Recalibration of National Development Goals and SWFs

Sovereign wealth funds are built for a bundle of purposes. Funds like the Mubadala Development Company are active in promoting national development goals such as education and industry diversification. A cadre of new sovereign wealth funds is being cropped with national economic goals in mind. These funds desire investments by their SWFs to help achieve national development goals. For example, a sovereign fund may want to invest in a university to create educational opportunities at the same time earn an investment return.

Separating social and capital-growth development goals makes it easier to distinguish results. How can SWFs measure success in social investments? National education goals maybe best suited and paid for by the government’s fiscal budget rather than a sovereign fund’s investment. Better yet, a portion of the SWF’s investment returns could be allocated to a national development specific fund, like an education fund.

There are some national development objectives that can correlate into positive returns for sovereign wealth funds.

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