This paper studies the role of bilateral political relationship in the decision-making of sovereign wealth funds (SWFs). Based on the detailed data of SWFs’ outbound investments in 2007-2017, this paper finds that SWFs tend to invest in countries with distant bilateral political relations. Furthermore, bilateral political relationship plays an important role in the choice of investment area and the determination of investment amount. The results of this study show that, unlike rational private investors who seek to maximize benefits and minimize risks, SWF's outbound investments have strong political motives.
ISSN: 1792-7552 (Online)