Urban bias in government policy is a common phenomenon in many developing countries. Bates (1981) has famously argued that the wish to industrialize, paired with the political clout of urban residents, results in distinctly anti-rural policies. Empirically, however, the strength of urban bias varies substantially across countries and over time. This paper explains this variation by developing an argument about a countervailing force to urban bias: the threat of a rural insurgency. The direction of urban and rural bias is a function of the political threat that geographically distinct groups pose to the survival of the central government. When the rural periphery lacks collective action capacity, urban bias emerges, but if there exists a credible threat of rural violence, urban bias is diminished. I test this proposition and competing explanations using data on net taxation in the agricultural sector, covering up to 55 low-and middle-income countries from 1955 to 2007. The results show a strong relationship between past territorial conflict (which proxies for credible rural threats) and lower levels of urban bias in the developing world. The findings are robust to alternative model specifications, measures, and sensitivity analyses.
