The issue of Sovereign Wealth Funds (SWFs) and its role in fostering investment, trade and globalization has been a topic that come up on and off. I haven't followed the debate as keenly but this news of UAE's SWF investing in the UK caught my attention.
The UAE's SWF Mubadala Investment Co. is committed to invest $14 billion over a time frame in the UK in various industries covering infrastructure, technology, healthcare and energy. There is a bilateral investment partnership between the UK and UAE fostering this investment.
SWFs are state owned holding companies which are created by States for various reasons including to invest in diverse portfolios across economies. They could be also funds from commodity revenues that are invested more safely in treasury bills.
See this rating of the top 100 SWFs with Norway right on top followed by China. SWF is a state led strategy in a market driven model of investment. A number of issues including interplay of geo-political interests would probably guide investments. It would be interesting to see how a dispute would be resolved in the case of a SWF - through the traditional State to State diplomatic mechanism or a investor state dispute settlement framework.
SWFs are about 10% of global assets under management. What role will they play in the global economy? What questions does it raise about the role fo the State and market in global governance? What international institutional arrangements would be made to foster growth of SWFs?
