Strategic Investment Funds: Opportunities and Challenges

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Development beyond aid: Utilizing comparative advantage in the belt and road initiative to achieve win-win

“…Successful countries with future orientation (as in Spence, 2008) have seen their infrastructure better financed. Other evidence of rising patient capital can be seen by the rising number of Sovereign Wealth Funds and government-sponsored Strategic Investment Funds (SIFs) established by countries such as Kazakhstan, Malaysia, Mexico, Morocco, Nigeria, Philippines, Senegal, South Africa and Vietnam (Halland et al, 2016). The number of Multilateral Strategic Investment Funds (MSIFs), including those for infrastructure, are rising as well.…”

Equity Market Performance and Public Debt: An Empirical Investigation

“…These lines of argument stem primarily from the belief that debt-…nanced public capital investment generates positive spillover e¤ects to the economy. In spite of the increasing participation from private investors in recent years, the role of government in driving public capital investment, notably in strategic sectors, remains extremely important in most developing economies, as evidenced by the dominant role of entities such as sovereign-wealth strategic investment funds (see, for instance, Bernstein et al 2013;Halland et al, 2016) and government-linked companies. 3 Moreover, public capital has also been shown to be growth-enhancing via the promotion of both private investment and productivity growth through various direct and indirect channels of the economy.…”

The Case for Economic Development Through Sovereign Investment: A Paradox of Scarcity?

“…see Halland et al. ). A newly established sovereign fund in Turkey and the restructuring and recapitalization of Saudi Arabia's Public Investment Fund serve to illustrate.…”

“…Fundamentally, how can the fund, as an agent of the state, serve as a credible institutional partner to mobilize new inflows of foreign investment capital? This paper contributes directly to an evolving policy literature on sovereign development and strategic investment, including new funding streams to capitalize SWFs (Divakaran et al, 2016;Gamlen et al, 2015;Halland et al, 2016;Atkinson and Hamilton, 2016;Milhench, 2017;Schena and Ali, 2017).…”

“…This paper contributes directly to an evolving policy literature on sovereign development and strategic investment, including new funding streams to capitalize SWFs (Divakaran et al, ; Gamlen et al, ; Halland et al, ; Atkinson and Hamilton, ; Milhench, ; Schena and Ali, ). A key objective of this analysis is to systematize existing research with a focus on the challenges of what we perceive as a ‘paradox of scarcity’: The creation of SWFs not from surplus wealth, but using scarce capital with competing uses, to overcome market imperfections and to catalyze inward investment.…”