CAPITAL CHOICES

...Post Covid, governments role in private economy is going to be ever more important. Sovereign wealth funds are an important aspect and this is the best study of their complex politics...

 

Lawrence H. Summers - former US Treasury Secretary

by Juergen Braunstein

Juergen Braunstein is a fellow at Harvard Kennedy School’s Belfer Center. 

He is a member of the Sovereign Wealth Community of Practice, Collaboration for Development (C4D) platform at the World Bank Group. Prior to that Juergen coordinated the New Climate Economy Special Initiative on financing the urban transition under the leadership of Nick Stern and Felipe Calderon at the London School of Economics (LSE) Cities. Juergen led the engagement program between the LSE and the International Forum of Sovereign Wealth Funds in London.

His areas of expertise include financial instruments, emerging markets and state-owned enterprise reform and Sovereign Wealth Funds (SWFs). He was a researcher at the Kuwait Programme on Development, Governance Globalisation in the Gulf States, where he worked on one of the first databases on SWF equity investments in OECD economies. His work on SWFs appeared in the Review of International Political Economy, New Political Economy, Journal of Economic Policy, The Financial Times and Forbes. He has a B.A. from the University of Vienna and a masters and doctorate from the London School of Economics.

 
 

CapitalChoices demystifies the process of sovereign wealth fund creation and examines the politics surrounding them...

Sovereign wealth funds are state-controlled pools of capital that hold financial and real assets, including shares of state enterprises, and manage them to grow the nation’s base of sovereign wealth. The dramatic rise of sovereign wealth funds (SWFs) in both number and size—this group is now larger than the size of global private equity and hedge funds, combined—and the fact that most are located in non-OECD countries, has raised concern about the 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, do not? Why do other countries with no macroeconomic justification, such as Senegal and Turkey, create SWFs? And why do countries with similar macroeconomic features, such as Kuwait and Qatar or Singapore and Hong Kong, choose different types of SWFs?

Capital Choices analyzes the creation of different SWFs from a comparative political economy perspective, arguing that different state-society structures at the sectoral level are the drivers for SWF variation. Juergen Braunstein focuses on the early formation period of SWFs, a critical but little understood area given the high levels of political sensitivity and lack of transparency that surround SWF creation. Braunstein’s novel analytical framework provides practical lessons for the business and finance organizations and policymakers of countries that have created, or are planning to create, SWFs.

 

“Many books have explored the actual and the ideal relationship between states and markets. This book asks a new question: How should the state organize itself in order to be an effective market participant, through improved management of its assets. It should be mandatory reading for all those concerned with public policy.”

-- Ricardo Hausmann, Director Center for International Development Harvard University

“Capital Choices is an insightful and informative analysis of the origins of Sovereign Wealth Funds. Braunstein convincingly emphasizes the role of different types of policy networks on the political economy of decisions to establish funds to explain variations in their objectives and structures.”


—Edwin Truman, former Assistant Secretary of the US Treasury

“Sovereign wealth funds are increasingly important actors on the global investment stage. But these organizations are poorly understood, in part because their incentives and behavior—as organizations that are both return-maximizing investors and state bodies—are complex. This book, through a series of thoughtful case studies, shed fresh light on these funds and their implications.”


—Josh Lerner, Jacob H. Schiff Professor of Investment Banking, Harvard Business School

“When the label ‘Sovereign Wealth Funds’ was applied to a set of government-owned asset funds, it fostered the impression that we were talking about a single well-defined animal. Capital Choices shows that SWFs in fact vary widely and explores the nature and origins of the differences.”


—Jeffrey Frankel, James W. Harpel Professor of Capital Formation and Growth at the Harvard Kennedy School

“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, Louis G. Lancaster Professor of International Political Economy at the University of California, Santa Barbara —

“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, Director of the Asia Research Center at Murdoch University

“Many books have explored the actual and the ideal relationship between states and markets. This book asks a new question: How should the state organize itself in order to be an effective market participant, through improved management of its assets. It should be mandatory reading for all those concerned with public policy.”

-- Ricardo Hausmann, Director Center for International Development Harvard University

“Capital Choices is an insightful and informative analysis of the origins of Sovereign Wealth Funds. Braunstein convincingly emphasizes the role of different types of policy networks on the political economy of decisions to establish funds to explain variations in their objectives and structures.”


—Edwin Truman, former Assistant Secretary of the US Treasury

“Sovereign wealth funds are increasingly important actors on the global investment stage. But these organizations are poorly understood, in part because their incentives and behavior—as organizations that are both return-maximizing investors and state bodies—are complex. This book, through a series of thoughtful case studies, shed fresh light on these funds and their implications.”


—Josh Lerner, Jacob H. Schiff Professor of Investment Banking, Harvard Business School

“When the label ‘Sovereign Wealth Funds’ was applied to a set of government-owned asset funds, it fostered the impression that we were talking about a single well-defined animal. Capital Choices shows that SWFs in fact vary widely and explores the nature and origins of the differences.”


