Domestic Sources of Twenty-first-century Geopolitics: Domestic Politics and Sovereign Wealth Funds in GCC Economies

The present article brings domestic politics into an analysis on sovereign wealth funds (SWFs) that are relevant for the study of contemporary geopolitics. What are the domestic drivers behind SWF creation, and how does a country’s domestic political environment affect the creation of these funds? Using a comparative historical case study on sovereign funds in Gulf Cooperation Countries, this article investigates the effects of domestic state–society structures on decisions about SWF creation and their evolving structure. Thereby, this article adds to an emerging stream of literature that looks at the drivers and implications of SWFs. One of the key findings of this analysis is that there are systematic links between the sovereign fund types and domestic structures; these structures include and exclude socio-economic actors that influence policy-making decisions.     

论主权财富基金的理论逻辑

主权财富基金是国际金融市场一类崭新的有影响力的机构投资者。全球的主权财富基金的现有规模大概在3万亿美元左右。其规模还将继续不断增长。从主权财富基金兴起的原因看,首先,国际货币体系的变革是主权财富基金兴起的根本原因;其次,能源价格上涨是导致主权财富基金规模扩张的重要原因;最后,经济全球化为主权财富基金的运作提供了良好的环境。根据"国家经济人模型",国家在经济发展的初期和高增长阶段,外汇储备迅速增加,国家逐步将盈余财富用于投资。然而,随着生产要素的消耗,国家积累的财富逐步达到顶峰。当国家经济进入富裕导向阶段或稳定低增长阶段时,国家需要消费积累的财富,投资也倾向于无风险资产。目前看,各国设立主权财富基金主要有五方面目标:(1)跨期平滑国家收入;(2)协助中央银行分流外汇储备;(3)跨代平滑国家财富;(4)预防国家社会经济危机;(5)支持国家发展战略。     

Country factors and the investment decision-making process of sovereign wealth funds

In this paper, we examine the complex decision-making processes that lead to sovereign wealth funds' (SWFs’) choice of investment location. Using a two-tiered dynamic Tobit panel model, we find that country-level factors do not have the same impacts on the investment decision and the amount to invest and that SWFs tend to invest more frequently and at higher amounts in countries in which they have already invested. More specifically, we find that SWFs prefer to invest in countries with higher political stability, whereas they are more prone to invest large amounts in countries that are less democratic and more financially open. Our results also lend support to the idea that SWFs are prudent in their choice of a target country with regard to their investment decision but behave as more opportunistic investors with regard to the amounts to be invested.     

Understanding the politics of bailout policies in non-Western countries: The use of sovereign wealth funds

This article examines bailout policies in non-Western states through selected case studies of financial bailouts in Hong Kong and Singapore between the 1960s and 1990s. Given their structural similarities and extreme openness, standard explanations would expect to find similar policy responses over this period. However, between the 1960s and 1990s, bailout policies differed greatly between the two countries, particularly with respect to the use of their sovereign wealth funds (SWFs). This article also shows that the differing uses of SWFs reflected the respective regulatory environments. In line with an emerging stream of studies in comparative politics, the present article finds that these differences take root in the institutional settings of the respective countries and vary across state-business relations.     

Deterritorialisation and the Transformation of Statehood: The Paradox of Globalisation

Since the end of the Cold War, states and civil societies face a radically different security situation. In addition to state-to-state threats, transnational security issues have risen to previously unknown relevance. I will argue that – in order to create effective counter-policies against transnational threats – states must transform fundamental principles of traditional statehood according to the logic of global deterritorialisation. To develop this argument, the nature of changed security will be analysed which itself can be found in de-territorialisation: transnational actors withdraw from the territorial principles of traditional security, as best epitomised by transnational terrorism. Consequently, ‘national security’, developed according to the territorial ‘inside’-‘outside’-logic of the state, no longer counters those actors. States must elaborate deterritorial strategies. This development causes a transformation of the state since territoriality is the basic principle of modern statehood. Thus, the reassertion of the state in global security unveils a paradox: to react to deterritorialised security and to reassure their power in global politics, states must overcome their traditional principles of territorial politics and further the development of deterritorialisation.     

