Date of Award

2024

Degree Type

Restricted to Claremont Colleges Dissertation

Degree Name

International Politics and Political Science, PhD

Program

School of Social Science, Politics, and Evaluation

Advisor/Supervisor/Committee Chair

Yi Feng

Dissertation or Thesis Committee Member

Melissa Rogers

Dissertation or Thesis Committee Member

Sallama Shaker

Dissertation or Thesis Committee Member

Sallama Shaker

Terms of Use & License Information

Terms of Use for work posted in Scholarship@Claremont.

Rights Information

© 2024 Afra Ali AlNuaimi

Keywords

Consumption, Democracy, FDI, MENA, Oil-Exporting

Subject Categories

Economics | Political Science

Abstract

The economic outcomes observed in the essays such as foreign direct investment, economic development, and private consumption are not solely influenced by individual policies or economic indicators in isolation. Instead, they are significantly affected by the wider political and economic context of a region. Where the broader narrative is that the economic health and growth of a region are closely intertwined with its political and economic structures. As these economic and political measures are part of a larger, more complex system where political stability, economic freedom, governance, and the nature of political systems collectively influence economic outcomes. Essay 1: The Impact of Economic Freedom and Governance on Foreign Direct Investment: A Study of Selected Middle East and North Africa Countries Foreign Direct Investment (FDI) is widely recognized as a key driver of economic growth. The Middle East and North Africa (MENA) region has enormous potential to tap into foreign investment to further accelerate development. The first essay examines the impact of economic freedom and governance indicators on FDI in the region. Various panel estimation methods were implemented to evaluate this impact, including the pooled ordinary least squares (OLS) model, the fixed effect model, the random effect model, and the Fully Modified OLS model. The dataset used in the study comprised 12 selected MENA countries and spanned the period 1995 to 2021. The results showed that the previous year’s Monetary Freedom Index (MFI) and Financial Freedom Index (FFI) exerted positive and statistically significant effects on current FDI in the economic freedom model. In the governance model, previous year’s Political Stability Index (PSI) and Trade Openness showed positive effect on FDI whiles Government Effectiveness Index (GEI), Civil Liberties Index (CLI), and Voice and Accountability Index (VAI) were negatively related to FDI. The results show that policy makers should prioritize implementing policies that improve scores in MFI, FFI, PSI and Trade Openness to attract more foreign investment. Essay 2: Democracy and Its Impact on Economic Development: A Study of Countries in Democratic Transition. The impact of democracy on economic development is inconclusive as existing literature produces mixed results. The second essay examines the role of four democracy indicators on economic development with a focus on 28 countries undergoing democratic transition over the period 1990 to 2021. The paper investigates this relationship using pooled regression, fixed effect model, random effect model and Feasible Generalized Least Squares (FGLS) techniques. The key empirical finding is that previous year’s democracy, as measured by Polity IV, Boix-Miller-Rosato (BMR) and Varieties of Democracy (VDEM) democracy indices have positive impact on economic development. This finding implies that democratic governance has the potential to foster development and citizens’ wellbeing for countries undergoing democratic transition. Policy makers within these countries should prioritize enacting and implementing policies that enhance country-specific democracy credentials to improve economic development. Essay 3: Impact of Macroeconomic Variables on Private Consumption: A Study of Selected Oil-Exporting Countries Consumption accounts for the largest share of GDP in most countries and is crucial for stimulating aggregate demand. In their quest to diversify away from dependence on oil revenue, it is advantageous for oil exporting countries to understand the determinants of their private consumption to guide policy. However, research in this area is scarce. Therefore, the paper investigates the impact of macroeconomic factors on private consumption in ten (10) selected oil-exporting countries from 2000 to 2022. The study employed the following econometric techniques in examining the impact of macroeconomic factors on private consumption: Dynamic Pooled Model, Dynamic Fixed Effects Model, Lagged First Difference Model, and Cross-Lagged Panel Model using the Structural Equation Framework. These models were used to account for possible reverse causality. The findings show that the previous year’s economic growth, inflation and savings positively affect current private consumption. However, the previous year’s non-oil GDP growth has a negative effect on private consumption. Moreover, unemployment rate, non-oil revenue, GDP per capita and FDI were not statistically significant in influencing private consumption. The paper recommends that concerted efforts should be directed at improving savings, economic growth and maintaining sustainable inflation to stimulate private consumption. Also, policymakers should further examine how non-oil revenue and GDP growth can be reengineered to enhance private consumption.

ISBN

9798382742144

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