Natural resources, political competition, and economic growth: An empirical evidence from dynamic panel threshold kink analysis in Iranian provinces

• Published in: Resources policy 2022-09, Vol.78, p.102928, Article 102928
• Main Authors: Maddah, Majid, Ghaffari Nejad, Amir Hossein, Sargolzaee, Mostafa
• Format: Article
• Language: English
• Subjects: Dynamic panel threshold kink model; Economic growth; Iran; Political competition; Resource curse; Spatial effect
• ISSN: 0301-4207; 1873-7641
• DOI: 10.1016/j.resourpol.2022.102928

Using dynamic panel threshold kink model approach, this paper measures the threshold level of political competition maximizing economic growth in the provinces of Iran during the years 2000–2019 and analyzes the moderation role of political competition in functioning of the resource curse hypothesis. Our results show that various indicators of political competition have a threshold effect on economic growth and the nonlinear relationship between political competition and economic growth is confirmed as U-shaped, based on which political competition above the threshold level leads to more economic growth. We also find that political competition affects the functioning of resource curse hypothesis in the provinces of Iran by moderating the effect of oil revenues on economic growth. Considering the spatial effects in the dynamic panel threshold kink regression model, which has been modeled for the first time in the provinces of Iran, has led to the robustness of the research findings. Our findings support the positive and significant effect of political competition on economic growth in countries with natural resources. •The functioning of the resource curse hypothesis is conditioned on the quality of institutions.•The dynamic panel threshold kink model provides the possibility to obtain threshold effects of institutional quality on growth according to true pattern of relationship among model variables.•Political competition moderates the impact of oil revenues on the economic growth of provinces.•After the threshold levels of political competition oil revenues is blessing for Iranian provinces.•Considering the spatial effects in the dynamic panel threshold kink regression model leads to the robustness of the research findings.