Fiscal decentralization and internal conflict: an empirical investigation

Abstract

This paper examines the relationship between fiscal decentralization and internal conflict in 77 countries during the period 1972-2000. The results show that the devolution of scal power to subnational tiers of government reduces the incidence of civil conflict. This finding is robust to the inclusion in the analysis of the degree of political decentralization and of a number of control variables commonly employed in the literature. Likewise, the observed relationship does not depend on the estimation strategy or the specific measures used to quantify the degree of fiscal decentralization and the incidence of civil conflicts within the various countries.