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Sovereign Wealth Fund Decision Scorecard (DSC) - Macroeconomic Evidences from Emerging Economics

Author(s): Manvinder Singh Pahwa | Amanpreet Singh Chopra

Journal: International Journal on Research and Development : A Management Review
ISSN 2319-5479

Volume: 2;
Issue: 1;
Start page: 34;
Date: 2013;
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Keywords: International Finance | Sovereign Wealth Funds | Macroeconomics | Forex reserves

Sovereign Wealth Funds (SWFs) with combined asset under management of around $4.8 Trillion have emerged as major power in the financial world. However, literature which has empirically analyzed the decision variables impacting the establishment of these funds is limited. Authors has identified and collaborated list of 63 variables which were then rationalized to list of 30 variables that may have affected establishment of Sovereign Wealth Fund for Emerging economies of China, Russia, Mexico and Brazil and analyzed the static state of these variables at the time of establishment of these funds. For India another set of 30 variables were identified and the static state of these variables was then analyzed with respect to macroeconomic and socio-political environment in the country as on 2011. Authors observed the paradox of political stability coupled with low scoring on corruption barometer for all these emerging economies. Author also argue, that all the countries including India do confirm to reserve adequate matrice but risk of capital flight, current account and fiscal account deficit with social and infrastructure trade-off will be major debate issues and weigh heavily against the creation of such fund.

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