Posted by Andrew Bauer
Developing, capital-scarce countries need domestic investment. Governments in countries such as Angola, Mongolia, and Timor-Leste must invest in education, health and public infrastructure if they hope to achieve middle- or high-income status. What’s more, mineral-rich countries have access to large (yet finite) sources of income that can be used to boost domestic investment and help overcome the poverty trap. On this nearly everyone can agree.
In response to this need for domestic investment, some commentators have recently suggested that there might be opportunities for these countries’ sovereign wealth funds (SWFs) to directly invest at home. Nearly every country with significant oil, gas or mineral exports operates a SWF. Already, governments in Angola, Azerbaijan, Iran, Nigeria and Russia, for example, use their SWFs to channel money to special domestic projects.