World Bank Group: A Promising New Resource for Development – The Potential of Sovereign Wealth Funds

June 11, 2014 | By CFI

Norway: Storting building

Mobilizing finance for long-term, large-scale direct investment in development is a daunting global challenge. However, a growing and potentially vast source of capital seems poised to transform the process of financing development, reducing poverty and building shared prosperity in some of the world’s lowest-income countries. The wealth controlled by Sovereign Wealth Funds (SWFs), which now command almost $5 trillion in assets, seems destined to become a vital new force in the global financial architecture.

Already deploying more than twice the sum controlled by the world’s private-equity industry, SWFs – if wisely managed and well governed – could emerge as a key driver of global development as their capital is put to work in far-sighted investment opportunities.

SWFs are government investment agencies, usually established with balance-of-payments or fiscal surpluses – which are frequently created by an influx of revenue from commodity exports. Since SWFs are often motivated by an implicit promise to serve the long-term welfare of their countries’ citizens, their ideals coincide with those of the global development community, which seeks to allow capital to be put to work in ways that will optimize human development, social welfare and sustainable growth. Given their potential for providing substantial South-to-South flows of Foreign Direct Investment (FDI), SWFs could be a vehicle that delivers “win-win” outcomes – earning substantial returns for their countries, while channelling savings in surplus-earning countries toward productive investments that benefit the poorest people.

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This BLOG  looks at pensions and their impact on what are called Public Private Partnerships or P3’s these are not really about private funding at all but about two streams of public funding, pensions and government with private capital a third partner.
We will also deal with other pension matters, such as Defined Contribution Plans (DC) vs Defined Benefit (DB) PLANS, the weakness in private plans, the need for pension reform in public pensions to have shareholder rights, directorships and ethical investment directives and policies. 
Finally taking the long view we will show how these funds are forms of evolving social capital that is dominating private capital as we evolve into socialization of capital. 
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