2014/06/18 by Jeffrey M. Chwieroth · 65 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Business #Commodity #Economic growth #Economics #Emulation #Finance #Foreign direct investment #Macroeconomics #Natural Resources and Economic Development #Political science #Politics #Private Equity and Venture Capital #Sovereign wealth fund #State Capitalism and Financial Governance
paper · pdf · doi:10.1111/isqu.12140
published in International Studies Quarterly 58(4), 752-763 (Oxford University Press)
openalex publication_date 2014/06/18 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/01
What accounts for the spread of Sovereign Wealth Funds (SWFs)? Despite the increasing importance of SWFs in the global economy, we lack persuasive systematic answers to that question. Most analysts take for granted that economic imperatives drive the creation of SWFs; governments create them as effective solutions to the challenges generated by reserve accumulation and commodity-export specialization. In this article, I argue that the evidence fails to support this theory. Instead, the spread of SWFs best resembles the diffusion of a fashion or fad. SWFs became fashionable as an appropriate approach for reserve- and resource-rich countries seeking to manage policy uncertainty related to these economic characteristics. As other countries developed the same characteristics, they followed the lead of their peers and also created SWFs. I provide, with the use of a new data set, the first cross-national political-economy statistical analysis of SWF creation. The results suggest peer group emulation has, indeed, been crucial in shaping the decision of many countries to create SWFs—especially in fuel-exporting countries.