Note that sentiment can be interpreted as either support for current economic conditions or current directions of economic reforms, or both. To zoom into sentiment about economic reforms, we examine sentiment on “reform sentences” only. Reform sentences contain the word “reform(s)”. The argument is that these sentences are more likely about economic reforms than about the economic status quo. We manually check a small set of reform sentences in Arabic and English and confirm that these reform sentences do discuss reforms and not the economic conditions. The sentiment divergence remains the same. The sentiment of reform sentences in news articles outside the GCC is consistently more negative than news from the GCC and local news (Panels C and D of Figure IV.4), suggesting that sentiment about economic reforms in the GCC is robustly more negative from the international news.

Two other findings provide indirect evidence to support the argument that reform news articles talk about economic reforms. First, the sentiment of full articles and of reform sentences is highly correlated. Second, sentiment for local and international sources is not significantly correlated with oil price shocks. In other words, reform sentiment does not drop when oil prices drop. This finding suggests reform news articles are more likely to discuss economic reforms than just economic conditions. If news articles discuss the latter, the sentiment (about economic conditions) will likely decline when oil prices drop.

Why does sentiment from outside the GCC matter? We explore whether non-GCC international media sentiment has real effects. One such outcome that attracts great interest is FDI inflows. We find that sentiment about GCC economic reforms in the non-GCC international media is significantly and robustly correlated with the level of FDI inflows to the GCC (see Table A7.1 in Appendix A7).<sup>11</sup> Interestingly, reform chatter is not correlated with FDI inflows. This finding suggests that the support for the current reforms matters for FDI decisions. In other words, “talk is not cheap”. FDI inflows also correlate with the GCC’s GDP growth and trade openness in the same year.

# V. Conclusion

This paper finds that GCC reform efforts have intensified in recent years, as indicated by the rapidly rising number of passed laws and decrees. Nevertheless, the GCC countries tend to pass more laws and decrees in stronger policy areas. Using data from the social media platform Twitter, the paper discovers increasing engagement from the population. In addition, the number of economic reform tweets per engaged user has risen dramatically. Nevertheless, support for economic reforms from the population is declining, suggesting either growing discontent about the current economic situation or shrinking support for the current direction of economic reforms. Data from news media show that international media is more engaged but less positive about the GCC’s economic reforms than local media. These findings suggest a relative disengagement from economic reform discussions by local media (and potentially domestic participants). The more negative tone from international media, which possibly reflects international stakeholders’ views, is noteworthy. Sentiment in international media and social media matters because it is found to be correlated with FDI inflows into the GCC.

> 11  The literature on the determinants of FDI inflows is very broad, covering different regions, time periods, data sets, and employing different methodologies. Some examples include Gammoudi and Cherif (2016) who study the MENA region, Hintosova et al. (2018) for the ‘Visegrad’ countries in Eastern Europe, and Asongu et al. (2018) on the BRICS and MINT countries. Our estimations follow the literature in including variables for GDP growth, inflation, trade openness, and institutional quality, in addition to the media-based variables.

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