The Effectiveness of Public Policy Governing International SWFs
The funds for most of the International SWFs come directly from the better management of public assets (Lansley, 2016). The literature on International SWFs involved two points of views, which were policy centric management practices and non-policy- based subjective fund management practices, as broadly outlined by Chhaochharia and Laven (2008) and Alhashel (2015). The policy-based SWF management practices followed the investment best practices, as per the guidelines of the international financial regulatory bodies.
Non-policy-based SWF management practices, however, lacked transparency, accountability, and the funds are run “in a highly secretive way as little more than the investment wing of the state” (Lansley, 2016, p. 9). Kirshner (2009), in his study “Sovereign wealth funds and national security” dismissed the notion of political agenda posed by these SWFs, categorizing SWFs as the “manifestations of other pathologies - rather than the root cause of the postulated problem” (p. 305). Kirshner presented empirical analysis and categorically stated that the SWFs exist only due to the demand
for transmission of wealth in the global economy. The burden of accountability and responsibility needs to fall on the host nations (Kirshner, 2009). Haberly (2011), on the other hand, criticized the implications of SWFs presented by Kirshner (2009) and emphasized the need to conduct more studies centered around the “strategic use” of SWFs in the context of a national development instrument.
Truman (2009), regardless of his differing viewpoint, presented a neutral voice for the value that SWFs would provide in global development. Truman emphasized that to reap the value that SWFs offered in ethical, fair, and equitable ways, there is an urgency to craft policy- based governance structure under the regulation of international organizations such as the International Monetary Fund (IMF) and the Organization for Economic Co-operation and Development (OECD).
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© 2013 by Jay Maharjan. All rights reserved.