Sovereign Wealth Funds as an Actor in the Political Economy: An Explanation from the Perspective of Institutionalism

Sovereign wealth funds have been one of the important actors of political economy in the last two decades, and their role in the political economy of many societies, especially societies benefiting from rentier incomes from the sale of natural resources, such as the Persian Gulf countries, has been very prominent. Although these funds are considered an economic tool, governments have been able to benefit from their political gifts. This article tries to use the institutional approach to investigate the function of these funds in the framework of domestic political economy for the owner countries and its effects on their internal system. This article raises the question of what is the reason for the importance of foreign exchange reserve funds in the last two decades in the domestic political economy? Relying on the descriptive-analytical-exploratory method and using the data statistics and letters related to the funds, it is on the agenda to examine the hypothesis that foreign exchange reserve funds as an institution for countries have important political benefits despite their economic benefits. The findings of this research from examining the effects of these funds in two political and economic dimensions show that the important and fundamental role of currency reserve funds in creating power and forming a procedure appropriate to the ruling policy can help consolidate the internal power of governments.