Sovereign Wealth Funds
A Sovereign Wealth Fund (SWF), a type of public fund that invests in companies without taking control of their productive assets, is a source of practical revenue for states and sovereign nations used for public projects such as funding for education, healthcare, and medical research. The primary goal of a SWF is to amalgamate assets that generate income and utilize the return on investments (ROIs) from these assets to invest in socially beneficial projects. The United States of America does not have a sovereign wealth fund. However, there are twelve state-based SWFs in the United States.
Despite a long history of these funds, the management practices of SWFs are misunderstood and inconsistent in terms of how assets are allocated, and the ROIs utilized. In 2018, seven out of the 12 states with SWFs had budget shortfalls. During the COVID-19 pandemic, all the 12 states faced challenges to balance their budgets. This problem of scarcity in resources that the states are facing, especially during the challenging economic times, warranted a closer look at how the state-based SWFs are being managed, and the strategies SWF managers are leveraging to maximize ROI. Moreover, my research findings included the empirical evidence to make a case for starting a sovereign wealth fund at the national level and explaining why it is imperative that stakeholders need to aid the members of the legislative branch to understand the value and governance structure of these funds.
Furthermore, the findings of my research included the management practices of sovereign wealth funds in the context of the US foreign policy and national security implications, as in understanding how SWFs are implementing equitable foreign policy (including sub-national diplomatic) protocols and U.S. sanctions programs imposed by the US Department of Treasury.
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© 2013 by Jay Maharjan. All rights reserved.