Articles

The small open economies of the Gulf and Southeast Asia are pioneers in the establishment of

Sovereign Wealth Funds (SWFs). The SWFs of countries like Qatar and Singapore are among the

world’s largest in terms of total asset size relative to Gross Domestic Product. This article looks

at the different compulsions behind the setting up of SWFs by small open economies.

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.

Professor Meghan O'Sullivan was interviewed on November 15th, 2015 for a Wall Street Journal special section on energy, discussing the rapid transformation of the American energy sector in light of low fuel prices, new climate policies and other factors.

"The Rio+20 process is an important reminder of the urgency to guide global production and consumption patterns with sustainability principles. Sadly, there is really no genuine global institution that is championing sustainable development. The vision that inspired Rio has been supplanted by two extreme positions. The first is a group that believes economic growth will have trickle-down benefits for the environment. The environmental camp has successfully replaced the spirit of Rio with a one-sided agenda that leaves little room for recognising the central role that human wellbeing plays in natural resource management."

Deforestation in the tropics is proceeding rapidly. It is in the interest of the United States Government to implement policies for improved management of tropical forests. The most effective approach is through development aid.