Rethinking the settler-extractive distinction.
Why formal institutions fail to cure inequality when access is restricted.
The institutional approach to development typically classifies colonial institutions as either inclusive or extractive. This categorization is based on formal design and often overlooks how rights were distributed within societies.
This paper develops the Selective Inclusion framework. Using a new Partial Access Index (PAI) for 62 former colonies, the data reveals a Settler Colony Paradox: countries treated as benchmarks of inclusive institutions often exhibited substantial exclusion.
Influential theories link institutional development to settlement patterns. Where Europeans settled, they supposedly established "inclusive" institutions. Where they did not, they built "extractive" ones.
The Problem: This view confuses form with access. A country can have a Supreme Court (form) that excludes 80% of the population from using it (access).
Does the constitution exist? Are there courts? (The standard measure).
Can the indigenous majority vote? Can they own titled land? (The new measure).
The Partial Access Index (PAI).
A new historical dataset (N=62) constructed across four critical domains.
Was voting restricted to an elite, or was there universal suffrage?
Was there one law for all, or parallel "customary" courts for the poor?
Could the population check the leader's power?
Was education and land ownership accessible to non-elites?
A common critique is that the Partial Access Index (PAI) is just a proxy for democracy. However, data validation against the Polity IV dataset reveals a crucial divergence.
The chart reveals the "Settler Paradox": nations that score high on standard democracy indices (Institutional Form) but low on actual access.
DATA SOURCE: FIGURE G.3 (ALWIS, 2026)
Countries appearing democratic (y-axis) but excluding majorities (x-axis).
Higher institutional access at independence is robustly associated with lower long-term income inequality (Gini 1995-2015).
Highest Inequality (e.g., Sub-Saharan Africa)
Partial Inclusion (e.g., Latin America)
Lowest Inequality
Results survive "Jackknife" resampling and region-exclusion tests. Patterns are not driven by outliers.
The "Low Access" penalty remains significant even when controlling for colonial origin and GDP.
"Partial inclusion" can generate high inequality by empowering elites while excluding the majority.
Why "more" institutions don't always mean "less" inequality. The data reveals two distinct paths to the same unequal outcome.
Reforms expanded Political Rights (voting) but restricted Economic Assets (land).
"Liberal Forms, Elite Assets" New legal institutions were used to formalize old hierarchies rather than dismantle them.
Driven by Bifurcated Rule. Civil law for elites; customary law for the majority.
"Concentrated Power" Weak constraints on the executive allowed elites to capture limited economic rents.
Inequality peaks at intermediate levels of access (Medium Access). Partial inclusion modernizes the economy enough to create wealth, but restricts the assets needed to share it—widening the gap more than stagnant exclusion.