14 Nowrasteh, Forrester, and Blondin

**Table 5.** EFW, Polity IV, and Freedom House Indexes, Jordan v. Kuwait

||**Total**<br>**index**|**Size of**<br>**gov.**|**Legal**<br>**system**|**Sound**<br>**money**|**Internatl.**<br>**trade**|**Regulation**|**Polity II**|**Political**<br>**rights**|**Civil**<br>**liberties**|
|---|---|---|---|---|---|---|---|---|---|
||||||_Panel A._|_Jo_<br>_rdan_||||
|1975|4.83|1.53|.|5.65|5.76|6.40|−10.00|6.00|6.00|
|1980|5.13|4.77|1.81|6.82|5.76|6.49|−10.00|6.00|6.00|
|1985|5.50|4.60|2.74|7.74|6.00|6.42|−9.00|5.00|5.00|
|1990|5.43|6.12|3.10|6.20|4.81|6.93|−4.00|5.00|5.00|
|1995|6.14|5.71|4.63|7.15|6.63|6.61|−2.00|4.00|4.00|
|2000|7.06|6.08|5.09|9.67|7.22|7.17|−2.00|4.00|4.00|
|2005|7.30|6.27|5.28|9.21|7.94|7.81|−2.00|5.00|4.00|
|2010|7.45|7.35|4.79|9.12|7.89|8.08|−3.00|6.00|5.00|
|2015|7.47|7.38|4.76|9.66|7.63|7.91|−3.00|6.00|5.00|
||||||_Panel B._|_Kuwait_||||
|1975|.|.|.|6.40|.|5.14|−8.00|4.00|3.00|
|1980|3.69|2.97|1.47|5.18|.|5.13|−10.00|6.00|4.00|
|1985|5.46|1.19|4.65|8.92|7.07|5.49|−8.00|4.00|4.00|
|1990|4.98|3.15|2.17|7.51|7.07|4.99|.|7.00|7.00|
|1995|6.41|4.83|5.91|8.89|7.13|5.29|−7.00|5.00|5.00|
|2000|6.97|6.37|5.99|8.09|7.96|6.46|−7.00|4.00|5.00|
|2005|7.08|6.72|5.81|7.84|7.56|7.47|−7.00|4.00|5.00|
|2010|6.95|6.18|5.65|8.07|7.59|7.24|−7.00|4.00|5.00|
|2015|6.62|6.40|4.99|7.58|6.76|7.39|−7.00|5.00|5.00|

_Source_ : Authors’ tabulation of the Gwartney, Lawson, and Hall (2017) Economic Freedom of the World (EFW) index, Center for Systemic Peace Polity IV Index, and Freedom House Freedom in the World Report (2018). _Note_ : Table presents the EFW Index, its components, the Polity IV Index, and the Freedom House Political Rights and Civil Rights Indexes over 1975–2015 for Jordan in panel a and Kuwait in panel b.

The refugees also boosted the demand side of the economy. Figure S1.1 in the supplementary on- line appendix S1 shows that the largely Transjordanian-owned real-estate sector boomed, housing starts doubled, and construction employment expanded (Troquer and al Oudat 1999; van Hear 1995, 1998; De Bel-Air 2007).

In terms of Jordan’s EFW scores, improvements in Jordanian monetary policy translated into substantial gains in Jordan’s sound money EFW subscore—rising 15.3 percent from 1990 to 1995 and by 35.2 percent from 1995 to 2000. Reforms to tariffs and the removal of trade barriers also saw a rise in Jordan’s trade liberalization subscore by nearly 38 percent over 1990 to 1995, increasing from 4.8 to over 6.6 (table 5).

Acemoglu and Robinson (2008) note that often it is necessary that there be a shock to the distribution of power in order to overcome institutional persistence. Accordingly, these changes are mirrored by significant changes in Jordan’s legal system sub-score within the EFW index, rising from 3.1 in 1990 to 4.63 in 1995—a change of nearly 49 percent. This was a substantial improvement in Jordanian legal institutions, the most rigid economic institution (Acemoglu and Robinson 2008).

Jordan liberalized its economy to settle the Kuwaiti-Palestinians, and they, in turn, were a promarket cohort that tipped the political balance in favor of further free market reforms after being included in the governing coalition (Brynen 1992). The resulting economic boom caused by the refugees and continued by the reforms reduced opposition to liberalization and the risk of policy backtracking as had happened often before.

# **8. Conclusion**

The Kuwaiti-Palestinian refugee surge to Jordan in 1990 and 1991 is a natural experiment that allows us to understand how a government changed its economic policy after experiencing mass