Abstract:
How do rebel groups incorporate locals into their economic systems, and how do these civil-military relations affect the political dynamics of armed conflicts? This study explores the economic institutions regulated by rebel groups in conflict areas and their impact on the duration of the conflict. As economies that benefit from windfall rents motivate rebel groups to focus their financing methods on exploiting natural resources, they are assumed to pay little attention to economic diversification. In this context, however, economic diversification by rebel groups through the mixed employment of ownership, authorization, and subsidization is commonly observed beyond taxation. The analyses of a novel dataset on the rebel strategies of economic regulation reveal that their organizational characteristics and conflict situations determine the adoption of these policies. Furthermore, these measures are associated with prolonged conflict, even when combined with taxation. The proposed framework provides alternative explanations as to whether and how violence ceases in conflicts and offers broader implications for the dynamics of post-conflict state-building.