Resources Policy 68 (2020) 101807 Available online 10 August 2020 0301-4207/© 2020 Elsevier Ltd. All rights reserved. Reconciling empirics on the political economy of the resource curse hypothesis. Evidence from long-run relationships between resource dependence, democracy and economic growth in Iran Roberto Dell’Anno Department of Economics and Statistics - CELPE, University of Salerno, Via Giovanni Paolo II, 132, Fisciano, SA, 84084, Italy A R T I C L E INFO JEL classifcation: O13 O17 O43 O47 Q3 D7 Keywords: Resource curse Democracy Economic growth Resource dependence Iran ABSTRACT This paper analyzes the long-run relationships between resource dependence, democracy and per capita eco- nomic growth in Iran using the ARDL approach of cointegration (Pesaran et al. 2001). We fnd that resource dependence and democracy have positive, negative, or no signifcant effect on the long-term growth in Iranian GDP over the period 1970–2017. This multifaceted result is an additional reason to explain the lack of consensus on the empirics of the political economy of the resource curse hypothesis. We show as the interpretation of statistical tests only based on the average effect of resource dependence on economic growth may be misleading. 1. Introduction A vast body of literature has focused on the relationship between natural resource abundance and economic growth. Auty (2001) coined the term of ‘natural resource curse’ to describe this surprising feature of economic life that resource-poor economies often outperform resource-rich economies in economic growth (Sachs and Warner, 1995). Several surveys point out both economic 1 and political 2 arguments to rationalize a negative correlation between resource abundance and economic growth. However, some econometric studies fnd a positive or also statistically not signifcant effect of resource abundance on GDP growth. This lack of consensus in the empirical literature emerges clearly in Havranek et al.’s (2016) meta-analysis. He found as 40% of empirical studies estimate a negative effect, 40% fnd no effect, and 20% of the analyzed studies showed that natural resources richness positively affects long-term economic growth. In this research, we focus on one of the most infuential hypotheses of this literature that argues as institutional quality plays a fundamental role in determining the effect of the abundance of natural resources in the national economy (Mehlum et al., 2006a, 2006b; Rosser, 2006; Robinson et al., 2006; Brunnschweiler, 2008; Deacon, 2011; Busse and Gr¨ oning, 2013; Vahabi, 2018). According to this hypothesis - also known as the political economy of the resource curse hypothesis - institutions are pivotal to reverse the “curse” into a “blessing” through several chan- nels. 3 Good institutions can prevent rent-seeking activities (Auty, 2001), reduce corruption (Isham et al., 2005; Robinson et al., 2006), lower the risk of violent civil confict (Collier and Hoeffer, 2005) and accelerate effcient resource allocation (Atkinson and Hamilton, 2003). Among these potential “channels”, this research considers a specifc type of institutional setting - that according to Collier and Hoeffer (2009: 294) E-mail address: rdellanno@unisa.it. 1 E.g. appreciation in the exchange rate - also known as “Dutch diseases”-, ineffciency of market economy because natural resources tend to be owned by frms with signifcant degrees of monopoly and monopsony power, less incentive for the rich-economy to diversify into different industries, etc. 2 E.g. higher opportunities for rent-seeking activities, wars for ownership of resources, lower democracy, etc. 3 These arguments solve some apparent empirical puzzles for purely economic explanations of resource curse hypothesis. Indeed, political economy resource curse hypothesis - including the role of institutions - is able to explain why for some resource-rich countries (e.g. Nigeria, Zambia, Venezuela) the resource abundance has been a “curse” while for other resource-rich countries (e.g. Norway, Botswana, Canada) it has been a blessing. Contents lists available at ScienceDirect Resources Policy journal homepage: http://www.elsevier.com/locate/resourpol https://doi.org/10.1016/j.resourpol.2020.101807 Received 8 May 2020; Received in revised form 8 July 2020; Accepted 9 July 2020