Rebel Governance and Development: The Persistent Effects of Guerrillas in El Salvador

How does territorial control by non-state actors affect long-term development This paperinvestigates the economic, social, and political consequences of temporary territorial control by guerrillasduring the Salvadoran Civil War. During this period, the guerrillas displaced state authorities and promoted thecreation of self-governing institutions that were highly representative of local values and openly distrusted thestate and elites. Using a spatial regression discontinuity design, the paper shows that areas once under guerrillacontrol have experienced worse economic outcomes about 30 years after the guerrillas first controlled them, relativeto adjacent areas that were then controlled by the formal state. The results suggest that informal communityinstitutions in guerrilla-controlled areas led to enduring land fragmentation and disengagement with the government.The paper argues that when non-state actors develop governance institutions as an alternative to the state, thiscan lead to negative development effects through lasting norms of distrust of out-groups.