Sovereign Wealth Funds: The Emergence of State Owned Financial Power Brokers

This paper is a comprehensive empirical survey which investigates the phenomenon of Sovereign Wealth Funds (SWFs) in an International Political Economy context. SWFs can be defined as state related pools of capital which derive most of their capital from external resources, and reinvest a large part of this capital internationally. These powerful financial brokers impact international finance in a number of ways. Due to their sheer size, SWFs influence global financial stability. Even if the financial crisis 2008 has substantially reduced their volume, SWFs will continue to have immense financial influence. SWFs constitute a heterogenous group of actors, but there are distinct intersections between them and other financial players, such as central banks and pension funds. Despite these overlappings, SWFs can be clearly operationally differentiated into subcategories, and furthermore, can be clearly differentiated from other financial actors. Hence, knowing the position of SWFs in financial markets is critical in evaluating the effects that they may have on various dynamics related to financial markets. Pure economic approaches struggle with the obvious intersection of states and funds in an international financial environment. Therefore, an analysis through an International Political Economy perspective has significant advantages.