Sovereign wealth funds as coping mechanisms in the global economy: three Emirati case studies

Sharqi, Rashid Al (2013) Sovereign wealth funds as coping mechanisms in the global economy: three Emirati case studies. Doctoral thesis, London Metropolitan University.


This thesis argues that Sovereign Wealth Funds based in small emerging market economies necessarily fulfil a double-sided coping function in today's globalised economy: a coping function because the task of promoting the home country's economic growth through closer integration into the global division of labour can only be fulfilled successfully if the manifold pressures emanating from the global market place are suitably absorbed and managed by the SWFS; a double-sided coping function because SWFs need to negotiate not only the pressures caused by the instability of the global economic space but also the pressures associated with the highly unequal structure of that space. To substantiate this argument three hypotheses are advanced all of which take as their point of reference, either directly or indirectly, the newly established 'voluntary' set of internationally agreed principles governing SWF conduct - the 'Santiago Principles'. The central hypothesis is that the net benefits of small EME based SWFs for their home countries are maximised when they conform to the Santiago principles because the voluntary nature of these principles allows SWFs to fulfil their coping function effectively. The preliminary hypothesis is that the net benefits will be lower when there are no internationally agreed principles of SWF conduct in place because of likely negative blocking actions on the part of foreign governments and regulators; however, the net benefits will still be positive inasmuch as S\VFs can still fulfil their coping function. The third hypothesis is that the net benefits will be lower still, and possibly even minimal, if SWFs are forced to comply with an alternative and more strict set of rules of conduct because of the constraints these will impose on their room for manoeuvre in the global economy thus undermining their coping function. To help verify these hypotheses, a combination of quantitative and qualitative research techniques is used with triangulation and the case study approach serving as the all-encompassing methodological framework. The three case studies chosen are Abu Dhabi's ADIA, one of the world's largest SWFS, Dubai's ICD, a medium sized SWF, and Fujairah's FIE, one of the world's youngest and smallest SWFs.

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