Tools of Survival: Sovereign Wealth Funds in Singapore and China

The rise of sovereign wealth funds (SWFs) as major investors in the global economy has raised worries that they serve the geopolitical ends of owner countries. However, given the paramount importance of surviving domestic political competitions, SWFs are likely also tools of domestic political survival. In examining the corporate governance and underlying political environment in which SWFs in Singapore and in China operate, this paper further examines the role of political unity in directing SWF behaviour in authoritarian regimes. The main finding is that a highly unified autocracy is more likely to direct SWFs to maximise long-term profit, while a fragmented one like China is more likely to treat its SWF as an arena for domestic political and bureaucratic infighting. SWFs operating in a fragmented regime are unlikely to make long-term profit and foreign policy objectives top priorities, and their behaviour can be highly unpredictable.     

The National State and Identity Politics: State Institutionalisation and “Markers” of National Identity

Nationality has been a key identity in international relations for much of the modern period, and the marriage of “nation” and “state” produced a powerful polity – the national state – that dominated global politics. This article investigates the forces that “pushed” and “pulled” nations and states together and explores the factors associated with violent identity politics. It argues that while recent decades have witnessed increasing instances of divorce between “nation” and “state” and a simultaneous proliferation of identity conflicts, the likelihood that identity conflicts will be expressed violently depends both on the character of the state (the timing of state institutionalisation relative to the construction of national consciousness, the democratic or non-democratic nature of the state, and the national or non-national basis for the legitimation of state authority) and on the principal “marker” used to construct national identity (blood, language, culture, religion, or citizenship).     

中国主权财富基金的投资绩效研究

本文利用事件研究法（event study）实证研究了中国主权财富基金的投资绩效。在整理中国四家主权财富基金2007年12月-2010年6月进行的28项国内外上市公司投资数据的基础上,通过计算平均异常收益（AAR）和累积平均异常收益（CAAR）等指标,对目标公司在投资宣布日附近的股价异常波动情况进行估计和检验。同时,利用长期效应度量方法来度量中国主权财富基金投资行为的长期绩效。     

Reserves,Sovereign Wealth Funds and the Resilience of Global Imbalances

Reserves and sovereign wealth funds (SWFs) assets should be jointly considered for the assessment of global imbalances, hence their denomination as sovereign external assets (SEAs): both are public capital outflows from developing to developed countries, both hinder adjustment in current account surplus and deficit countries and, therefore, both contribute to sustain global imbalances. They represented 135 per cent and 50 per cent of net and gross US financing needs, respectively, in 2007. Reserves contribute 80 per cent and SWFs 20 per cent. They will go on providing resilience to the global imbalances, and the relative importance of SWFs is set to increase if commodity prices stay high.     

The Maas-Rhine Euroregion: A Laboratory for European Integration?

The transborder and trilingual Maas–Rhine Euroregion is often presented as a laboratory for European integration. The authorities in the region promote the image of a region that has ‘always’ been a unity, but which is divided by artificial boundaries – ‘scars of history’ – as a result of power politics. In this essay this image is confronted with the reality of the cross-border interactions and identities of the people involved. This confrontation leads to the conclusion that although there is political, economic and cultural cooperation in the region, the region is not at all politically, economically and culturally integrated. The national border as a physical barrier may have been removed, but the economic, social, juridical and cultural barriers are still there. The unification and integration of the citizens living in the region is being impeded by conflicting national systems of law and regulations, by communication and information media focused on national issues, by nationally oriented infrastructure, and especially by strongly different national cultures and identities. The consequences for European integration in general are analysed by comparing this regional integration with the national integration and nation-building policies of the past.     

Flexible Adjustment in the Age of Financialisation: The Case of Norway

Norway's “Government Pension Fund” – Global (GPF-G) is large (around $400b), portfolio oriented and transparent. It tries to be ethical and has been mooted as a role model for other SWFs. The way the GPF-G is set up undergirds the US vision of a financialised world economy and it even indirectly supports US warfare in Iraq by buying treasury bills. It is also a leader in ethical investments – more than 20 private funds piggyback any divestment decision the GPF-G makes. Understanding the international implications of the GPF-G does not, however, amount to an explanation of why this vehicle was created. This article puts forward the argument that if we want to understand why and how these diverse behaviours cohere into a larger strategic whole, the fund must be interpreted as the continuation and technocratisation of a long established corporatist tradition of foreign economic policy that Peter Katzenstein more than 25 years ago labelled a strategy of flexible adjustment and domestic compensation.     

