Sovereign Wealth Funds: In it for the money or the policy objectives?

May 5th, 2011 | Filed under: Institutional Investing, Today's Post | By:
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Historians of western history point out that the past millennium can be broken into three distinct epochs, each based on the mode in which society organized itself.  First, the Church served as the central organizing force in society.  Then, as principalities coalesced into nation-states, governments came to dominate – most transcending religions.  Finally, with the the industrial revolution came the supremacy of the corporation – culminating into today’s transnational companies that, according to critics, know no national boundaries.  Five hundred years ago, for example, the largest building in nearly every European city was a church.  Today, it is invariably a skyscraper containing a corporate headquarters.  In between, the largest building was likely to be the palace or parliament buildings.

But although the national state had its moment in the Sun, it has often shown a knack for exerting its influence through other dominant institutions of the day.  Several hundred years ago, social policy was often the dictate of the Church.  And now sovereign states exert political influence through the private sector itself by deploying their treasuries toward political goals in the form of sovereign wealth funds.


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