Developing Asia's Sovereign Wealth Funds and Outward Foreign Direct Investment

Arbeitspapier

Sovereign wealth funds (SWFs) have emerged in developing Asia as a policy response to an unprecedented accumulation of foreign exchange (FX) reserves since 2000. At the same time, developing countries have become an increasingly important source of outward foreign direct investment (FDI). The central objective of this paper is to evaluate the prospects for SWFs to serve as a major conduit for the region's outward FDI. In principle, FDI represents an attractive means of earning higher returns on FX reserves than traditional reserve assets. In practice, the limited institutional capacity and the political sensitivity of state-led FDI severely constrains the ability of developing Asia's SWFs to undertake FDI on a significant scale. Therefore, the potential for developing Asia's SWFs to become major sources of outward FDI is more apparent than real. This paper also explores the implications of the Santiago Principles and the global financial crisis on outward FDI by SWFs.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ADB Economics Working Paper Series ; No. 169

Classification and Topics

• Classification: Wirtschaft ; International Investment; Long-term Capital Movements ; Multinational Firms; International Business
• Subject: Sovereign wealth fund ; FDI ; capital flows ; foreign exchange reserves ; Asia ; Staatsfonds ; Auslandsinvestition ; Asien ; Welt

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Park, Donghyun ; Estrada, Gemma
• Event: Veröffentlichung
• (who): Asian Development Bank (ADB)
• (where): Manila
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/109336
• Last update: 10.03.2025, 11:42 AM CET