Building on the introduction, Chapter 2 goes back to the more general notion of extractive institutions and proposes a theoretical framework that helps explain a conundrum in the literature according to which extractive institutions are sometimes beneficial and sometimes detrimental for economic development. I contend that the persistent effect of extractive colonial institutions depended on the extent of imperial infrastructural investment, the treatment of property rights, and the use of violence. The worst scenarios for long-run development demonstrate little public investment, the removal or weakening of individual property rights, and high levels of coercion through violence. In the second part of this chapter, I discuss the role of elites in the creation and perpetuation of such institutions. I argue that colonial subjects who had been deprived of public goods (because of underinvestment from the center), had not enjoyed individual property rights for centuries, and had been exposed to imperial violence, were likely to become alienated from the state. Such alienation persists over generations, outliving the formal institutions that created it.

This final chapter concludes the book with a discussion of the theory’s significance for broader scholarly and policy implications that result from the central argument. Uneven access to public goods throughout a state’s territory can be reflective of historical exposure to institutions that alienated people from central state authority. Importantly, the argument and evidence presented in this book suggest that extractive institutions can affect modern access to public goods through both institutions and attitudes that get transmitted over generations. It also raises the point that while military colonialism is yet another example of the deleterious consequences of extractive institutions for development, it shows that what matters are the specific instruments of colonial extraction, including violence, the removal of private property, as well as underinvestment in public infrastructure and underprovision of public goods.