More public goods, more violence? The effect of rural roads on armed conflict and illegal economies in Colombia

Abstract

This paper estimates the impact of rural roads on armed conflict and illicit crops in Colombia over a fourteen year period of rapid growth of road investments. I estimate the causal impact of these interventions using micro-data of the royalties revenues to the transport sector at the municipal level, and implement a strategy of Difference-in-Differences with staggered adoption. The results show that new rural on armed conflict and on coca crops. These unintended effects of road provision are mainly driven by the intensification of violence in wealthier municipalities. In these municipalities, I find that the new connectivity leads to an increase in the production of legal crops. Hence, wealthier municipalities are more attractive to armed groups and more vulnerable to attacks that seek to expropriate these new rents. Similarly, the institutional background seems to be determinant in the sign of the effect: in municipalities with qualified and stable institutions, public good provision mitigates the development of illegal activity. I argue that these results highlight the importance to provide public goods in parallel with strengthening the local state capacity through reliable institutions.