In the Line of Fire: Political Violence and Decentralization in Colombia

Policies aimed at increasing the resources and administrative responsibilities of subnational governments are often proposed as a conflict resolution strategy. This paper explores a particular threat to the effectiveness of decentralizing reforms in war-torn countries, namely the capture of local governments by non-state armed actors. These groups are reliant on rents and may increase their violence against local authorities in an attempt to capture local governments in a decentralized system. This relationship between decentralization and conflict is explored using subnational-level data from Colombia during the 1990s, when local fiscal capacity greatly expanded. I exploit a key reform to identify the effect of automatic transfers from the center on conflict casualties. The evidence shows that fiscal transfers are associated with higher murder rates of local authorities and politicians. Moreover, this effect is conditional on the state capacity of localities. These results are robust and consistent with the rent-seeking strategy of paramilitaries and guerrillas during the period.