Selective Inclusion and Colonial Institutions: Rethinking the Settler–Extractive Distinction in Long-Run Development⋆

The institutional approach to development typically classifies colonial institutions as inclusive or extractive. This categorization is based on formal design. This classification often overlooks how rights and protections were distributed within societies, assuming access rather than measuring it. This paper develops a Selective Inclusion framework, arguing that colonial regimes frequently built formally capable institutions while restricting access for indigenous and majority populations. To operationalize this idea, I construct a Partial Access Index (PAI) measured at independence for a sample of 62 former colonies. The index codes access in four domains: political franchise, access to executive constraints, legal uniformity, and educational-economic participation. Descriptive evidence reveals a Settler Colony Paradox: countries commonly treated as benchmarks of inclusive institutions often exhibited substantial exclusion of non-settler populations. Empirically, higher institutional access is associated with lower long-term income inequality. Robustness checks, including jackknife and region-exclusion tests, confirm that this relationship is not driven by outliers. The pattern is non-linear and region-specific. Latin America exhibits high inequality under partial inclusion. Sub-Saharan Africa exhibits high inequality under low access. These findings suggest that formal institutional strength can coexist with restricted access, and that who is included matters as much as what institutions exist. The distinction of institutional form from institutional access clarifies the persistent distributional consequences of colonial rule.