Structure

fiscal management and transparency, and other related topics. When relevant statistical evidence is available in the literature, such evidence is taken into account. For empirical information on the case study SIFs, the volume is grounded in publicly available documentation, as well as documentation provided by the individual SIFs.10

STRUCTURE

This book is divided into two parts comprising a total of 13 chapters. The first part describes the establishment and operations of SIFs; each chapter in this part concludes with a list of key takeaways. The second part consists of six case studies that detail the structural and organizational features of global SIFs operating in a variety of contexts. Finally, three appendixes include four thematic reviews, a list of global SIFs, and a list of people interviewed in the course of the research for this book. The thematic reviews provide additional reference material on topics relevant to SIFs: (1) the role SIFs can play in catalyzing domestic institutional capital to infrastructure, (2) SIF partnerships with private equity funds, (3) risk management, and (4) measuring the double bottom line.

Within the chapters, this volume explores how the SIF sponsor organizes a series of contracts between parties of the fund’s multilayered principal-agent architecture to balance competing considerations.11 To rectify potential pitfalls of the principal-agent relationship (such as information asymmetry or moral hazard) and realize multiple objectives, the public sponsor employs frameworks or contracts discussed in this publication’s chapters.

Chapter 2: Overview of Strategic Investment Funds. This chapter introduces SIFs conceptually. It considers SIFs’ effectiveness, as well as their limitations, and seeks to present a balanced view of their role. It provides the definition of SIFs, outlines the main features of such funds, and discusses the rationales behind the establishment of SIFs, SIF mandates, and the principles that underpin these mandates. The chapter then discusses the macrofiscal implications of SIFs and the limits to their potential as policy instruments. It concludes by underscoring the importance of preparatory studies that provide a rigorous analysis that can either validate or refute the hypothesis that the SIF is the instrument of choice among a menu of alternatives.

Chapter 3: Legal Framework. This chapter discusses a menu of options and good practices to consider when constructing the legal framework for a SIF, allowing for the heterogeneity of environments within which SIFs are formed. It examines the three overlapping foundational elements that construct the legal framework for a SIF: (1) the legislation under which a SIF is brought into existence, (2) the legal structure adopted by the SIF, and (3) the domicile of the SIF. It discusses the private agreements facilitated by general contract law via which a SIF relates to its stakeholders and outlines other public legislation—domestic or foreign—that affects the operations of a SIF.

Chapter 4: Governance. The quality of a SIF’s governance is a core determinant of its success. This chapter discusses the importance of good governance for SIFs and how these entities and their public backers and capital providers can embed robust governance techniques within the organization to ensure that SIF activities correspond to their mandate. It explores why governance is important, what foundational elements constitute the governance of a SIF, and the principles of a well-governed SIF. The chapter serves as a precursor to the