Articles

Sovereign wealth funds (SWFs) have traditionally been created to recycle excess reserves from natural resource or non‐commodity revenues. However, in recent years funds are being established under conditions of capital scarcity with objectives to contribute domestic economic development, often through the buildout of national infrastructure programs. Such trends in new fund creation represent a fundamental shift in the sovereign wealth fund paradigm and raise serious questions about how these entities are to be capitalized and also the implications of capitalization models on their sustainability. This study examines the recent evolution of SWF models focused on economic development. Its analytic focus is drawn, in particular, to countries that are neither endowed with oil wealth, nor otherwise enjoy export surpluses to be used to capitalize a development‐oriented SWF. While this study is relevant to and expands the scope of the broad literature on SWFs, its specific contribution is as a focused analysis of how SWF funding sources impact achieving long‐term financial and socio‐economic development objectives.

Richard W. Maass and Carla Norrlof respond to Daniel W. Drezner's Summer 2013 International Security article, "Military Primacy Doesn't Pay (Nearly As Much As You Think)."

"Just when it seemed safe to start using the word "recovery," a Greek crisis is threatening the world economy, and the very existence of the world's second-biggest currency."

After World War II, "trading states" seemed to be charting a new path forward. But small was not beautiful. Even great powers found themselves negotiating larger markets through economic associations with others. It's time the United States became such a power.

"For a time, [Chimerica] was a symbiotic relationship that seemed like a marriage made in heaven. Put simply, one half did the saving, the other half the spending. Comparing net national savings as a proportion of Gross National Income, American savings declined from above 5 percent in the mid 1990s to virtually zero by 2005, while Chinese savings surged from below 30 percent to nearly 45 percent. This divergence in saving patterns allowed a tremendous explosion of debt in the United States, for one effect of the Asian "savings glut" was to make it much cheaper for households to borrow money than would otherwise have been the case."

As a result of the recent financial crisis, the United States has grown increasingly dependent on foreign sources of credit. U.S. policymakers worry that China, in particular, could use its financial power to influence U.S. foreign policy. However, two case studies (the contestation over the regulation of sovereign wealth funds and the protection of Chinese investments in the United States) demonstrate that their concerns are somewhat exaggerated. The current relationship between the United States and China is one of mutual dependency. Unless the balance shifts, China will be able to resist U.S. entreaties, but not coerce the United States into changing its policies.

Hurricane Katrina devastated our region in 2005. With the help of volunteers, we have been rebuilding. If oil prices rise high enough to make travel unaffordable for volunteers, our resurrection will falter.

In a public hearing last week, the New Orleans City Council tangled with the Office of Recovery and Development and Administration over a state tax credit program to promote cultural activities. Some council members felt their districts were being ignored. The mood turned contentious. As a result of this debate, approval of funding for the city's 17-zone recovery plan was put off -- at Dr. Ed Blakely's request -- for at least another week.

"As the American political system hurtles toward its quadrennial encounter with the oracle of democracy, it is worth our while to take stock of the country's place in a world beset by bewilderingly rapid change. (Heaven knows none of the candidates will bother to do this.) I want to suggest that an old yet generally neglected subject remains particularly relevant: the relationship between the size of political units and the effective scale of systems of economic production and exchange. Another way to describe this relationship is by recourse to the hoary scholarly phrase "political economy", a term of art that has unfortunately gone out of style...."

G. John Ikenberry, professor of politics and international affairs at Princeton University's Woodrow Wilson School, and Stephen Walt, professor of international affairs at Harvard University's John F. Kennedy School of Government, participated in a debate at the Watson Institute for International Studies at Brown University on May 8, 2007. Christopher Lydon hosted the debate.