metadata: authors: 0: author: Cabra-Ruiz,Nicolás
1: author: Rozo Villarraga,Sandra Viviana
2: author: Sviatschi,María Micaela
count: Venezuela, Republica Bolivariana de
docna: 0: docna: Forced Displacement, the Perpetuation of
            Autocratic Leadership, and Development in Origin Countries
docty: Policy Research Working Paper
abstracts: cdata!: How does forced displacement shape
            development in origin countries? This article examines the
            case of Venezuela, where nearly eight million people have
            been forcibly displaced. To do this, it compares
            municipalities with varying shares of foreign-born
            populations before and after international oil price shocks
            accelerated forced displacement between 2014 and 2019. The
            findings show that municipalities with larger foreign-born
            populations in 1990, which also exhibited greater
            out-migration from Venezuela after 2014, experienced lower
            economic development and higher inequality. The paper
            highlights a new mechanism through which forced displacement
            facilitates the perpetuation of autocratic rule and hinders
            development: by weakening political opposition and enabling
            the growth of organized crime and illicit income sources.
            Using novel election data, the article finds that areas
            affected by mass forced displacement experienced lower voter
            turnout and opposition support, limiting political and
            social reforms. These areas also witnessed growth in
            organized crime and foreign non-state drug and human
            trafficking, which diminished incentives for economic change.
display_title: Forced Displacement, the
            Perpetuation of Autocratic Leadership, and Development in
            Origin Countries
listing_relative_url: /research/2025/01/34450381/forced-displacement-perpetuation-autocratic-leadership-development-origin-countries
topicv3: Forced Displacement m1326032 740,Crime m1439217 3041
publishtoextweb_dt: 2025-01-28T00:00:00Z
dois: 10.1596/1813-9450-11049
origu: Off of Sr VP Dev Econ/Chief Econ (DECVP)
no_of_pages: 102
author_keys: 0: author_key: NA
1: author_key: 1932755
2: author_key: NA
model_extractions: Policy Research Working Paper 11049 Forced Displacement, the Perpetuation of Autocratic Leadership, and Development in Origin Countries _Nicolás Cabra-Ruiz Sandra V. Rozo María Micaela Sviatschi_ Development Economics Development Research Group January 2025
Policy Research Working Paper 11049

# **Abstract**

When millions flee an autocratic regime, what happens to the country they leave behind? In Venezuela, nearly 38.8 percent of the population have left since 2013. Using pre-crisis variation in foreign settlement shares across municipalities to instrument for displacement outflows, we find that affected municipalities experienced a 29.4 percent GDP contraction, mirrored in higher poverty and unemployment. Paradoxically, the exodus sustained autocracy by weakening political opposition and strengthening organized crime, funneling illicit rents and armed enforcement to the regime. Forced displacement from autocratic contexts thus simultaneously induces underdevelopment and entrenches the political and social conditions that perpetuate it.

This paper is a product of the Development Research Group, Development Economics. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://www.worldbank.org/prwp. The authors may be contacted at sandrarozo@worldbank.org.

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent._ Produced by the Research Support Team
Forced Displacement, the Perpetuation of Autocratic Leadership, and Development in Origin Countries<sup>∗</sup> Nicol ́as Cabra-Ruiz<sup>†</sup> Sandra V. Rozo<sup>‡</sup> Mar ́ıa Micaela Sviatschi<sup>§</sup> Originally published in the Policy Research Working Paper Series in _January 2025_ . This version is updated in _June 2026_ . To obtain the originally published version, please email prwp@worldbank.org.

**Keywords:** Forced migration, electoral outcomes, economic growth, organized crime **JEL Classification:** O12, O15, O54

> ∗We are grateful to Roberto Mendoza and Gaspar Arias for excellent research assistant support and to Samuel Bazzi, Leah Boustan, Michael Clemens, Dean Yang, Mushfiq Mobarak, Jos ́e Morales-Arilla, Salvador Traettino, Maria Esther Caballero, Vincenzo DiMaro, Daniel Pereira, Carolina Mej ́ıa, Jose Luis Espinoza, Pablo Querub ́ın, Margaret Peters, Daniel Ortega, Juan Vargas, Javier Romero, Carlos Rodr ́ıguez, Mark Thomas, and Dorothy Kronick for suggestions. We also thank participants at seminars at Oxford University, NOVA University, Bocconi University, Princeton University, the University of Turin, George Washington University, Villanova University, the University of Pittsburgh, Johns Hopkins University, the University of Chicago, EAFIT University, Universidad Carlos III de Madrid, Paris School of Economics, Humans-LACEA, LISER, University of Rochester, 6th Workshop on the Economics and Politics of Migration, ESOC, 19th Migration and Development Conference, and World Bank, IDB, and IMF seminars for their feedback. Rozo acknowledges support from the Research Support Budget of the World Bank. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the World Bank and its affiliated organizations or those of the executive directors of the World Bank or the governments they represent.

- †Pre-doctoral Scholar, Princeton University. Email: nc7034@princeton.edu

- ‡Development Research Group. World Bank, CEGA, EGAP, and IZA. Email: sandrarozo@worldbank.org

> §Princeton University and NBER. Email: msviatschi@princeton.edu
“Exit has [been] shown to drive out voice.” Albert O. Hirschman, 1970

# **1 Introduction**

Forced displacement driven by conflict, violence, persecution, socioeconomic collapse, and climate change has more than tripled since 2000, reaching 117 million people by 2025 (UNHCR, 2025) and emerging as a major global development challenge. While recent research has studied how these flows affect _destination_ countries (e.g., Card, 1990; Foged and Peri, 2016; Dustmann et al., 2019; Steinmayr, 2021) and _displaced individuals_ themselves (e.g., Michalopoulos et al., 2025; Chiovelli et al., 2021), less is known about their effects on the development paths of _origin_ countries, which typically have the weakest institutional environments.

The causes and magnitude of forced displacement mean that it can shape the development trajectories of origin countries very differently from voluntary migration. In economic terms, large numbers of displaced individuals leave in a short period of time, taking with them their consumption power, labor, and capital, which can substantially shrink aggregate demand and productive capacity in origin communities. Politically, the displacement of individuals who may disagree with or fear a regime means less political opposition and reduced pressure for reform (Hirschman, 1978; Anelli and Peri, 2017; Grossmann et al., 2024), which can tilt political outcomes in favor of incumbents and impede social change. In strong institutional contexts, voluntary migration flows can generate positive externalities (Javorcik et al., 2011; Parsons and V ́ezina, 2018; Khanna et al., 2022; Godlonton and Theoharides, 2025; Dinkelman and Mariotti, 2016; Dinkelman et al., 2024), but in the weaker ones that commonly experience forced displacement crises, these channels are often muted and negative spillovers may dominate. In such settings, characterized by autocratic regimes and non-state actors, forced displacement can create opportunities for criminal expansion and illicit economies, 2
enabling non-state armed actors to help authoritarian regimes to consolidate power as formal institutions erode. (Kapur, 2014; Bada and Feldmann, 2018; Yates and Leutert, 2018; Bandiera et al., 2025; Guerrero and Sviatschi, 2025; Sviatschi et al., 2025).<sup>1</sup> Thus, forced displacement can substantially deepen economic underdevelopment while reinforcing the political and social conditions that enable autocratic regimes to continue.

We investigate these hypotheses by assessing the role of forced displacement in shaping Venezuela’s development between 1992 and 2021. In that period, at least 38.8 percent of Venezuela’s 1990 population—nearly 7.7 million individuals—fled the country in response to severe economic and social turmoil during the regimes of Hugo Ch ́avez and Nicol ́as Maduro. Although this event did not principally stem from conflict or war, the United Nations formally recognizes it as a forced displacement crisis given the poor living conditions, including acute food deprivation and the complete collapse of health and public services.

Ch ́avez had concentrated power in the executive branch and scrapped political accountability since taking office in 1998, but forced displacement surged after 2013 and intensified dramatically after 2017, when his successor (Maduro) faced collapsing international oil prices and tough international sanctions. These shocks, amplified by distortional economic policies and unsustainable fiscal imbalances, pushed the regime to rely increasingly on hyperinflationary monetary expansion, criminal actors, and illicit resources for its survival, triggering a displacement wave of historic proportions.

