Capital Choices: Sectoral Politics and the Variation of Sovereign Wealth PDF
Preview Capital Choices: Sectoral Politics and the Variation of Sovereign Wealth
2RPP Praise for Capital Choices “Capital Choices breaks new ground, providing a convincing explanation for the wide variations we observe in the characteristics of sovereign wealth funds around the world. Clearly written and thoroughly researched, the book is a must read for anyone interested in the domestic politics of international finance.” — Benjamin Cohen, University of California, Santa Barbara “This is a major work not just about the increasingly important sovereign wealth funds but also about how non- Western states pursue industrial policies. It combines theory, non- Western cases and new empirical material to tell a story of why states create sovereign wealth funds and their scope for choosing distinct paths of economic development.” — Mark Thatcher, London School of Economics and Political Science “In Capital Choices, Juergen Braunstein provides an illuminating original account of the emergence and divergence of sovereign wealth funds. Explaining how different interests and coalitions shape varying SWF paths, this compelling argument finally places politics where it belongs— at the centre of analysis. A decisive intervention in the debate.” — Garry Rodan, Murdoch University 2RPP 2RPP Capital Choices Sovereign wealth funds are state-c ontrolled pools of capital that hold financial and real assets, including shares of state enterprises, and man- age them to preserve and grow the nation’s base of sovereign wealth. The dramatic rise of sovereign wealth funds (SWFs) in number and size— the funds are now larger than the combined size of global private equity and hedge funds— and that the majority of them are located in non- OECD countries have raised concerns about the future direction of capitalism. Yet SWFs are not a homogenous group of actors. Why do some countries with large current account surpluses, notably China, create SWFs while others, such as Switzerland and Germany, don’t? Why do countries with no macroeconomic justification, such as Senegal and Turkey, create SWFs? And why do countries with similar macro- economic features, such as Kuwait and Qatar or Singapore and Hong Kong, choose very different types of SWFs? Capital Choices analyzes the struggles behind the creation of differ- ent SWFs from a comparative political economy perspective. Examin- ing small open economies, the book argues that different state-s ociety structures at the sectoral level are the core drivers responsible for SWF variation. Author Juergen Braunstein looks inside the “black box” of SWF creation, focusing on the early formation period of SWFs, a criti- cal but little understood area in the current debate, given the high lev- els of political sensitivity and lack of transparency. Braunstein’s novel analytical framework provides practical lessons for business and finance organizations, as well as for policymakers of countries that have cre- ated or are planning to create SWFs. This book illustrates the scope for domestic politics and the strategies of small states in economic policy despite strong transnational forces, notably international economic and diffusion pressures. Dr. Juergen Braunstein is a research fellow at the Harvard Kennedy School’s Belfer Center for Science and International Affairs. 2RPP 2RPP CAPITAL CHOICES Sectoral Politics and the Variation of Sovereign Wealth Juergen Braunstein University of Michigan Press Ann Arbor 2RPP Copyright © 2019 by Juergen Braunstein All rights reserved This book may not be reproduced, in whole or in part, including illustrations, in any form (beyond that copying permitted by Sections 107 and 108 of the U.S. Copyright Law and except by reviewers for the public press), without written permission from the publisher. Published in the United States of America by the University of Michigan Press Manufactured in the United States of America Printed on acid- free paper A CIP catalog record for this book is available from the British Library. Library of Congress Cataloging- in- Publication data has been applied for. First published July 2019 ISBN: 978- 0- 472- 13132- 7 (Hardcover : alk paper) ISBN: 978- 0- 472- 12518- 0 (ebook) 2RPP Contents Abbreviations vii Foreword ix Acknowledgments xi ONE Introduction 1 TWO Global Review 9 THREE Bringing Domestic Politics In: A Policy Network Analysis of Sovereign Wealth Funds 26 FOUR Capital Choices in Industrial Policy: Asian City- Economies and the Emergence of Temasek 36 FIVE Capital Choices in Savings and Financial Policy: Asian City- States and the Emergence of the Government Investment Corporation 79 SIX Capital Choices in Small Open Economies of the Middle East 103 SEVEN Capital Choices in OECD and BRIC Countries 124 EIGHT Conclusion: Domestic Politics and Capital Choices 137 Appendix 151 Notes 155 Bibliography 165 Index 193 Digital materials related to this title can be found on the Fulcrum platform via the following citable URL: https://doi.org/10.3998/mpub.9853048 2RPP 2RPP Abbreviations ADIA Abu Dhabi Investment Corporation ADNOC Abu Dhabi National Oil Corporation APF Alaska Permanent Fund AUM assets under management BRIC Brazil, Russia, India, China CMA Chinese Manufacturers’ Association CPF Central Provident Fund DBS Development Board of Singapore DPM deputy prime minister’s office DPMO Deputy Prime Ministers Office EDB Economic Development Board ExCo Executive Council FHKI Federation of Hong Kong Industries GCC Gulf Cooperation Council GIC Government Investment Corporation HK$ Hong Kong dollar HKGCC Hong Kong General Chamber of Commerce KIA Kuwait Investment Authority LAC Labour Advisory Committee LegCo Legislative Council MAS Monetary Authority of Singapore MFI Minister for Finance Incorporated MNCs multinational corporations OECD Organisation of Economic Co- operation and Development
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