No blessing, no curse? On the benefits of being a resource-rich southern region of Italy

• A quantitative comparative case study is used to test for regional resource curse.
• A comparison unit for Basilicata is constructed using synthetic control techniques.
• The economic effects of large-scale oil extraction in Basilicata are estimated.
• Large-scale oil extraction has had no detectable effect on Basilicata׳s economy.
• The role of the royalty tax rate has contributed to the result of missing effects.

The aim of this research is to examine the aggregate economic effects of large-scale oil extraction in Basilicata, a southern region of Italy. This paper is the first empirical attempt to test for a regional resource curse by constructing a comparison unit using synthetic control techniques. The comparison unit captures how Basilicata׳s economic activities would have evolved in the absence of the oil extraction industry. The negligible differences between economic parameters in Basilicata and in its comparison unit suggest that a large amount of oil extraction has had no detectable effect on Basilicata׳s economy. A set of tentative political economy explanations of the result of missing effects is also provided, based on control rights structure, the royalty tax rate and organized crime.