> 1Across a wide range of contexts, substantial qualitative evidence indicates that forced displacement in settings with weak institutions creates governance vacuums and new sources of revenue, which criminal and armed groups exploit through activities such as trafficking, taxation, and smuggling. Sviatschi et al. (2025) reviews several such events in Latin America. In Venezuela, mass displacement outflows combined with restrictive policies in neighboring states increased the profitability of cross-border human trafficking, thereby enhancing the rents of existing Venezuelan criminal groups and strengthening their connections to foreign drug-trafficking groups. In Sudan, both the Sudan Armed Forces (SAF) and the paramilitary Rapid Support Forces (RSF), successors of the Janjaweed militias, have long depended on informal economies and criminal networks, which now expand amid massive internal displacement and refugee flows (UNHCR, 2024). In Syria, years of civil war eroded the distinction between state and non-state authority, as regime-linked elites and armed groups coordinated illicit trade and cross-border smuggling to finance the conflict (Brookings Institution, 2023). Likewise, in Myanmar, decades of military rule and the entrenched presence of ethnic armed organizations (EAOs) fostered parallel governance systems and illicit economies, which strengthened following the violent campaigns against the Rohingya population in 2016 and 2017 (Baron-Mendoza, 2017).

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To study the development consequences of forced displacement in Venezuela, we approximate annual municipal outflows using data from Colombia, the main host of displaced Venezuelans. This is necessary since autocratic regimes typically do not produce reliable data on forced displacement outflows. Annual variation comes from the total number of Venezuelans registered as entering Colombia each year. Municipal variation comes from the municipality of origin shares of Venezuelans living in Colombia, drawn from the Venezuelan Refugee Panel Study (VenRePS). This was collected in 2018 at the peak of the displacement crisis and is representative of Venezuelans living in Colombia at that time (Ib ́anez et al., 2025). The interaction between these two components distributes total national outflows across Venezuelan municipalities of origin and is scaled by municipal population in 1990 to express the measure as a share of baseline population.

Our empirical strategy cannot compare development outcomes across municipalities with high and low displacement outflows because individuals tend to leave certain areas for reasons that are likely correlated with local economic trends. We therefore construct an instrumental variable for displacement outflows that exploits municipal variation in foreign settlement shares before the onset of the crisis. The share of foreigners living in each municipality comes from the last population census before Ch ́avez’s presidency, collected in 1990. Foreigners in Venezuela in 1990, predominantly Colombians, likely lowered displacement costs by providing network support and information to prospective migrants. Consistent with this mechanism, there is a strong positive correlation between the 1990 municipal foreigners share in Venezuela and the municipal origins of Venezuelan migrants living in Colombia in 2018. We validate this mechanism further using Venezuela’s National Surveys on Living Conditions (ENCOVI), collected between 2017 and 2021, showing that municipalities with a higher 1990 foreign share were more likely to have households reporting relatives in Colombia.

Our shift-share instrument generates annual municipal variation in displacement intensity, interacting pre-crisis foreign settlement shares with national displacement outflows to Colom4
bia across the full analysis period, scaled by municipal population in 1990 to express displacement intensity as a share of baseline population. This generates variation in displacement intensity that is plausibly exogenous to local economic trends. The key identifying assumption is that municipalities with higher and lower 1990 foreign settlement shares would have followed similar development trajectories absent the displacement crisis. Although municipalities with a larger foreign presence in 1990 were on average somewhat richer, we show that these municipalities followed parallel pre-crisis trends in our main outcomes prior to 2013, which supports this assumption. The exclusion restriction further requires that the 1990 foreign settlement share affected outcomes only through its influence on displacement outflows. We provide several pieces of evidence to support this requirement. We show that municipalities with a larger foreign settlement share do not have systematically different economic structures that would cause them to respond differentially to aggregate shocks. In fact, all estimates are robust to the inclusion of interactions between a rich set of municipal controls and year trends, including oil-production concentration. We further show that national economic policies during the analysis period, namely discriminatory repression, electricity shortages, expropriations, and access to social programs, did not differentially target municipalities with a higher foreign settlement share.

Our analysis employs data on night-light density, household living conditions, political elections, and organized crime for the period 1992 to 2021. Night-light data serve as a proxy for economic growth and inequality.<sup>2</sup> We measure inequality using a spatial measure that estimates the dispersion of night-light density at the _parroquia_ (county) level within each municipality. We find that this measure positively correlates with traditional income-based inequality metrics, validated using census data from Venezuela and Colombia. To examine how forced displacement facilitated the perpetuation of the autocratic regime, we use unique web-scraped data on the results from the last five presidential and mayoral elections, as well

> 2Using ENCOVI, we validate these measures for correlation with household-level income measures. Moreover, we control for the presence of oil fields in our estimates to rule out concerns that luminosity driven by gas flares could affect our main results.

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as data on the presence of several organized crime groups from the Armed Conflict Location and Event Data and the Global Terrorism Database.

Our first key result is that municipalities affected by forced displacement experienced sharper declines in economic development relative to other municipalities. We estimate that nightlight density declined by 7.5 percent for every additional percentage point of the municipal population displaced from Venezuela to Colombia, representing an estimated 2.1 percent decline in GDP (Henderson et al., 2012). Considering that approximately 14 percent of Venezuela’s 1990 population is registered as living in Colombia, our estimates imply that total displacement outflows of this magnitude would translate into a GDP contraction of roughly 29 percent. This amounts to about half of the total GDP contraction Venezuela experienced during our period of analysis. Our results are not mechanically driven by population loss since data from ENCOVI show consistent increases in poverty rates and unemployment. Moreover, inequality also rose markedly in municipalities with higher displacement outflows, although these coefficients are estimated with less precision.

How does an autocratic regime remain in power during such a profound economic and social crisis? Our second key finding is that forced displacement contributed to the survival of autocratic leadership by simultaneously weakening political opposition and expanding organized crime, which provided illicit income and coercive capacity to the regime.

We find that displaced individuals disproportionately backed opposition candidates and that their departure also changed the composition of remaining voters.<sup>3</sup> For a municipality experiencing a 14 percent population decline, our estimates imply a reduction of 21.1 percentage points in opposition support and 39.3 percentage points in electoral turnout.<sup>4</sup> These results are corroborated by the fact that only 60,000 out of approximately eight million Venezuelans abroad were permitted to vote in the 2024 presidential election. Our findings include the

> 3This is consistent with the evidence in Holland et al. (2024), in which 12.1 percent of displaced Venezuelans in Colombia supported the left and only 0.1 percent supported Maduro’s government.

> 4These figures are computed as the product of the estimated coefficients and the share of the 1990 population displaced: 14 _×_ 1.51 and 14 _×_ 2.81, respectively.

6
opposition-reported 2024 election results and are consistent across all Venezuelan municipal elections that occurred during our period of analysis. These effects are not a mechanical consequence of population loss and reflect a change in the remaining vote composition, since they persist even when the electoral census is updated to reflect the population loss.

We also find that organized crime expanded in Venezuelan municipalities that were more exposed to forced displacement as network connections grew among criminal organizations operating both inside Venezuela and abroad. This criminal expansion provided the regime with a source of illicit revenue and enforcement capacity, reducing pressure for economic and political reform. The exodus facilitated this expansion through two channels. First, criminal groups were more able to enlist, coerce, and exploit displaced populations in highoutflow areas. Second, the departure of displaced individuals conveyed information about weak institutional conditions in their municipalities of origin, allowing criminal organizations to identify and exploit areas of low state presence.

