Description
Saudi Arabia's Public Investment Fund (PIF) reacted to the COVID-19 shock not by following its stated strategy to invest through a low-risk and long-term horizon but by opportunistically acquiring undervalued stocks in developed markets to provide immediate returns. This speculative shopping spree reflects how the sovereign wealth fund (SWF) has become a more adventurous investor since 2015. The PIF revamp raises crucial questions: What are the political considerations underlying the rise of SWFs as large-scale investors in the global economy? What are the political drivers of SWF choices? Existing scholarship oscillates between a geopolitical or commercial lens to explain SWF development. Using the Saudi PIF as a case study, I suggest going beyond this dichotomy by looking at the nature of domestic political arrangements. I argue that the concentration of royal authority and power politics within the family following the rise of Mohammed bin Salman carved the shift in the PIF's design and investment initiatives. The outcome was a shift from scattered and uncoordinated investment patterns associated with interagency feuds and the influence of competing senior decision-makers to a personalized and highly interventionist strategy driven by a tightly knit group of regime insiders evolving around the crown prince. The paper introduces political agency and the relational structure underlying the rise of SWFs as key market actors, thus adds to a growing literature on socio-political drivers of SWFs and contributes to broader International Political Economy (IPE) debates surrounding the interplay between states and markets under processes of financialization.
