Class warfare and socio-economic exclusion: the political-institutional consequences of left-wing terrorism

Using panel data for 168 countries from 1970-2008, we investigate how left-wing terrorism affects socio-economic exclusion. We find that higher levels of left-wing terrorism are robustly associated with increased political and economic participation of the poor, whereas no such relationship emerges for nationalist-separatist or Islamist terrorism. These results align with a conceptual framework in which governments respond to destabilization generated by left-wing terrorism with inclusionary policies tailored to address left-wing grievances; such measures are expected to weaken popular support for left-wing militancy and thus reduce future terrorist activity. At the same time, we show that left-wing terrorism does not induce broader institutional reforms – weakened property rights or expanded public ownership of the economy – that would reflect maximalist left-wing objectives. Overall, our findings suggest that terrorism can be effective in prompting targeted institutional adjustments, but it is not a viable strategy for realizing far-reaching political change.