Fiscal Space and the Supply of Pro‐Government Militias

ABSTRACT Militias hamper state‐building by undermining the government's monopoly of violence, which creates an environment of anarchy. Yet many governments collaborate with them. These pro‐government militias (PGMs), such as paramilitary groups, are not only a poor‐country phenomenon, that is, economic growth does not seem to eradicate these armed nonstate actors: Intriguingly, cross‐country data reveals a U‐shaped relationship between GDP per capita and PGM presence. This article presents an economic theory of PGM supply that can explain this puzzling relationship and provide actionable ways for international actors (e.g., UN) to discourage the emergence of PGMs. However, the theory also cautions that some common international policies (e.g., development aid) may unintentionally encourage PGM supply.