Our quantitative findings align with abundant qualitative evidence from journalists and NGOs in the region, suggesting that forced displacement from Venezuela reduced transaction costs for drug and human trafficking groups and allowed them to grow while benefiting the regime. In particular, reports variously suggest that the Venezuelan government maintained power by leveraging criminal rents, as seen in the _Paraguan ́a Cartel_ and _Cartel of the Suns_ cases (Insight Crime, 2022a,b); that politicians, security forces, and drug traffickers formed symbiotic networks in which officials shielded traffickers from prosecution in exchange for financial support, political influence, and public services; that governors and mayors manipulated military and police appointments to ensure loyalty and facilitate drug trafficking; and that, at the same time, traffickers financed campaigns, mobilized votes, and filled gaps left by a collapsing state.<sup>5</sup>

> 5The Paraguan ́a Cartel is a criminal organization operating primarily in Venezuela’s Falc ́on state, particularly around the Paraguan ́a Peninsula. It is involved in large-scale drug trafficking, smuggling, and money laundering, often taking advantage of the area’s free-trade zones and proximity to Caribbean maritime routes. On other hand, the Cartel of the Suns ( _Cartel de los Soles_ ) refers not to a single cartel but to a network of high-ranking members of the Venezuelan military and security forces allegedly involved in cocaine trafficking

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The combined electoral and criminal effects of forced displacement exacerbated already negative impacts on development and fueled the autocratic regime. Amid less pressure for reforms and more reliance on illicit activities and coercive enforcement, the incumbent government had few incentives to improve conditions for private and human capital investment. We leverage a mediation analysis to show that these two channels explain approximately 40 percent of the effect of forced displacement on development.

Our findings are robust to additional validity tests. The estimates are robust to alternative cluster specifications for standard errors, to approximating forced displacement using inverse distance to Colombia’s border crossing points, and to alternative difference-in-difference estimators (Abadie, 2005; Sant’Anna and Zhao, 2020). Another potential concern is the possible manipulation of electoral data. To address this, we conduct data checks for abnormal patterns and find no evidence of manipulation before 2018, in line with reports from the humanitarian and international organizations that validated those elections.<sup>6</sup> However, we do find evidence of manipulation (or the effects of a political boycott by the opposition) in the 2018 presidential election. For this reason, we include opposition-collected data for the 2024 presidential election, which indicate that Maduro lost by a landslide. Additionally, we analyze mayoral elections across 335 municipalities, comprising five election years and 1,675 observations. The scale of these elections makes systematic manipulation unlikely. The estimates remain consistent and support the validity of our findings.

We contribute most directly to recent research on the impacts of cross-border migration on migrant-origin socioeconomic conditions (Yang 2008; Dinkelman and Mariotti 2016; Theoharides 2020; Dinkelman et al. 2024; Godlonton and Theoharides 2025). Closest to our work, Khanna et al. (2022) and Testa (2021) focus on the effects of emigration on economic growth at origin locations. Our paper complements their work by examining the effects of forced mi-

> and corruption. The name derives from the sun insignias ( _soles_ ) worn by Venezuelan generals and the term is commonly used to describe the military’s role in facilitating and protecting drug shipments, particularly in cooperation with Colombian and Mexican cartels (U.S. Department of Justice, Office of Public Affairs, 2020; Transparencia Venezuela, 2022).

> 6Reports from the Carter Center (1998–2021) suggest no systematic manipulation before 2018.

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gration on development in a context where the autocratic regime is entangled with non-state armed actors. This combination prompted greater underdevelopment effects through weaker economic and political incentives for change and more state reliance on illicit resources.

We also contribute to the broader literature on the association between migration and development. The vast majority of research has focused on the effects of migration on destination economies (Card, 2001; Borjas, 2014; Abramitzky et al., 2014; Foged and Peri, 2016; Dustmann et al., 2017; Hanson et al., 2018); brain drain (Beine et al., 2008; Gibson and McKenzie, 2011; Docquier and Rapoport, 2012; Batista et al., 2012; Anelli et al., 2023); remittances (Amuedo-Dorantes and Pozo, 2006; Giuliano and Ruiz-Arranz, 2009; Portes, 2009; Ambler et al., 2015); cultural remittances (Melki et al., 2024); and workers’ outside options and bargaining power (Karadja and Prawitz, 2019). Our study adds a new dimension by examining the impact of forced displacement on development in origin countries with weak institutional foundations. We offer empirical evidence for Hirschman’s hypothesis that in contexts with weak democracies, emigration may reduce pressure for reforms (Hirschman 1970, 1978; Goodman and Hiskey 2008; Lehmann 2025), in contrast to the well-documented link between emigration, higher democratization, and political change in well-functioning democracies (Spilimbergo 2009; Docquier et al. 2016; Karadja and Prawitz 2019; Grossmann et al. 2024).<sup>7</sup> Furthermore, we show that in weak democracies where non-state actors are influential, the documented positive network effect of brain drain may not materialize (Gibson and McKenzie 2011; Docquier and Rapoport 2012). This may be because individuals are not inclined to invest in such places due to the high risks involved. In fact, “bad investors” are often the ones to move there.

Our paper also relates to recent work examining how migration and deportations intersect with criminal organizations, facilitating the expansion of criminal networks across borders (Murphy and Rossi, 2020; Guerrero and Sviatschi, 2025; Bandiera et al., 2025; Sviatschi 7See Kapur (2014) for a detailed survey of the literature on international emigration and political outcomes in origin countries.

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et al., 2025). We extend this line by demonstrating that periods of forced displacement in weak institutional settings can reinforce the power and resources of criminal organizations linked to autocratic regimes. In this regard, we also complement the work analyzing authoritarian regimes (Besley and Kudamatsu, 2008; Acemoglu and Robinson, 2009; Acemoglu et al., 2019; Hsieh et al., 2011; Egorov and Sonin, 2023; Gonz ́alez et al., 2023; Yang, 2024 ). However, rather than focus on the effects of the regimes themselves, we investigate how forced displacement may reinforce the power of such leaders.

Finally, we contribute to the literature by combining unique data sources to study the effects of forced displacement outflows on an origin country with weak institutional development, as is typically the case with emigration of this type. In such settings, data are rarely available (Martinez 2022; Chiovelli et al. 2023), since autocratic regimes prevent their collection and such countries are often so profoundly in crisis that data collection becomes extremely challenging. For this reason, we integrate data from multiple unique sources including labor force surveys, remote-sensing variables, population censuses, and surveys of Venezuelan migrants in Colombia, as well as web-scraped digital data on electoral results, private-firm expropriations, and international economic sanctions. We can thus comprehensively assess the complexity of forced displacement and its wide-ranging effects in origin locations.

# **2 Local Context: Venezuela’s Unraveling**

Venezuela, a historically unequal society highly reliant on oil, entered an economic recession in the late 1990s due to falling oil prices and a downturn in its non-oil sector, which fueled widespread discontent and led to the election of Hugo Ch ́avez as president in 1998 (Hausmann and Rodr ́ıguez 2014). Ch ́avez’s presidency brought sweeping changes, including constitutional reforms that concentrated power in the executive branch and weakened political accountability. His administration also expropriated private firms, spurring a sharp contraction of the private sector (Panel A, Figure A.1). Despite early political instability 10
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# **3 Data**

This section describes the data used in the study. Appendix B provides details on outcome construction and Appendix C presents descriptive statistics for the main variables in the analysis. Our analysis period is 1992 to 2021, in line with available remote-sensing data.

## **3.1 Forced Displacement**

**The Venezuelan Refugee Panel Study (VenRePS), 2018.** VenRePS was collected in 2018 as a representative national sample of Venezuelans living in Colombia in 2018, at the peak of these forced migration flows. It includes approximately 3,000 Venezuelan households in Colombia. We use the sample to determine migrants’ municipality of origin in Venezuela before migration to create a proxy for outflows.

**Annual Venezuelan outflows to Colombia, 1992–2021.** We compile data on annual Venezuelan forced displacement outflows to Colombia from 1992 to 2021, combining two data sources. For 1992 through 2002, we use information from the 1993 and 2005 Colombian population censuses, which record the year when each Venezuelan forced migrant arrived in Colombia. These data represent the number of Venezuelan nationals living in Colombia each year, as reported by respondents in the retrospective censuses. From 2003 to 2021, our data are based on records from official Colombian migration checkpoints.

