Historians and anthropologists often see political violence as related to movements of social protest against established powers and political scientists stress the often-violent response of the state to these challenges. Economists working in this subject highlight the monopoly of coercion and force by the state and see political violence as related to failures of the state to maintain that monopoly. Latin America has a long history of political violence with domestic conflicts of different intensity, ideological origins, players and dynamics. In the second half of the XX century, political violence has included civil wars, guerrilla movements, military intervention, coups d'état, terrorism and others form of violent confrontation. The socio-economic structure of Latin America is characterized by large inequalities of income and wealth, poverty and volatile growth. This paper discusses the main economic and political determinants of conflict and terrorism as two main types of political violence. It also reviews recent literature on the relation between the process of economic development and conflict and terrorism and provides empirical evidence on the incidence and nature of these phenomena in the Latin American region in the second half of the 20th century and early 21st century. Finally, the paper discusses how to deal with political violence from an institutional and developmental perspective, including also the prevention of and insurance against conflict and terrorism.