—Jeffrey Frankel, James W. Harpel Professor of Capital Formation and Growth at the Harvard Kennedy School

“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, Louis G. Lancaster Professor of International Political Economy at the University of California, Santa Barbara —

“Many books have explored the actual and the ideal relationship between states and markets. This book asks a new question: How should the state organize itself in order to be an effective market participant, through improved management of its assets. It should be mandatory reading for all those concerned with public policy.”

-- Ricardo Hausmann, Director Center for International Development Harvard University

“Capital Choices is an insightful and informative analysis of the origins of Sovereign Wealth Funds. Braunstein convincingly emphasizes the role of different types of policy networks on the political economy of decisions to establish funds to explain variations in their objectives and structures.”


—Edwin Truman, former Assistant Secretary of the US Treasury

“Sovereign wealth funds are increasingly important actors on the global investment stage. But these organizations are poorly understood, in part because their incentives and behavior—as organizations that are both return-maximizing investors and state bodies—are complex. This book, through a series of thoughtful case studies, shed fresh light on these funds and their implications.”


—Josh Lerner, Jacob H. Schiff Professor of Investment Banking, Harvard Business School

“When the label ‘Sovereign Wealth Funds’ was applied to a set of government-owned asset funds, it fostered the impression that we were talking about a single well-defined animal. Capital Choices shows that SWFs in fact vary widely and explores the nature and origins of the differences.”


—Jeffrey Frankel, James W. Harpel Professor of Capital Formation and Growth at the Harvard Kennedy School

“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, Louis G. Lancaster Professor of International Political Economy at the University of California, Santa Barbara —

“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, Director of the Asia Research Center at Murdoch University —

“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, Professor in Comparative and International Politics at the London School of Economics and Political Science —

“Dr. Braunstein fills an important niche in the sovereign wealth fund literature by providing a meticulously researched and skillfully executed description of the different domestic and international actors, networks, and forces at work in the development of modern SWFs. This book is an excellent example of the kind of detailed research needed to fully understand the crucial impact of these funds.”

 

— Paul Rose, Frank E. and Virginia H. Bazler Designated Professor in Business Law at The Ohio State University —

“Many books have explored the actual and the ideal relationship between states and markets. This book asks a new question: How should the state organize itself in order to be an effective market participant, through improved management of its assets. It should be mandatory reading for all those concerned with public policy.”

-- Ricardo Hausmann, Director Center for International Development Harvard University

“Capital Choices is an insightful and informative analysis of the origins of Sovereign Wealth Funds. Braunstein convincingly emphasizes the role of different types of policy networks on the political economy of decisions to establish funds to explain variations in their objectives and structures.”


—Edwin Truman, former Assistant Secretary of the US Treasury

“Sovereign wealth funds are increasingly important actors on the global investment stage. But these organizations are poorly understood, in part because their incentives and behavior—as organizations that are both return-maximizing investors and state bodies—are complex. This book, through a series of thoughtful case studies, shed fresh light on these funds and their implications.”


—Josh Lerner, Jacob H. Schiff Professor of Investment Banking, Harvard Business School

“When the label ‘Sovereign Wealth Funds’ was applied to a set of government-owned asset funds, it fostered the impression that we were talking about a single well-defined animal. Capital Choices shows that SWFs in fact vary widely and explores the nature and origins of the differences.”


—Jeffrey Frankel, James W. Harpel Professor of Capital Formation and Growth at the Harvard Kennedy School

“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, Louis G. Lancaster Professor of International Political Economy at the University of California, Santa Barbara —

“Many books have explored the actual and the ideal relationship between states and markets. This book asks a new question: How should the state organize itself in order to be an effective market participant, through improved management of its assets. It should be mandatory reading for all those concerned with public policy.”

  Ricardo Hausmann, Director Center for International Development Harvard University

“Capital Choices is an insightful and informative analysis of the origins of Sovereign Wealth Funds. Braunstein convincingly emphasizes the role of different types of policy networks on the political economy of decisions to establish funds to explain variations in their objectives and structures.”


— Edwin Truman, former Assistant Secretary of the US Treasury

“Sovereign wealth funds are increasingly important actors on the global investment stage. But these organizations are poorly understood, in part because their incentives and behavior—as organizations that are both return-maximizing investors and state bodies—are complex. This book, through a series of thoughtful case studies, shed fresh light on these funds and their implications.”


— Josh Lerner, Jacob H. Schiff Professor of Investment Banking, Harvard Business School —

“When the label ‘Sovereign Wealth Funds’ was applied to a set of government-owned asset funds, it fostered the impression that we were talking about a single well-defined animal. Capital Choices shows that SWFs in fact vary widely and explores the nature and origins of the differences.”


Jeffrey Frankel, James W. Harpel Professor of Capital Formation and Growth at the Harvard Kennedy School —

“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, Louis G. Lancaster Professor of International Political Economy at the University of California, Santa Barbara —

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