Taxing Turmoil: Rebel Extortion, Government Taxation, and Investment in the Global South's Conflict Zones

This 23-year study examines the interactions among rebel groups, government forces, and local investments in conflict-affected regions, focusing on predatory violence and extortion as mechanisms for rebel financing. Empirical evidence from regions such as Latin America, Southern Africa, and the Middle East suggests that stronger government control is associated with reduced rebel extortion as investment increases. Conversely, regions such as West Africa and North Africa continue to experience significant rebel gains from local investment, underscoring the persistence of extortion in areas with weaker governance. The study also highlights that as the rebel extortion rate (\(\:{\theta\:}_{R}\)) rises, so do rebel revenues, reinforcing their operational capacity. Government-imposed damage is crucial for limiting rebels' financial power, underscoring the importance of a combined military and economic strategy. These findings provide important implications for policymakers seeking to reduce rebel financing through targeted security, fiscal, and economic interventions in conflict zones.