From Theaustralian.news.com.au: Norway and Chile have set up national funds to quarantine the excess tax bounty generated by their resource boom sectors. By investing offshore, such sovereign wealth funds dampen the tendency for their booming resource sectors to push up domestic inflation, interest rates and the exchange rate.
And some of the earnings can be brought back, as in Chile during the global crisis, to cushion the economy from downturns. Or they can provide a foreign income stream for when the resource demand, or the resource itself, runs out...................Full Article: Source
|