SWFs: New Challenges for the Caspian Countries

Over the past decade, the boom in commodity prices and the growth of foreign exchange reserves have made Sovereign Wealth Funds (SWF) major forces in the global economy, with the largest funds managing well over $4 trillion in assets.

Their influence has had far-reaching consequences for both host and sponsoring countries. SWFs can finance development projects and shield economies from volatility. But they can also hamper the effectiveness of macroeconomic policies and create opportunities for corruption.

This report from Azerbaijan's Public Finance Monitoring Center, Khazar University and RWI presents a critical analysis of resource-based SWFs in three Caspian countries: Azerbaijan, Kazakhstan and Russia. While SWFs enabled them to weather the global financial crisis, the funds’ investment choices have failed to promote long-term development at home, highlighting the need for transparency and accountability as well as new methods to assess SWF performance.