Policy Innovations The central address for a fairer globalization

A publication of the Carnegie Council

Foreign Investment and Sovereign Wealth Funds

New America Foundation, September 2007

ABSTRACT: The amount of money now held by governments around the world both in reserves and through sovereign wealth funds (SWFs) represents the largest concentration of investment capital the world has ever known. Their sheer size and expected rate of growth raise important issues regarding both the origin of this wealth and how it is to be invested. The origin of these funds rests on two main factors: the global imbalances between debtor nations (like the U.S.) and surplus nations (like China), and the rise of state-owned commodity (oil) funds. As for their uses, these countries have built up sums that dwarf those held by all the hedge funds in the world combined and are set to grow at an unprecedented pace. It is incumbent upon policymakers to not wait, but rather to address this issue now, and to determine what opportunities and threats they present. We should be assessing how best to influence how these funds are utilized and invested. The issues raised involve political, economic, and security considerations.

External Link: Foreign Investment and Sovereign Wealth Funds