Fiscal decentralization promises more efficient local service delivery by shifting revenue and spending to municipal governments, but it can also create attractive rents that organized crime seeks to capture. This study tests whether greater local spending (LS) makes violence from organized crime (OCV) worse as criminal groups fight for access to municipal resources.

📊 Data and Design — Mexican municipalities, 1995–2015

• Unit of analysis: Mexican municipalities observed from 1995–2015.
• Main independent variable: local spending (LS) per capita.
• Outcome measures: organized crime violence operationalized through homicide rates; models separate the likelihood that OCV occurs from the intensity of violence when it is present.
• Method: regression models linking municipal LS to OCV, with analyses that distinguish occurrence (probability of OCV) from conditional intensity (homicide rates given OCV is present).

🔥 Key Findings

• Higher LS per capita is strongly associated with higher homicide rates, conditional on homicide rates being positive.
• LS does not predict whether organized crime violence begins in a municipality (no effect on the probability of OCV occurring).
• In short, larger local budgets appear to increase the intensity of violence where organized crime is already active, rather than causing its initial emergence.

⚖️ Why It Matters

• These results qualify standard fiscal decentralization arguments: shifting resources to local governments can improve service delivery but may also intensify conflict over those resources in contexts of local capture and entrenched organized crime.
• Policy implication: decentralization reforms in settings with potential local capture and OCV warrant caution and safeguards to prevent municipal resources from becoming focal points for violent competition.