign Wealth Funds
Part II. Rule-Based Fiscal Policies for Sovereign Wealth Funds
5. It’s (Still) Mostly Fiscal: Simple Fiscal Rules for Accumulating Windfall Resource Revenues in a Sovereign Wealth Fund
6. Integrated Fiscal Rules for Sovereign Wealth Funds: Spending, Saving, and Stabilizing Resource Revenues
7. Governing the Fiscal Rule: The Design and Institutional Infrastructure of Fiscal Rules for Resource Revenues
Part III. The Governance of Operationally Independent Sovereign Investment Institutions
8. Public Footprints in Private Markets: Institutional Arrangements in Delegated Sovereign Investment Management
9. Shadows and Siren Calls: Rules and Contracts in Delegated Sovereign Wealth Fund Management
10. Summary
Notes
References
Index

About the Author

Khalid Alsweilem is a visiting scholar with Stanford University Global Projects Center. He is a former fellow at the Belfer Center at Harvard University. Alsweilem is the former chief counselor and head of investment at the Saudi Arabian Monetary Agency (SAMA). He is one of the longest serving and most successful sovereign investment practitioners, having held senior investment positions at SAMA for over two decades. Alsweilem was a lead author for three recent papers on sovereign funds models and institutions that were published by Harvard University.

Malan Rietveld is a fellow at the Columbia Center on Sustainable Investment at Columbia University and was previously a fellow at the Center for International Development at the Harvard Kennedy School. He is the editor of several books on sovereign wealth funds, including The New Frontiers of Sovereign Investment (Columbia, 2017, with Perrine Toledano). He has advised several sovereign wealth funds on governance, management, and strategic issues.