We explore the long-term consequences of martial law amid a state of emergency on local governance. To identify these effects, we take advantage of the fact that, during the fight against terrorism in Peru in the 1980s and early 1990s, the Peruvian central government based its emergency and martial law declarations on provincial rather than district levels of violence, and on political rather than natural boundaries.
Using a geographic regression discontinuity design, we find significant long-term impacts on public goods provision, the local political landscape, and institutional trust. Areas subject to martial law amid a state of emergency have lower access to basic services. These also have stronger regional political movements and weaker national parties. We also find suggestive evidence of mistrust of national institutions closely linked to the fight against terrorism.
Overall, our results suggest that these counter-insurgency strategies can have longstanding economic and political impacts.