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Bryan's avatar

It has been said that the economic model used by Japan and the South Korean government to grow their national economies in a few decades has been a combination of protectionism, favoritism of several chosen companies by subsidies, loans, and labor laws, and export-focused industrial policy. The goal of these factors were to create a few highly competitive companies to compete in global industries in order to create economic growth even if it came at the cost of domestic competition. The results of this was indeed a sustainable source of foreign currency and economic activity from these companies. However, they have also led to a variety of political issues and unrest because of the mismatched economy and uneven growth that they have caused at home. These companies have turned from private ventures to nationally important institutions. That does not even mention the political influence and corruption invovled during the creation and maintenance of these companies as this was not a completely objective process.

I see these funds as a centralized way to plan the consolidation and use of the economic capital of the nation in order to take advantage of the scale that this consolidation provides. This seems similar to the plan described above except in that they outsource the actual economic activity to another entity. If the citizens do own them in theory, then these funds might have a more equitable outcome in theory instead of the uneven economic growth that resulted in South Korea and Japan. Do you think that the outcome these funds will be anything like the results of South Korea's and Japan's previous economic models?

In addition, the size of these funds and the fact that many are controlled in some way by the national government means that political considerations are included in their use no matter what their official purpose is. I predict that the two short-term consequences of this will be that the funds will be used to support partisan goals and that the fund will be used to support strategic goals. I believe that Norway's fund's intent to invest its funds specifically in goals to promote environmentalism, women's rights, and social justice is an example of this. We already see examples of the second consequence which you have implied in your post. I believe that this will either lead to funds becoming explicitly politicized with their decision making being tied to elections, or their independence will become heavily restricted and tied to only a few avenues in which they can invest. What do you think that the perception of these institutions will be?

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Rohan Shah's avatar

China, through the China Investment Corporation (CIC) has claimed 384,235 acres of American farmland soil, with a single Chinese billionaire owning more than half the property, per NYP.

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