Browsing by Author "Rietveld, Malan"

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    An institutional assessment of the role of sovereign wealth funds in managing resource revenues
    (Stellenbosch : Stellenbosch University, 2016-12) Rietveld, Malan; Du Plessis, Stan; Stellenbosch University. Faculty of Economic and Management Sciences. Economics.
    ENGLISH SUMMARY : This dissertation studies the contribution of sovereign wealth funds to the management of fiscal revenues derived from the extraction of natural resources. The literature on the “resource curse” has increasingly identified the institutional and political-economic foundations of the observed cross-country variation in the management of resource revenues. This literature has found the quality of general (or “meta”) institutions – such as the rule of law, democracy, government accountability and low levels of corruption – to be a critical differentiating factor in determining the success and failure of resource revenue management. The growing consensus around this argument – particularly the recent emphasis on “initial institutions” (the institutional quality at the time of resource discovery) – is noteworthy given the dismissal of the importance of institutions in the early resource-curse literature. From a policy perspective, however, a more productive line of enquiry pertains not to institutions at the general level, but to institutional responses to political-economy problems directly related to the management of resource revenues. Using the tools of institutional economics, the dissertation analyses the governance of sovereign wealth funds and the fiscal frameworks that accompany them. An evaluation of leading sovereign wealth funds and their fiscal rules is presented, as well as an empirical assessment of the impact of various fiscal rules in a number of illustrative country cases. The full embrace of the sovereign wealth fund model requires an often-elaborate institutional infrastructure to govern the policies and operations of independent operational investment authorities tasked with managing the assets. The dissertation therefore assesses the institutional arrangements between the owners and managers of the sovereign wealth fund, and a set rule-based investment policies through which to manage the principal-agent relationship established by the delegation of authority to an independent investment manager. It is contended that sovereign wealth funds can address a number of these specific political-economy and institutional problems, even in the context of relatively poor general institutions. A central argument advanced in the dissertation is that sovereign wealth funds alone have limited effectiveness, and that they should therefore form part of a broader fiscal framework that is rule based, constraining and countercyclical. The model of institutional reform developed here can be described as incremental or piecemeal. Considerable attention is paid to “second-best institutions”, particularly in the areas of fiscal rules and asset allocation, as intermediate steps towards more complex institutional arrangements.