An Analysis of the Sovereign Wealth Fund Trap

　　Abstract: Over the past few years, with the aggressive development of sovereign wealth funds in emerging economies, Western countries have attempted to intervene in such funds using both administrative and legislative means. They have erected many protectionist barriers obstructing investment in sovereign funds, creating great difficulties for investors, even rendering some investments impossible. This paper analyzes the factors that have lead to the so-called sovereign wealth fund trap, and argues that some basic descriptive factors (such as source country, size of the fund and type of fund) and the political climate of the target country and its public opinion, investment behavior and transparency of such behavior and the direction of investment in sovereign wealth funds / the related industry are the primary factors to which the obstruction can be attributed. The paper also analyzes the causal mechanisms through which these factors have an impact.

　　Author: Jin Yingji is an Associate Researcher in the Institute for Asia Pacific Studies of the Chinese Academy of Social Science