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Demystifies the process of sovereign wealth fund creation and examines the policy and economic issues surrounding them, updated for a post-Covid world

Table of contents


Chapter 1: Introduction
Chapter 2: Global Review
Chapter 3: Bringing Domestic Politics In: A Policy Network Analysis of Sovereign Wealth Funds
Chapter 4. Capital Choices in Industrial  Policy: Asian city-economies and the emergence of Temasek
Chapter 5: Capital Choices in Saving's and Financial Policy: Asian City States and the emergence of the GIC
Chapter 6: Capital Choices in Small Open Economies of the Middle East
Chapter 7: Capital Choices in OECD and BRIC countries
Chapter 8. Conclusion: Domestic Politics and Capital Choices


Sovereign wealth funds are state-controlled pools of capital that hold financial and real assets, including shares of state enterprises, and manage them to grow the nation’s base of sovereign wealth. The dramatic rise of sovereign wealth funds (SWFs) in both number and size—this group is now larger than the size of global private equity and hedge funds, combined—and the fact that most are located in non-OECD countries, has raised concern about the direction of capitalism. Yet SWFs are not a homogenous group of actors. Why do some countries with large current account surpluses, notably China, create SWFs while others, such as Switzerland and Germany, do not? Why do other countries with no macroeconomic justification, such as Senegal and Turkey, create SWFs? And why do countries with similar macroeconomic features, such as Kuwait and Qatar or Singapore and Hong Kong, choose different types of SWFs?
Capital Choices analyzes the creation of different SWFs from a comparative political economy perspective, arguing that different state-society structures at the sectoral level are the drivers for SWF variation. Juergen Braunstein focuses on the early formation period of SWFs, a critical but little understood area given the high levels of political sensitivity and lack of transparency that surround SWF creation. Braunstein’s novel analytical framework provides practical lessons for the business and finance organizations and policymakers of countries that have created, or are planning to create, SWFs.

Juergen Braunstein is a Fellow at Harvard Kennedy School.

“Dr. Braunstein fills an important niche in the sovereign wealth fund literature by providing a meticulously researched and skillfully executed description of the different domestic and international actors, networks, and forces at work in the development of modern SWFs. This book is an excellent example of the kind of detailed research needed to fully understand the crucial impact of these funds.”
​—Paul Rose, Ohio State University

“… Post COVID, governments' role in the private economy is going to be ever more important. Sovereign wealth funds are an important aspect, and this book is the best study of their complex politics…

Lawrence H. Summers, former U.S. Secretary of the Treasury

- Lawrence H. Summers

“Braunstein provides fresh account for the creation of sovereign funds in particular but the state’s relations with capital more broadly. This book shows that capital choices are not driven by a too-much-money problem, but through the dynamic interactions and competing interests of domestic policy networks.”

—Dr. Adam D. Dixon, Maastricht University

- Adam D. Dixon

Capital Choices breaks new ground, providing a convincing explanation for the wide variations we observe in the characteristics of sovereign wealth funds around the world.  Clearly written and thoroughly researched, the book is a must read for anyone interested in the domestic politics of international finance.”
—Benjamin Cohen, University of California, Santa Barbara

- Benjamin Cohen

“This is a major work not just about the increasingly important sovereign wealth funds but also about how non-Western states pursue industrial policies. It combines theory, non-Western cases and new empirical material to tell a story of why states create sovereign wealth funds and their scope for choosing distinct paths of economic development.”
—Mark Thatcher, London School of Economics and Political Science

- Mark Thatcher

“In Capital Choices, Juergen Braunstein provides an illuminating original account of the emergence and divergence of sovereign wealth funds. Explaining how different interests and coalitions shape varying SWF paths, this compelling argument finally places politics where it belongs—at the centre of analysis. A decisive intervention in the debate.”
—Garry Rodan, Murdoch University

- Garry Rodan