Tabloid realism and the revival of American security culture

At a time when notions like globalisation and cultural fragmentation are being used to describe the changing nature of international politics, a persistently conservative discourse of national security (re)surfaces in foreign policy literatures. The purpose of this essay is to analyse this ‘new’ discourse and sketch out some of its ideological intents. Referred to as ‘tabloid realism’, this discourse can be found in texts authored by American scholars such as Robert Kaplan, Samuel Huntington and Zbigniew Brzezinski. Tabloid realism is a discourse of geopolitics which resists the idea that territorial sovereignty and national security are currently being transformed. Imitating the narrative style of tabloid publications, tabloid realists seek to grab the attention of the public by providing highly sensationalistic and overtly panic-stricken representations of international affairs. By proliferating fear-inducing images of current realities and preparing for a soon to be anarchical future, tabloid realists hope to conservatively re-anchor the state to stabilising visions of national security, geographical borders, and economic interests.     

Sovereign-Wealth Funds: the institutional dimension

In the recent past, the operations of the capital-rich Sovereign-Wealth Funds (SWFs) went on increasing in the global capital markets. As the global economic crisis that started in 2007 deepened, SWF operations dramatically spurted, leading to further progressive increase in their significance for the global capital markets. For all appearances they are going to be important financial players in the foreseeable future. This article focuses on the basic concept of SWFs, their structure and operations. It attempts to analyze and elucidate on them. Notwithstanding the fact that SWFs are an instrument of enhancing liquidity and financial resource allocation in the international capital market, they managed to become a source of controversies. Consequently they became a source of escalation in financial protectionism in several advanced industrial economies, in particular the USA. The article concludes that this was unwarranted. Recently SWFs have attempted to device an array of best practices to improve the transparency of their global financial operations. These measures are expected to enhance the acceptance of SWFs as well as global recognition of their operations. They would also help in dispelling the negative image that SWFs have held in several advanced industrial economies.

主权财富基金与世界经济失衡的互动关系探析

主权财富基金与世界经济失衡之间存在复杂的互动关系,世界经济失衡的加剧为主权财富基金提供了巨额的剩余外汇储备,因此主权财富基金的兴起是世界经济失衡的产物。稳定型主权财富基金将新兴经济体大量的剩余外汇储备主要以购买国债的形式流回了美国,对增强世界经济失衡的持续性发挥了重要作用;"高收益、高风险"的战略型主权财富基金将使得那些原本流入美国国债市场的外汇储备转向日本、欧洲、新兴国家等风险资产市场,从多种途径对世界经济失衡的调整做出贡献。     

Wealth,Natural Capital,and Sustainable Development: Contrasting Examples from Botswana and Namibia

Theoretical work has demonstrated that sustainable development requires non-declining per capita wealth, where wealth is defined to include produced, natural, human and social capital. Several studies have attempted to measure total national wealth or changes in wealth, but have been seriously hampered by a lack of data, especially for natural and human capital. To address this problem, the UN and other international statistical agencies developed a standardized framework for environmental accounts, the System of integrated Environmental and Economic Accounts (SEEA). Using the newly available asset accounts for natural capital, national wealth accounts are constructed and used to assess the contrasting development paths of Botswana and Namibia. Botswana, with an explicit policy of reinvestment of resource rents, has roughly tripled per capita wealth and national income over the past two decades. Namibia, with no explicit policy to use natural capita to build wealth, has seen per capita wealth and income decline.     

构建中的主权财富基金国际规则

活跃的主权财富基金(SWFs)在投资接受国中引起了怀疑与不安。各国的投资保护主义在一些国家的投资政策和立法中有所加强。本文介绍了国际货币基金组织(IMF)和经合组织(OECD)制定的有关SWFs和投资政策的国际准则,追踪国际投资制度的发展变化,研究SWFs国际规制的制度环境,思考我国主权财富基金(CIC)发展的应对之策。     

New Protagonists in Global Economic Governance: Brazilian Agribusiness at the WTO

