The Canada Strong Fund isn’t a sovereign wealth fund — and that’s OK
The federal government’s proposed Canada Strong Fund is not a sovereign wealth fund, despite being marketed as one, because it will be financed through government borrowing rather than surplus wealth, resource revenues, or accumulated savings, says Gabrielle Sorensen, a researcher for the Atlantic Economic Council. Rather, it resembles a state-led development bank, designed to invest in domestic companies and infrastructure projects to support industrial policy and economic growth. Sorensen notes traditional sovereign wealth funds, such as those in Norway and China, deploy existing national wealth into diversified investments, often abroad, whereas Canada lacks the resource surpluses and current-account balances that typically justify such vehicles. Instead, the Canada Strong Fund would increase public debt while directing capital into the domestic economy, making it fundamentally different from the savings-oriented model associated with sovereign wealth funds. "Whatever the merits of the Canada Strong Fund as industrial policy — and those merits are genuinely contested — it is at least pointed at the right problem. On that count, the government has stumbled in the right direction, it’s just using the wrong name.”