**Historic foreigner settlements, 1990.** To define the municipalities mainly affected by forced displacement, we use Venezuelan census data to quantify the presence of foreign residents in municipalities during 1990, the last census before Ch ́avez’s election. The location of foreigners at that time should be unaffected by the migration crisis, since it predates the onset of the crisis by more than two decades.<sup>10</sup> We construct the foreign settlement

> 10Although the census does not permit the direct identification of foreigners, it collects individual information on whether each person had lived outside Venezuela in the last five years. We use this measure as a

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measure as the share of foreigners living in each municipality in 1990 as a percentage of the total number of foreigners in Venezuela that year. This variable serves as the allocation weight in our shift-share instrument, which is then scaled by municipal population to express imputed outflows as a share of each municipality’s baseline population. Figure 4 illustrates the geographic distribution of this measure.<sup>11</sup> proxy for foreign nationality.

> 11For our event studies, we employ an alternative measure constructed as the ratio of foreigners in each municipality to the total municipal population in 1990, which we present in Figure B.1.

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# Migrants’ Entry Points

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Table D.1 presents results on the origin nationality of foreigners living in Venezuela in 1990 and on the host countries of relatives living abroad as reported by Venezuelan households interviewed in the ENCOVI between 2017 and 2021. The overwhelming majority of foreigners living in Venezuela in 1990 had been living in Colombia five years earlier, drawn by demand for labor during Venezuela’s oil boom that began in the 1970s. Their subsequent return to Colombia, combined with the networks they left behind, provided informational and logistical support that lowered displacement costs for Venezuelans seeking to relocate after 2013. Consistent with this, Venezuelan households reported that most of their relatives abroad were also living in Colombia. Our measure of foreign settlements therefore captures the strength of network connections to Colombia across municipalities, connections that facilitated forced displacement after the crisis began. We validate this mechanism in Section 4 by examining if Venezuelans arriving in Colombia after 2013 were more likely to originate from municipalities in Venezuela with historically higher foreign settlement shares.

Tables D.2 and D.3 characterize foreigners living in Venezuela in 1990. In addition to predominantly Colombian nationality, these individuals were mostly employed, older, and more educated than Venezuelans (Table D.2). On average, they also had incomes three times greater than those of the Venezuelan population in 1990 (Table D.3).<sup>12</sup>

# **3.2 Remote-Sensing Data**

To create a proxy of Venezuela’s economic growth and inequality, we construct a municipalityyear-level longitudinal dataset of satellite night-light density for 1992–2021. This information is processed by the National Oceanic and Atmospheric Administration (NOAA) using images collected by the U.S. Defense Meteorological Satellite Program Operational Linescan System (1992–2013) and the Visible Infrared Imaging Radiometer Suite remote sensor (2012–

> 12Since the main specification follows a difference-in-difference design, any imbalance in the outcome levels between high and low shares of foreign settlements in municipalities does not threaten the empirical strategy because they are absorbed by the municipality fixed effect in the empirical specification. Nevertheless, we rule out the concern that these characteristics could trend differently by controlling for time trends in socioeconomic baseline characteristics.

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2021). These sources are inconsistent due to differences in spatial and radiometric resolution, spectral responses, the spread function of the sensors, local overpass time at night, radiance range, and on-board calibration (Li et al. 2017; Sahoo et al. 2020; Chiovelli et al. 2023, 2026). Hence, we harmonize the night-light series for 1992–2021 following the process outlined by Li et al. (2020, 2017). Figure C.1 shows the spatial distribution of night-light density in 2014 (right after the oil price decline) and in our last period of analysis (2021). It illustrates a stark reduction in night-light density over a remarkably short period of time.<sup>13</sup> To measure spatial inequality, we construct a novel spatial Gini index that corresponds to the traditional Gini formula estimated for each municipality and year, using the night light of each _parroquia_ (county) within each municipality as the unit of observation. Tables B.1 and B.2 show that our measure correlates with the traditional measure of income inequality constructed using population censuses for Venezuela (1990) and Colombia (1993 and 2005).

We also use other remote-sensing variables as controls that are listed in Table C.1. These capture baseline economic characteristics and their linear trajectories. They include annual tree-cover loss from Global Forest Watch (2023) and data on urban coverage and areas covered by water from MODIS Land Cover (2023) (see Appendix B for details). All variables were recorded in 2001, the first year for which they were available.

# **3.3 Electoral Data**

**Presidential elections.** We web-scrape information to construct longitudinal data at the municipal-election-year level for the five presidential elections from 2006 to 2024. The data come from the Consejo Nacional Electoral (2023) and the Venezuela 360 (2023) project. Specifically, we analyze two outcomes: turnout (total votes divided by the electoral census) and opposition support (votes for candidates other than Ch ́avez or Maduro as a percentage

> 13We confirm the validity of this measure as a proxy for economic growth and income inequality in Tables B.1, B.2, and B.3, and test the sensitivity of our main results to controlling for oil production in order to account for concerns related to biases due to brightness from gas flares in the satellite data.

18
of the electoral census).<sup>14</sup> Table B.4 describes the five presidential elections within the study period, the elected candidate, and the type of election (ordinary or due to an extraordinary event). Appendix B provides detailed information on the outcome construction and data sources. Figures C.2 and C.3 present results for the geographic distribution of election outcomes before and after 2013, showing a sharp nationwide decrease in electoral turnout and opposition support.

One relevant concern is the possibility of data manipulation. To address this, we search for abnormal data patterns consistent with manipulation, following the analysis first proposed by Klimek et al. (2012). The authors propose a test that consists of making two-way scatterplots of election results, illustrating the relationship between electoral turnout and support for the incumbent by municipality, which in our case means support for Ch ́avez and Maduro. Manipulation is evident graphically when there is a clear linear positive trend with concentration along the diagonal, indicating that for each vote added to the electoral turnout, support for the incumbent systematically increases by one vote as well. Elections with no manipulation typically show no obvious correlation between the variables.

The results of this exercise, illustrated in Figure B.2, suggest there was no systematic manipulation before 2018. In fact, the results are consistent with international electoral reports from the Carter Center for 1998–2021 (Carter Center, 2024). However, there seems to be evidence of potential electoral manipulation in 2018.<sup>15</sup> Consequently, we include the 2024 presidential elections in our main specifications in order to validate our results. The opposition directly collected results of the 2024 elections and thus addressed concerns about manipulation by the incumbents.<sup>16</sup> This exercise supports our main findings and we com14We fix the electoral census at the year 2000 to keep the denominator constant in our estimates and to facilitate interpretation of the coefficients. Nevertheless, we also verify that our main results are not mechanical and remain consistent when using the contemporaneous electoral census that accounts for the population decline.

> 15The opposition formally boycotted the 2018 presidential election, which contaminated turnout and opposition support measures for that year. We address this by including results for the 2024 presidential election, which saw full opposition participation.

> 16The data are publicly available at Resultados con VZLA (2024).

19
plement it with robustness checks using municipal election results as outcomes.

**Mayoral elections.** We web-scrape data for the 2004–2021 municipal elections, covering five election years in 335 municipalities and producing a total of 1,675 independent election observations. The original data come from the Consejo Nacional Electoral. We examine effects on the same two outcomes: electoral turnout and opposition support. To construct the share of opposition votes, we classify each candidate based on party affiliation and policy program. Appendix B provides details on each candidate’s classification process.

# **3.4 Additional Data**

**ENCOVI, 2014–2021.** These surveys are analogous to labor force surveys that are typically available in other countries in the region. They are cross-sectional surveys of independent households, representative at the national and state levels, and available for the main urban centers. As previously noted, they include a migration module that characterizes the relatives living abroad of Venezuelans between 2017 and 2021.

**Organized crime.** We also construct an annual municipal panel spanning 1993–2024 that combines information on violent events and the presence of organized crime and nonstate armed actors. These data come from the Armed Conflict Location and Event Data (ACLED) and the Global Terrorism Data Base (GTD).

**Other variables.** We also employ other data from multiple sources to examine the validity of the main results. These include municipal measures on the intensity of the 2019 energy blackouts, coverage of social welfare programs for 2016–2017, and measures of political repression under the Ch ́avez regime in 2004.<sup>17</sup> We also use annual municipal data on private firm expropriations by the government and annual data on inflation and global sanctions for

> 17These data come from Hsieh et al. (2011).

