Sovereign wealth funds – large state-owned investment funds – are key players in international finance, but little is known about their underlying political drivers. Why do some states with surpluses choose to create sovereign wealth funds, while others advocate private finance institutions instead? This article speaks directly to this question by investigating the variation in sovereign wealth fund choices across nations with excess reserves. Thereby it contributes to an emerging stream of social network analysis within the international political economy literature. It develops an argument in least likely cases (i.e. Hong Kong and Singapore) about how the structure of domestic state-society relations – in form of policy networks – explains variation in sovereign wealth fund choices, which benefits some actors over others. By analysing primary archival material and through interviews with former policy-makers, this article opens the black box of policy-making behind the choices of state finance institutions.
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