Despite being a constant theme in current media coverage, the United States financial crisis often seems to inspire more questions than answers.

One of the latest economic issues to be embroiled in debate is the regulation of investments, known as Sovereign Wealth Funds, which are owned by other governments but invested in the U.S.

Mohammed Akacem spent time in Singapore discussing the role Sovereign Wealth Funds play in the global economy.

Economics Professor Mohammed Akacem traveled to Singapore—a country with two Sovereign Wealth Funds—in late March to meet with academics, banking officers and a few government officials to discuss the role that Sovereign Wealth Funds play in the global economy.

Essentially, Sovereign Wealth Funds are government-owned surplus funds—made up of money from commodities, such as oil and wheat, or the export of manufactured goods—that are invested in markets around the globe. Besides Singapore, other countries that have the funds are China and the United Arab Emirates.

Questions have arisen about these foreign investments due in part to the concern by some that there are few, if any, restrictions in place that regulate where the funds are invested and for what purpose.

To help resolve these and other issues, the U.S. Congress and the International Monetary Fund are investigating the implementation of checks and balances that would consider possible political agendas and to ideally prevent foreign investments that are rooted in nefarious causes. Akacem contends that Sovereign Wealth Funds are largely misunderstood, and also points out that the introduction of foreign capital into U.S. financial markets is largely necessary and ultimately beneficial.

“When they invest overseas, [these governments are] driven by a profit motive just like everybody else,” says Akacem. “Because they are government funds, they are actually likely to be more stable for the global financial markets and not cause this sudden yanking of capital at the first sign of trouble. They’re more likely to be long-term investors.”

A guest editorial about Sovereign Wealth Funds penned by Akacem was published in the April 20 edition of the Rocky Mountain News. To read the column, please visit www.rockymountainnews.com/news/2008/apr/20/speakout-worried-about-too-much-foreign-in-the/

Akacem’s research trip was primarily funded by the College’s Office of International Studies through a program designed to give tenured faculty opportunities to study and/or attend conferences overseas. He received supplemental funds for the trip from the School of Business Dean’s Office.

“The benefit of the initial funding … is tremendous,” Akacem says. “Such support for faculty helps us collect data, meet and speak with experts in our field overseas, and adds so much to our professional development. But, more importantly [it adds] to the classroom as well because the benefits are transferred and shared with the students.”

Last fall, Akacem had a research paper on Sovereign Wealth Funds accepted to the Association of Private Enterprise Education annual conference in Las Vegas. Getting the opportunity to tap into the collective knowledge of the experts in Singapore in person, as opposed to via telephone or e-mail, greatly informed the paper he presented just days after his return, he says.

“There’s something about being face to face and establishing contact,” says Akacem. “There’s a certain comfort level that you establish with people.”