Is government decentralization useful in the fight against domestic terrorism? A cross-country analysis

This article examines the link between government decentralization and domestic terrorism in 65 countries over the period 1976–2009. The results show the existence of a U-shaped relationship between fiscal devolution and the number of domestic terror attacks. This implies that fiscal decentralization first contributes to reducing domestic terrorist activity. However, beyond a certain threshold level, the relationship becomes positive, indicating that the transfer of fiscal power to subnational governments increases the incidence of domestic terrorism. Furthermore, our findings also reveal that the number of domestic terror attacks is higher in those countries in which subnational governments are characterized by greater levels of political autonomy. These results are obtained after controlling for a number of factors that could plausibly be correlated with both the incidence of domestic terrorism and government decentralization, such as the level of economic development, country size, the extent of civil liberties and democracy, the degree of trade openness, or geographical features.