Decentralisation, Regional Autonomy and Ethnic Civil Wars: A Dynamic Panel Data Analysis, 1950-2010

This paper empirically revisits the relationships between decentralisation, regional autonomy and ethnic civil war. On the one hand, decentralisation and autonomy may allow ethnic minorities to directly control their own affairs or to better hold regional rulers to account. On the other hand, decentralisation and autonomy in multi-ethnic countries may foster centrifugal forces and bestow legitimacy and resources to secessionist groups. Current evidence from cross-country or cross-ethnic group econometric studies are limited by crude operationalisation of decentralisation and often questionable treatment of endogeneity. The paper makes three key contributions: i) it builds a new dataset bringing together up-to-date and cutting edge data on decentralisation and autonomy (RAI) and ethnic group violence (EPR), thereby providing new insights on groups exposure to decentralisation in 81 countries between 1945 and 2010; ii) it tests how various facets of decentralisation (autonomy, self-rule, shared-rule, political decentralisation) relate to ethnic violence; and iii) it exploits dynamic panel data techniques, namely the difference-GMM estimator, to account for reverse causality and unobserved heterogeneity biases. The validity and strength of the estimator are explicitly established. I find that regional autonomy - even when decentralisation is otherwise limited - strongly reduces the incidence of ethnic civil wars. The conflict-mitigating effect of autonomy is maximal when regional governments command substantial powers in terms of policy-setting and when political decentralisation is strong. Political decentralisation is also found to be a strong and consistent factor of ethnic peace in the absence of regional autonomy. In contrast, granting regional governments wide-ranging authorities on policy and fiscal matters does not reduce the incidence of large-scale ethnic conflict on its own. Granting autonomy to regional governments which have no substantial powers of self-rule is weakly correlated with higher chances of onset of civil wars but a combination of autonomy and above-median self-rule and political decentralisation strongly reduces such a likelihood. Regional autonomy appears to be the only effective strategy to stop existing civil wars.