20
our whole period of analysis. All data sources are described in Appendix B.

# **4 Empirical Strategy**

## **4.1 Measuring annual municipal displacement from Venezuela**

Direct measures of population outflows are rarely available for autocratic regimes. We therefore proxy municipal-level outflows using data from Colombia, the primary destination of Venezuela’s displaced population. Our measure combines two sources of variation. Annual variation comes from total Venezuelan inflows registered by Colombian migration authorities. Municipal variation comes from VenRePS, as above. From these, we construct Origin Share _m,_ 2018 as the fraction of survey respondents who originated from Venezuelan municipality _m_ . Combining these two sources, our municipality-by-year measure of migration outflows is: where Outflows _t_ denotes total annual Venezuelan outflows to Colombia in year _t_ and _Pm,_ 1990 is the municipal population in 1990, the last census before the crisis. The numerator of Migration Outflows _mt_ allocates total outflows to Colombia across municipalities of origin, while the denominator scales this count by baseline population to express the measure as the share of each municipality’s 1990 population that was displaced.

Since approximately 2.8 million Venezuelan migrants resided in Colombia at the time of VenRePS (out of more than 7.7 million who had left Venezuela), the Colombian data do not capture the full universe of displaced individuals. Nonetheless, as the primary destination for Venezuelan forced migrants, Colombia is the most reliable available proxy for national outflows, and the survey was fielded at the peak of the migration crisis.

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# **4.2 Identification strategy**

Forced displacement is induced by intense crisis. Typically, the term implies that everyone who will not benefit directly from the crisis and who can flee the situation, will leave. As such, we tend to observe disproportionally higher forced displacement from areas that have higher economic growth because individuals there have the economic means to leave. If we directly compare municipalities with more and less forced migration, we will likely underestimate the effects of displacement on economic growth.

We address this concern by constructing an instrumental variable for forced displacement outflows that exploits the location of foreigners in Venezuela in 1990, well before the crisis onset. Foreigners living in Venezuela at that time were predominantly Colombians, whose presence lowered displacement costs and provided informational and logistical support for native Venezuelans seeking to relocate to Colombia after the crisis began. Municipalities with a larger historical Colombian presence therefore experienced systematically higher forced displacement throughout the crisis period.

Specifically, we estimate the following two-stage least squares (2SLS) specification: where In these equations, _m_ stands for the municipality and _t_ denotes the year. _ymt_ represents the 22
main outcomes of analysis, including economic growth, spatial inequality, electoral outcomes, and organized crime. _Xm_<sup>_′_isavectorofbaselinecontrolvariablesbefore2013.Thesepre-</sup> shock municipal characteristics are interacted with year fixed effects to flexibly control for differential municipal trends. The variables in this vector include baseline night-light density measured in 1992; urban coverage, water bodies, and tree-cover loss observed in 2001; and proxies for political repression collected in 2004.<sup>18</sup> Foreigners Share _m,_ 1990 is the share of foreign settlers in municipality _m_ in 1990, constructed as the ratio of foreigners in the municipality over total foreigners in the country. By construction, these shares sum to 100. This variable serves as an allocation weight that distributes total national outflows across municipalities of origin. The numerator of Imputed Outflows _mt_ therefore allocates total outflows to Colombia across municipalities according to their foreign settlement shares, while the denominator scales this count by _Pm,_ 1990 to express the instrument as the share of each municipality’s 1990 baseline population that was displaced. This population normalization operates at the level of the full instrument rather than at the level of the allocation weight, because dividing the share itself by local population would break the adding-up property and prevent the instrument from being interpreted as a municipal displacement rate. Imputed Outflows _mt_ is multiplied by 100 to facilitate interpretation.

_γm_ and _αt_ denote municipality and year fixed effects, respectively, and standard errors are clustered at the municipality level to account for potential serial correlation within municipalities. The coefficient of interest, _β_ 1, measures the change in outcomes associated with a one-percentage-point increase in displacement outflows as a share of the 1990 municipal population. The main results report ordinary least squares (OLS) estimates of equation (2), 2SLS estimates as specified by the equations above, and reduced-form estimates from a regression of _ymt_ on Imputed Outflows _mt_ .

> 18As described in Appendix B, these measures correspond to the municipal count of the individuals who opposed the Ch ́avez regime in an open letter and subsequently received fewer economic opportunities as a result of lower employment and reduced access to the social welfare system. The data come from Hsieh et al. (2011).

23
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living abroad between 2017 and 2021.<sup>19</sup>

# **4.4 Validity of the exclusion restriction**

The exclusion restriction requires that Foreigners Share _m,_ 1990 affects outcomes solely through its influence on forced displacement outflows, not through any independent time-varying channel correlated with the instrument. We offer several exercises to support this assumption.

**Parallel trends between municipalities with different foreign settlement shares.** We examine whether municipalities with high and low shares of foreign settlements in 1990 followed similar trajectories in the outcomes of interest prior to the oil price shock and the intensification of international sanctions, which marked the onset (after 2013) and intensification (2017), respectively, of the exodus. Figures 6 and 7 show that pre-treatment trends are statistically indistinguishable across municipalities in both pre-crisis windows (before 2013), supporting the validity of the identifying assumption. The divergence in outcomes observed from 2014 onward is therefore attributable to the differential forced displacement that municipalities with a larger historical Colombian presence experienced in response to both shocks rather than to pre-existing differences in economic trajectories.

**Effects are not driven by differential oil production trends.** A potential concern is that municipalities with higher foreign settlement shares in 1990 also had differential exposure to oil production, which could independently drive outcome divergence from 2014 onward through channels unrelated to forced displacement. We address this by controlling for the location of oil fields interacted with time trends. The results are unchanged (Table E.1), confirming that the outcome divergence observed from 2014 onward reflects differential forced displacement rather than differential oil sector exposure.<sup>20</sup>

> 19Although ENCOVI allows validation of the imputed outflows measure, the survey covers too few municipalities to support a more rigorous econometric analysis.

> 20Oil field geographic variation comes from the Global Oil and Gas Features Database, which standardizes and integrates information on global oil and gas infrastructure from over 380 sources worldwide, encompassing

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**Effects are robust to different specifications.** We include controls for pre-shock municipal characteristics interacted with year fixed effects to flexibly control for differential municipal trends. The variables in this vector include baseline night-light density measured in 1992; urban coverage, water bodies, and tree-cover loss observed in 2001; and proxies for political repression collected in 2004. As we illustrate in the main tables, our main results remain largely unchanged with and without the inclusion of these controls. A related concern is that the return migration of Colombians, whose historical presence in Venezuela motivates the instrument, may have independently affected local labor markets and economic conditions. To the extent that this channel operates through differential pre-existing economic trends across municipalities, it is absorbed by municipality fixed effects and baseline controls interacted with time trends, including baseline night-light and oil production controls that capture the primary economic shock driving both return migration and local economic conditions.

**Effects are not driven by differential government targeting.** A further concern is that the Venezuelan government may have disproportionately targeted municipalities with higher or lower foreign settlement shares through economic policies, potentially confounding our estimates. Three salient policy episodes are relevant during our analysis period: the Carnet de la Patria social welfare program, mass energy blackouts, and expropriations of private sector firms. We collect municipal-level temporal variation for each of these from multiple sources and include them as controls in Tables E.3 and E.4.<sup>21</sup> The main results remain unchanged, indicating that differential government targeting does not account for the estimated effects of forced migration.

> more than 4.8 million features as of 2018 (Sabbatino, 2018). This control also addresses concerns about the effect of gas flaring on night-light density.

> 21See Appendix B for a description of all data sources.

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# **5 Forced Displacement and Development in Weak States**

Table 1 presents estimates of the effect of forced displacement on economic development across three specifications and three outcomes. Panel A reports OLS estimates of equation (2), Panel B reports 2SLS estimates of equations (2) and (3), and Panel C reports reduced-form estimates obtained by regressing each outcome on Imputed Outflows _mt_ directly. The dependent variables are night-light density in columns (1) and (2), Log(night light) in columns (3) and (4), and the spatial Gini coefficient in columns (5) and (6). Odd-numbered columns exclude baseline controls and even-numbered columns include them.

