Sovereign Wealth Funds and Economic Growth in High Income Countries

Sovereign wealth funds (SWFs) are increasingly used by diverse countries to support large-scale economic development. However, limited evidence exists regarding their national effects. I investigate SWF effects on GDP per capita ($ US 2024) and domestic savings share of GDP in Norway and Singapore, the two open economies with the largest SWFs, and Australia, a negative control unit with a much smaller SWF. The analysis estimates that Norway’s Government Pension Fund SWF added $816,089 per capita over the analysis period ($28,141/Year) to resource-rent pruned GDP per capita and 9.69% to domestic saving share of GDP (1995-2023). Singapore’s Temasek global SWF investments added $472,605 per capita over the analysis period ($22,505/Year) and 14.42% to domestic savings share of GDP (2003-2023). As expected, Australia’s smaller SWF had no significant effect on GDP. These synthetic control analysis estimates are robust to in-place and time placebos and negative control outcomes. The findings indicate that robust mandatory SWF-steered savings in open economies can accelerate economic growth beyond standard Solow model steady state equilibrium by adding a non-depreciating compound growth function to domestic investment.