The existing international economic order has been heavily shaped by US power and the US has been a key driver of globalisation and neoliberal economic restructuring, prompting speculation about whether the rise of new developing country powers could rupture the current trajectory of neoliberal globalisation. This paper analyses the case of Brazil at the World Trade Organization (WTO), a core institution in global economic governance. In the last decade, Brazil successfully waged two landmark trade disputes against the US and EU and created a coalition of developing countries – the G20 – which brought an end to the dominance of the US and EU at the WTO and made their trade policies a central target of the Doha Round. Brazil's activism has been widely hailed as a major victory for developing countries. However, I argue that rather than challenging the neoliberal agenda of the WTO, Brazil has emerged as one of the most vocal advocates of free market globalisation and the push to expand and liberalise global markets. I show that Brazil's stance has been driven by the rise of its export-oriented agribusiness sector. This case demonstrates that business actors from the Global South are becoming significant new protagonists in global economic governance; they are taking the tools created by the states and corporations of the Global North – in this case, the WTO and its neoliberal discourse – and turning them against their originators. At the same time, their interests are being wrapped in and advanced through a discourse of development and social justice and a strategic mobilisation of the politics of the North-South divide.     

The long run relationship between private consumption and wealth: common and idiosyncratic effects

We investigate the long run relationship between private consumption, disposable income and wealth approximated by equity and house price indices for a panel of 15 industrialized countries. Consumption, income and wealth are cointegrated in their common components. The impact of house prices exceeds the effect arising from equity wealth. The long run vector is broadly in line with the life cycle permanent income hypothesis, if house prices are allowed to enter the relationship. At the idiosyncratic level, a long run equilibrium is detected between consumption and income, i.e. the wealth variable can be excluded. The income elasticity in the idiosyncratic relationship is significantly less than unity. Hence, the presence of wealth effects in consumption equations arises from the international integration of asset markets and points to the relevance of risk sharing activities of agents. Without sufficient opportunities, an increase in national saving rates would be expected, leading to a lower path of private consumption expenditures.     

Resiliency or Change? The Contemporary Canada—US Border

The developed states of North America have not experienced transnational integration to the same degree as those of the European Union. Indeed, some scholars have argued that North American States and the border functions which define their territorial limits, are essentially unchanged in the face of globalisation, hardening rather than softening, and remaining unabashedly archaic and state-centred. This article suggests that although there has been considerable change in the border functions and geopolitical discourses which mediate transnationalism among the highly developed North American states – namely Canada and the United States – the nature and structure of transnational integration has remained more limited than that of the EU. It argues that the reasons for this more limited international integration agenda lie in the specific geopolitical discourses which sustain cross-border institutions and national identity before and after 11 September 2001 (‘9/11’). The Canadian state, for example, has demonstrated considerable resistance to greater levels of integration with the United States, at the same time that it has became increasingly open to cross-border trade under NAFTA. This resistance is based upon a national-identity discourse that relies upon distancing the Canadian state from its larger neighbours to the south. At the same time, however, the national security discourse which has emerged in the Canada and the United States following from 9/11, has failed to close borders to increasing levels of economic integration, and must accommodate the need for a degree of openness to the heightened levels of cross-border trade under NAFTA. As a result, there has been considerable reorganisation and reorientation of borders within North America. It is simply inaccurate to view the continent as a place where borders have remained unyielding to the broader forces of globalisation. If the role of borders in maintaining security while facilitating trade has resulted in an increased awareness of, and concern with the Canada-US border, the latter is not simply a continuation of ‘old-fashioned state-centred geopolitical concerns’ but is instead a newly-fashionedpost-9/11 response to the ramifications of globalised trade and terrorism.     

Are Asian Sovereign Wealth Funds Different?

Sovereign wealth funds have become a prominent feature of the international financial landscape. However, legitimate concerns have been raised about these funds. Many of those concerns can be addressed via increased accountability and transparency by the funds. The Santiago Principles are a good start in doing so. My sovereign wealth funds scoreboard points to areas where these Principles can be improved. At the same time, the OECD effort to address concerns from the host‐country side has not resulted in the erection of new barriers to that form of cross‐border investment, but the OECD failed to reverse the creeping financial protectionism of the past decade. Because of their size and the source of their funding, some Asian funds stand out. As a result, those funds will be held to a higher standard of accountability and transparency.