The estimates consistently show that forced displacement reduced economic activity in origin municipalities. The 2SLS estimates are larger in magnitude than the OLS estimates. This aligns with the intuition that more individuals left municipalities with higher economic growth as they were the ones with greater means to leave, relative to people from other municipalities. The Kleibergen-Paap Wald F-statistic exceeds 600 in all specifications, confirming a strong first stage. Our preferred specification is the 2SLS estimate for Log(night light) with controls, reported in column (4) of Panel B. It indicates that a one-percentagepoint increase in forced displacement outflows as a share of the 1990 municipal population is associated with a 7.5 percent reduction in night-light density. Since night-light density is an established proxy for GDP, with an estimated elasticity of 0.28 (Henderson et al., 2012), this corresponds to a GDP contraction of 2.1 percent for every one-percentage-point increment in forced displacement. To gauge the aggregate magnitude, as noted above, about 7.7 million Venezuelans have left the country since 2013; approximately 2.8 million of them are registered as living in Colombia (UNHCR 2025). Relative to Venezuela’s 1990 census population of 19.83 million, the last census before Ch ́avez’s election, this represents a 14 percent reduction in population that emigrated from Venezuela to Colombia (= 2.8 / 19.83). A municipality that lost 14 percent of its 1990 population to Colombia would therefore have experienced a GDP contraction of approximately 29.4 percent (= 2.1 _×_ 14).

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Turning to spatial inequality, the estimates for the spatial Gini are weaker and less precise than those for night-light density. The reduced-form estimates in Panel C are positive and marginally significant at the 10 percent level, suggesting that forced displacement may have widened within-municipality spatial inequality. However, the 2SLS estimates in Panel B are not statistically significant at conventional levels, and we therefore interpret the spatial inequality results as suggestive rather than conclusive.

Table 1: Forced Displacement and Development

||Night|Light|Log(Nigh|t Light)|Spatia|l Gini|
|---|---|---|---|---|---|---|
||(1)|(2)|(3)|(4)|(5)|(6)|
|**Panel A: OLS**|||||||
|Migration Outfows|-0.033**|-0.044***|_−_0.032***|_−_0.025***|0.001**|0.001**|
||(0.013)|(0.014)|(0.006)|(0.005)|(0.001)|(0.001)|
|**Panel B: 2SLS**|||||||
|_Second Stage_|||||||
|Migration Outfows|-0.177***|-0.173***|_−_0.073***|_−_0.075***|0.005|0.005|
||(0.061)|(0.057)|(0.023)|(0.020)|(0.004)|(0.003)|
|_First Stage_|||||||
|Imputed Outfows|0.205***|0.209***|0.205***|0.209***|0.205***|0.209***|
||(0.054)|(0.052)|(0.054)|(0.052)|(0.054)|(0.052)|
|F Statistic (excl. instrument)|664.48|786.67|664.48|786.67|664.48|786.67|
|**Panel C: Reduced Form**|||||||
|Imputed Outfows|_−_0.037***|_−_0.036***|_−_0.015***|_−_0.016***|0.001*|0.001*|
||(0.009)|(0.009)|(0.004)|(0.003)|(0.001)|(0.001)|
|Observations|10,020|10,020|9,974|9,974|10,020|10,020|
|Dep. Var. Mean 1992|3.77|3.77|0.034|0.034|0.27|0.27|
|Municipality & Year FE|✓|✓|✓|✓|✓|✓|
|Controls _×_ Time Trends||✓||✓||✓|

_Notes:_ The table illustrates the estimates of specifications (1), (3), and (2). Panel A presents the OLS estimates of equation (2). Panel B represent the 2SLS estimates of equations (3) and (2). Panel C presents the reduced-form estimates of the outcomes in the instrumental variable. Odd-numbered columns exclude baseline controls and even-numbered columns include baseline municipal characteristics interacted with year fixed effects. The F-statistic is the Kleibergen-Paap Wald F-statistic. Controls in the baseline are interacted with time trends and include urban coverage, water bodies, and tree-cover loss for 2001; night-light density for 1992; and political repression records for 2004. Robust standard errors clustered at the municipality level are in parentheses. *** _p <_ 0.01, ** _p <_ 0.05, * _p <_ 0.1.

Figure 6 examines the timing of these effects through an event study. Before 2013, municipalities with high and low foreign settlement shares followed statistically indistinguishable 28
trends in both night-light density and spatial inequality, supporting the parallel trends assumption. Following the oil price collapse in 2013, economic conditions in high-foreign-share municipalities began deteriorating relative to low-foreign-share municipalities. These effects intensified markedly after 2017, coinciding with the second shock of amplified international sanctions and the associated surge in forced displacement.

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nificant share of the population also reshaped the political landscape and created conditions favorable to the expansion of activity by organized crime groups. The following sections document these parallel processes, and a mediation analysis subsequently quantifies the extent to which the economic effects documented here operate through political and criminal channels.

# **5.1 Additional robustness tests**

**Effects are not mechanically driven by the population decline.** To validate that our main results are not mechanically driven by the population decline, we estimate the effects of forced displacement using annual ENCOVI data to calculate poverty rates and unemployment by state and year between 2017 and 2021.<sup>22</sup> The results point to increments in poverty and lower employment (Table E.13). However, the coefficients are smaller given that real income is extremely low during the period for which microdata exist (2017–2021). In fact, income nationwide declined dramatically and hyperinflation caused a complete generalized loss of purchasing power in this period. In fact, as noted earlier, by 2021, 94 percent of individuals had an income below the poverty line (Figure 2).

**Other specification alternatives.** Importantly, our core results remain consistent across a number of additional robustness tests, including: approximating the municipal variation of imputed outflows with the linear-and-road inverse distances of each municipality to the main entry points in Colombia (Tables E.5 and E.7); using alternative difference-indifference estimators, in line with the latest methods in the literature (Table E.9); employing only the Colombian foreign shares in Venezuela in 1990, instead of total foreigners share, to approximate the variation in foreign settlement share and imputed outflows (Table E.10); and correcting standard errors for clusters at the municipality-year level (Table E.11).

> 22We cannot use data beginning in 2014 due to the low number of cities covered for those initial years.

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**Do remittances mitigate development losses?** A relevant question concerns the role of remittances sent by Venezuelans abroad to their families at home (Amuedo-Dorantes and Pozo 2006; Giuliano and Ruiz-Arranz 2009; Portes 2009; Ambler et al. 2015). It is possible that migrants abroad can somehow compensate the effects of migration on development by sending money back home, but only if part of the family stays behind. Although the effects are positive, they are small and largely imprecise. As illustrated in Figure E.1, the vast majority of households used remittances for subsistence needs such as food and housing rather than for investment or business activities. Consequently, these remittances were less likely to stimulate long-term economic growth.

# **6 The Perpetuation of Autocratic Leadership**

In this section, we examine how forced displacement enabled autocratic leadership to endure despite profound economic and social crises. Our evidence suggests that in weak institutional settings, forced displacement reshapes the political and economic landscapes in ways that reduce pressures for change and reinforce autocratic regimes. The departure of forcibly displaced populations weakens political opposition by disproportionately removing dissatisfied citizens from the electorate. It also facilitates the expansion of organized crime and illicit economies, as shrinking local oversight and expanding transnational networks create new opportunities for organized crime groups. Together, these dynamics reduce demands for reform while providing alternative sources of revenue and armed enforcement that strengthen the regime’s hold on power. These political and criminal consequences are not independent of the economic deterioration documented in the previous section. They are the channels through which forced displacement grows and perpetuates underdevelopment.

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# **6.1 Silencing Political Opposition through Forced Displacement**

Forcibly displaced individuals are likely to oppose the governments they hold responsible for the crises underlying their flight. Their exit, however, removes them from the electorate, depleting opposition support and diminishing the collective will to demand change from within. In Hirschman’s framework, exit and voice are substitutes. When the most dissatisfied citizens leave, those who remain face higher costs of political engagement and weaker incentives to mobilize against incumbents.

