Internal Conflict Doesn't Build State Capacity: It Enables Private Tax Benefits in Colombia

This study examines the fiscal consequences of internal conflict in Colombia. Contrary to conventional expectations, armed groups capture municipal institutions for private gain rather than incentivizing state building.

New Findings

The research finds a strong correlation between local power structures and tax outcomes:

• Municipalities under right-wing paramilitary influence show increased land formalization and higher property tax revenues
• Those controlled by left-wing guerrillas display reduced tax collection and limited land formalization activities

Methodology Insights

This analysis uses granular data collected from Colombian municipalities, tracking two key institutional variables:

• Land formalization processes
• Property tax revenue generation

Across the conflict zones in Colombia, these indicators consistently align with specific armed group preferences.

The findings offer compelling evidence that internal armed conflict often serves as an institutional opportunity for interest groups to capture local governance structures. This systematic extraction of benefits through captured institutions appears to impede rather than enhance state-building processes.