Working Paper: NBER ID: w30488
Authors: Antonella Bandiera; Lelys I Dinarte Diaz; Juan Miguel Jimenez; Sandra V Rozo; Maria Micaela Sviatschi
Abstract: How does rebel governance affect long-term development? Rebel forces have controlled territory and imposed their own institutions in many countries over the past decades affecting millions of people. We investigate the economic, social, and political consequences of temporary territorial control by guerrillas during the Salvadoran Civil War. During that time, guerrillas displaced state authorities and created informal institutions that encouraged autonomy and self-sufficiency. Using a spatial regression discontinuity design, we show that areas once under guerrilla control have experienced worse economic outcomes over the last 20 years than adjacent areas controlled by the state. In these areas, higher social capital coexists with negative economic consequences. The fact that rebel institutions developed as an alternative to the state generated mistrust of outsiders, and isolated these areas from the rest of the country, resulting in over-dependence on subsistence farming and disengagement from postwar governments. Results are larger in areas where rebel governance initiatives were stronger and do not revert despite increased postwar public investment in formerly guerrilla areas. This study shows that when non-state actors develop alternative governance institutions, these can prompt adverse development effects through lasting norms of distrust of out-groups.
Keywords: rebel governance; long-term development; El Salvador; guerrillas; civil war
JEL Codes: N30; O10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Guerrilla governance (O17) | lower human capital (J24) |
| Guerrilla governance (O17) | lower wealth (D31) |
| Guerrilla governance (O17) | lower earnings (J31) |
| Guerrilla governance (O17) | divergence in economic outcomes (F62) |
| Guerrilla governance (O17) | lower educational outcomes (I24) |
| Guerrilla governance (O17) | development of local institutions (O43) |
| Development of local institutions (O43) | mistrust towards outsiders (Z13) |
| Mistrust towards outsiders (Z13) | reduced engagement with state institutions (O17) |
| Higher social capital (Z13) | lower access to public goods (H49) |
| Guerrilla governance (O17) | overdependence on subsistence farming (O13) |
| Intensity of self-governance initiatives (H10) | adverse effects on development (I15) |