The State as Investor: GCC Sovereign Wealth Funds Between Profit and Policy

Abstract

The role of Sovereign Wealth Funds (SWFs) in global markets has witnessed continued growth since the outset of the current century. This growth has been driven in large part by commodity SWFs exemplified by the Gulf Cooperation Council (GCC) countries’ SWFs whose influence has also increased, significantly contributing to the growth of their domestic economies. However, the opacity surrounding their activities has raised questions about their true motivations. This thesis explores the motivations behind the investment strategies and decision-making processes of the SWFs in GCC countries. Using a multifaceted approach that focuses on international portfolios and utilizes panel regressions, investment allocation analyses, and case studies, the drivers of cross-border GCC sovereign wealth fund investments are explored. I find that Gulf SWFs prioritize savings by seeking long-term value creation and maximizing returns which overshadows their role in economic buffering through international portfolio diversification. The study also shows that the funds pursue strategic investments driven by political factors and local capacity building. The results emphasize the multifaceted objectives of GCC SWFs, indicating a focus on long-term strategies rather than short-term financial optimization.