ABSTRACT
This chapter presents the second case study of SWFs, the Abu Dhabi Investment Authority (ADIA) of the United Arab Emirates. It also discusses the politico economic circumstances that existed prior to the establishment of the fund and the domestic political dynamics that led to the decision to establish the fund. Abu Dhabi is endowed with most of the United Arab Emirates natural resources and is the federation's fiscal heavyweight. Oil exploration in the region started in the 1930s and was pursued vigorously after World War II in various parts of the then Trucial States. As Setser and Ziemba have stated, ADIA is viewing itself as a pure portfolio manager that seeks the highest risk adjusted return not a fund that supports domestic or regional economic development. In the United Arab Emirates and the emirate of Abu Dhabi, there is a great emphasis on the role of the government in running the economy.