We explore this idea by examining the effects of forced migration on electoral turnout and support for the political opposition. Presidential turnout is defined as the total votes in each election divided by the electoral turnout of 2000, the earliest available before the 2013 oil price shock. We keep the electoral turnout fixed as it may be affected by displacement flows; hence, we only measure changes in the numerator. Opposition support is defined as the ratio of opposition votes (votes for candidates besides Ch ́avez or Maduro) to the electoral turnout of 2000. The year 2000 is a natural baseline because forced displacement was negligible at this time, when Venezuela was benefiting from surging oil prices. Importantly, these results are not mechanically driven by population loss, as the estimates are unchanged when using contemporaneous electoral censuses, which are available for the whole period of study (Table E.14). In our view, however, fixing the denominator in 2000 both simplifies interpretation and yields more conservative estimates, as it provides a lower bound on the effects.

Table 2 presents these results, revealing consistent negative effects of forced displacement in both electoral outcomes. The OLS estimates are again smaller in magnitude than the 2SLS estimates, consistent with the pattern documented in the development results. The Kleibergen-Paap Wald F-statistic is approximately 15, above the conventional threshold of 10, though weaker than in the development specifications, reflecting the smaller sample of five presidential election years. The 2SLS estimates in Panel B indicate reductions of 2.81 percentage points for turnout and 1.51 percentage points for opposition support per 33
additional percentage point of forced displacement as a share of the municipal population of 1990.

To gauge the aggregate magnitude of these effects, note that a municipality which lost 14 percent of its 1990 population to Colombia (the average implied by UNHCR figures) would experience a decline of 39.3 percentage points in electoral turnout (= 2.81 _×_ 14) and 21.1 percentage points in opposition support (= 1.51 _×_ 14). These effects are large enough to alter electoral outcomes decisively.

Table 2: Forced Displacement and Electoral Outcomes

||Tur|nout|Oppo|sition|
|---|---|---|---|---|
||(1)|(2)|(3)|(4)|
|**Panel A: OLS**|||||
|Migration Outfows|-0.425***|-0.325**|-0.197***|-0.136**|
||(0.145)|(0.132)|(0.054)|(0.055)|
|**Panel B: 2SLS**|||||
|_Second Stage_|||||
|Migration Outfows|-2.806***<br>(0.924)|-2.815***<br>(0.923)|-1.505***<br>(0.451)|-1.515***<br>(0.450)|
|_First Stage_|||||
|Imputed Outfows|0.206***|0.207***|0.206***|0.207***|
||(0.054)|(0.053)|(0.054)|(0.053)|
|F Statistic (excl. instrument)|14.38|15.11|14.38|15.11|
|**Panel C: Reduced Form**|||||
|Imputed Outfows|-0.576***<br>(0.123)|-0.583***<br>(0.124)|-0.309***<br>(0.052)|-0.314***<br>(0.051)|
|Observations|1,648|1,648|1,648|1,648|
|Dep. Var. Mean 2006|31.359|31.359|10.188|10.188|
|Municipality & Year FE|✓|✓|✓|✓|
|Controls _×_ Time Trends||✓||✓|

_Notes:_ The table illustrates the estimates of specifications (1), (3), and (2). Panel A presents the OLS estimates of equation (2). Panel B represent the 2SLS estimates of equations (3) and (2). Panel C presents the reduced-form estimates of the outcomes in the instrumental variable. Odd-numbered columns exclude baseline controls and even-numbered columns include baseline municipal characteristics interacted with year fixed effects. The F-statistic is the Kleibergen-Paap Wald F-statistic. Controls in the baseline are interacted with time trends and include urban coverage, water bodies, and tree-cover loss for 2001; night-light density for 1992; and political repression records for 2004. Robust standard errors clustered at the municipality level are in parentheses. *** _p <_ 0.01, ** _p <_ 0.05, * _p <_ 0.1.

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Due to concerns about manipulation in the 2018 elections, we include the last presidential elections of 2024, for which we have results for over 83.5 percent of the country. The opposition parties collected and published these results, which should attenuate these concerns. 23 We also find consistent effects for mayoral elections (see Table E.15). Although the coefficients indicate smaller effects, they are negative and statistically significant. This is a remarkable consistency test since these estimates evaluate forced displacement outflows over five years of elections in 335 municipalities, totaling 1,675 independent municipal elections.

Figure 7 examines the timing of the electoral effects. Before 2013, municipalities with high and low foreign settlement shares followed statistically indistinguishable trends in both turnout and opposition support, consistent with the parallel trends assumption. The divergence emerges clearly after 2013 and intensifies following 2017, mirroring the two-phase pattern documented for economic outcomes. This timing is consistent with the accelerating exit of opposition-leaning citizens as the crisis worsened, progressively eroding the political base needed to challenge the regime.

Overall, our results consistently show that forced displacement reduced both electoral participation and opposition support, weakening the political mechanisms through which voters could demand accountability from their government. These findings connect directly to the economic consequences documented in the previous section. The municipalities that experienced the largest economic declines were also those where political opposition eroded most sharply, suggesting that forced displacement simultaneously undermined both the economic and political foundations of institutional accountability.

> 23The data come from Resultados con VZLA (2024).

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# **6.2 Forced Displacement and Organized Crime in Weak States**

Voluntary migration typically facilitates connections between individuals in origin countries, those who leave, and those in destination countries. Previous work has shown that voluntary migration networks can promote knowledge diffusion, trade, and foreign direct investment (Javorcik et al. 2011; Parsons and V ́ezina 2018). Yet, these beneficial effects are unlikely to materialize in settings with forced displacement, which typically originates in places with weak institutions and limited rule of law. In such environments, forced displacement may accelerate connections for organized crime networks at both origin and destination locations (Kapur 2014; Sviatschi et al. 2025). This occurs, for example, when criminals exploit and recruit forced migrants by capitalizing on their economic desperation, relying on them to help fund, inform, and expand illegal activities. Autocratic regimes, in turn, benefit directly from the resulting expansion of criminal networks, which supply illicit revenue and armed enforcement capacity. These resources reduce the regime’s dependence on the broader population for fiscal support and coercive power, thereby weakening political accountability and enabling the regime’s perpetuation.

In fact, abundant qualitative evidence suggests that human trafficking is a significant criminal enterprise in these contexts, as forced migrants, especially women and children, become victims (Insight Crime, 2023d, 2021b,a). For instance, one article suggests that “migrants using irregular border crossings also represent a source of income for armed groups and predatory criminals, who extort the migrants as they cross their territory and, in some cases, also rob or kidnap them or force them into roles such as human couriers for drug trafficking. Human traffickers have also capitalized on the crisis, tailoring their recruitment of Venezuelan women and girls by offering false offers of jobs, scholarships, or even religious charity as bait for what ends up being coerced sexual exploitation.” (Insight Crime 2023c).

Journalistic reports also mention that forced displacement outflows go hand in hand with the expansion of drug-trafficking groups from Colombia to Venezuela. Oftentimes, this expansion 37
comes from employing forced migrants in the lower ranks of these organizations or from charging them extortion fees en route (Insight Crime, 2023a,b, 2019). For example, one report states that “(...) Venezuelans have to choose between hunger or joining the ranks of organized crime groups, which is helping them strengthen and reorganize their criminal structures while also facilitating the spread of their illegal activities into Venezuela.” (Insight Crime, 2018).

We examine these hypotheses using longitudinal municipal-level data on violent and criminal events by organized crime groups and non-state armed actors. Table 3 presents the results. Our findings largely support these hypotheses. They imply that forced migration is associated with an increased number of such events by the largest non-state armed actors from Colombia, including the Revolutionary Armed Forces of Colombia (FARC) and the National Liberation Army (ELN), both of which are heavily involved in drug trafficking. The findings also indicate an increase in violent events linked to Venezuelan organized crime groups, including gangs such as _El Tren de Aragua_ , which is known for its involvement in human trafficking.<sup>24</sup>

> 24We also examine the effects on irregular armed groups, such as small street gangs and criminal organizations not related to drugs, human smuggling, or the regime, and find no effects, demonstrating that the results are not due to an increase in overall crime.

