Periodically we’ll be interviewing Senior CEME Fellows to check in on their latest research, big questions they’ve been pondering and everything they’re keeping an eye on in the world. Today we spoke with Pat Schena, Adjunct Assistant Professor of International Business Relations at the Fletcher School and Co-Head of SovereigNet.
Interviewer: What are the questions that keep you up at night around your current research/focus of interest?
PS: As a Co-Head of SovereigNet, one of my research interests is the role of the state as a global investor and specifically on how states deploy and manage sovereign wealth. The earliest modern sovereign fund was set up in the 1950s by Kuwait. Since the financial crises of the late 1990s, the growth in foreign exchange reserves and, more generally, surpluses resulting from the capture of resource revenues have led to steady expansion in the introduction of new sovereign wealth funds — 60-80 in fact. This growth raises key questions, as well as concerns. Some of these include: “Do states deploy SWF assets for political or strategic advantage?” or “How can SWF assets be better deployed to address key development challenges?” Also of relevance are the impacts on recipient countries and specifically how domestic political issues may affect the way in which investments are welcomed… or not.
Interviewer: What do you see in the developments and events around the world today that make your work relevant and timely?
PS: Given the proliferation of SWFs and the vast assets they manage — over $6 trillion and growing – the investment functions of the state have timely relevance and importance for both national wealth management, as well as international wealth accumulation and capital market development. Many new funds recently created are in emerging economies such as in Africa. These are expected to provide enhanced governance over resource wealth and over time to contribute to the structural development of local economies. Still, the specter of politicization is never far away. One recent example might be Russia’s plan late in 2013 to lend $18B to Ukraine from one of its funds. The deterioration in Ukraine-Russia relations has since refocused Kiev IMF resources.
Interviewer: Where do you see the greatest opportunities for impact for students who affiliate or work with IBGC?
PS: Often at any given time I have 2-5 active projects, including those that aggregate and analyze SWF data. Some are conducted with partners, including State Street Bank and the World Bank. These create opportunities for students to serve in a research capacity and receive hands on experience and industry exposure to these topics. In addition to my teaching on related themes in finance — such as Global Investment Management and Private Equity – I am also the faculty advisor to the Fletcher team that competes in the CFA Institute’s Global Equity Research Challenge. This presents a great opportunity for students to work with industry professional and develop the very practical skills in investment analysis.
Interviewer: What is the most interesting book you have read recently?
PS: More Money than God by Sebastian Mallaby, which is an fascinating look into the hedge fund industry.