The Novelty of Sovereign Wealth Funds: The Emperor's New Clothes?



This article broadens the empirical and conceptual perspective on sovereign wealth funds (SWFs). This is first done through providing a definition of contemporary SWFs. Using recent literature it suggests that SWFs can be differentiated into discrete categories in terms of their funding, governance and investment structures. Using this definition, the subsequent history section identifies earlier instances of SWFs in the context of 17th century financial mercantilism and 1930s monetary mercantilism. This leads directly to a number of investment deals in the 2000s where some countries with SWFs were subject to intense media and government scrutiny. In the aftermath, commentators warned of protectionism and a resurgence in financial and monetary mercantilism by pointing to emerging economies, most notably China. Though contemporary SWFs are not the same as earlier state-related pools of capital, there are important similarities concerning policy-relevant variables, highlighted by the SWF literature. A historical interpretative approach provides a bridge between historical instances and a reconceptualised notion of SWFs, linking historical evidence directly to functional claims about the purposes of contemporary SWFs.