38
Table 3: Forced Migration and the Expansion of Non-State Armed Actor Activity

||FARC|+ ELN|Organize|d Crime|Total N|on-State|
|---|---|---|---|---|---|---|
||(1)|(2)|(3)|(4)|(5)|(6)|
|**Panel A: OLS**|||||||
|Migration Outfows|0_._003|0_._003|0_._200<sup>_∗∗∗_</sup>|0_._075<sup>_∗∗_</sup>|0_._203<sup>_∗∗∗_</sup>|0_._078<sup>_∗∗_</sup>|
||(0_._002)|(0_._002)|(0_._073)|(0_._035)|(0_._073)|(0_._035)|
|**Panel B: 2SLS**|||||||
|_Second Stage_|||||||
|Migration Outfows|0_._048<sup>_∗∗_</sup>|0_._043<sup>_∗_</sup>|0_._213<sup>_∗∗_</sup>|0_._228<sup>_∗∗_</sup>|0_._261<sup>_∗∗_</sup>|0_._271<sup>_∗∗∗_</sup>|
||(0_._024)|(0_._024)|(0_._100)|(0_._094)|(0_._109)|(0_._104)|
|_First Stage_|||||||
|Imputed Outfows|0_._206<sup>_∗∗∗_</sup>|0_._210<sup>_∗∗∗_</sup>|0_._206<sup>_∗∗∗_</sup>|0_._210<sup>_∗∗∗_</sup>|0_._206<sup>_∗∗∗_</sup>|0_._210<sup>_∗∗∗_</sup>|
||(0_._054)|(0_._052)|(0_._054)|(0_._052)|(0_._054)|(0_._052)|
|F Statistic (excl. instrument)|14.50|16.28|14.50|16.28|14.50|16.28|
|**Panel C: Reduced Form**|||||||
|Imputed Outfows|0_._010<sup>_∗∗_</sup>|0_._009<sup>_∗∗_</sup>|0_._044<sup>_∗∗_</sup>|0_._048<sup>_∗∗∗_</sup>|0_._054<sup>_∗∗_</sup>|0_._057<sup>_∗∗∗_</sup>|
||(0_._004)|(0_._004)|(0_._021)|(0_._018)|(0_._022)|(0_._019)|
|Observations|11,022|11,022|11,022|11,022|11,022|11,022|
|Dep. Var. Mean 1992|0.003|0.003|0.000|0.000|0.003|0.003|
|Municipality & Year FE|✓|✓|✓|✓|✓|✓|
|Controls _×_ Time Trends||✓||✓||✓|

_Notes:_ The table illustrates the estimates of specifications (1), (3), and (2). The dependent variable is the number of FARC and ELN events in columns (1) and (2), the number of organized crime events in columns (3) and (4), and total non-state armed actor events in columns (5) and (6). Panel A presents the OLS estimates of equation (2). Panel B represent the 2SLS estimates of equations (3) and (2). Panel C presents the reduced-form estimates of the outcomes in the instrumental variable. Odd-numbered columns exclude baseline controls and even-numbered columns include baseline municipal characteristics interacted with year fixed effects. The F-statistic is the Kleibergen-Paap Wald F-statistic. Controls in the baseline are interacted with time trends and include urban coverage, water bodies, and tree-cover loss for 2001; night-light density for 1992; and political repression records for 2004. Robust standard errors clustered at the municipality level are in parentheses. *** _p <_ 0.01, ** _p <_ 0.05, * _p <_ 0.1.

The estimates indicate that forced displacement significantly expanded activity by non-state armed actors in origin municipalities. The F-statistic of 16.28 confirms a strong first stage. Our preferred specification is the 2SLS estimate for total non-state armed actor events with controls, reported in column (6) of Panel B. It indicates that a one-percentage-point increase in forced displacement outflows as a share of the 1990 municipal population is associated with 0.271 additional non-state armed actor events per municipality per year. Applying the 39
same aggregate displacement figure used above, a municipality that lost 14 percent of its 1990 population to Colombia would therefore have experienced an increase of approximately 3.8 additional non-state armed actor events per year (= 0.271 _×_ 14).<sup>25</sup> The validity of the estimated effects are further illustrated in Figure E.2, where all data are aggregated to have a longer time series.<sup>26</sup> The figure shows a spike in the likelihood of an event being associated with non-state armed actors in municipalities with higher concentrations of foreign settlements after 2017, coinciding with the peak of Venezuelan forced migration to Colombia. In fact, ample qualitative evidence highlights how the rise of the _Tren de Aragua_ gang coincided with the peak of the Venezuelan economic crisis in 2018.

# **6.3 Mediating Effects of these Channels on Development**

In this subsection we examine the roles of weak political opposition and the expansion of organized crime groups to explain the negative effects of forced displacement on development outcomes. To do this, we apply the methodology introduced by Acharya et al. (2016), which estimates the average controlled direct effect (ACDE) of a treatment. The ACDE is the effect of forced displacement on development after partialing out the effect of forced displacement on political opposition and organized crime. It is estimated by first doing the above calculation and then estimating the ACDE by regressing the de-mediated night-light density on imputed outflows. This is done through a two-stage model as follows:

> 25The effects are also observed when we use events per 100,000 inhabitants as the dependent variable, as illustrated in Table E.16.

> 26Before 2018, the data excluded information on gangs to allow for their separation in analysis.

40
which follows the same notation as the one used in our main analysis. In the first stage, _Ymt_ denotes night-light density, Opposition _mt_ denotes opposition support (estimated as the share of votes for the opposition), and Organized Crime _mt_ is an indicator variable for the presence of organized crime groups. In the second stage, _Y_<sup>ˆ</sup> _mt_ is the de-mediated night-light density estimated as _Y_<sup>ˆ</sup> _mt_ = [ _Ymt −_ ( _δ_<sup>ˆ</sup> 2Opposition _mt_ + _δ_<sup>ˆ</sup> 3Organized Crime _mt_ )], and _υmt_ is the error term estimated through bootstrapping.

Figure E.3 presents the results of this exercise, which suggest that the standard estimated effect of imputed outflows on night-light density falls from –0.036 to –0.022 when the variation explained by the decline in political opposition and increase in organized crime is accounted for.<sup>27</sup> These two channels therefore explain approximately 40 percent of the effect of forced displacement on development.

# **7 Conclusion**

We show that forced displacement reduces development not only directly via the depletion of consumption power and factors of production, but also indirectly by exacerbating the very political and social conditions that perpetuate such displacement. Our findings suggest that political leaders and ruling parties in contexts with weak rule of law may actually benefit from these displacement flows. Thus, there is little incentive to restrict or prevent such flows when autocrats control the main sources of income (e.g., oil rents and illicit resources). Yet, this strategy comes at a steep cost: entrenched underdevelopment.

The case of Venezuela is not unique; historically, many governments have promoted emigration as a way to dampen political opposition. Examples include Japan, which disproportionately encouraged emigration from southwest regions in the nineteenth century (Endoh 2010); the Soviet Union’s exile of Aleksandr Solzhenitsyn; China’s exile of Chen Guangcheng; Cuba’s and Zimbabwe’s strategies of “venting disgruntled groups” through emigration (Ka-

> 27Table E.17 presents the point estimates.

41
pur 2014); and Russia, where 2.35 million individuals left between the 1990s and 2000, reflecting the alienation of professionals and entrepreneurs (Loiko, 2011).<sup>28</sup> Our findings have relevant policy implications. First, in order to prevent the use of forced displacement as a strategy for silencing political accountability, governments, election authorities, and the international community should facilitate out-of-country voter registration, consular and mobile voting, and secure diaspora voter rolls. Second, our findings imply that organized crime must be understood and confronted as a transnational system through coordinated cross-border intelligence and actions, since criminal organizations can migrate to areas with weak enforcement and institutions, and then expand and strengthen. Third, considering that autocratic governments derive illicit rents from organized crime activities such as human trafficking, actions that regulate displacement flows in host destinations might help reduce the rents derived from these networks.

We show that forced displacement has the power to transform cultural values, economic systems, and political landscapes in origin countries. As time passes and more data are available, future work should explore the medium- and long-term impacts of these flows and offer insights into their broad consequences for the development paths of affected countries.

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