Inclusive institutions play an important role in development. But how do inclusive institutions emerge? Inclusion is always the product of a tradeoff. The existing literature focuses on the tradeoffs that yield an extension of the franchise, which requires costly power-sharing agreements. This article uses evidence from ancient Athens to show that meaningful forms of welfare-enhancing inclusion need not await the historically infrequent and high-stakes conditions that compel dominant elites to share power. In the 4th century BCE, the Athenians extended access to economic, social, and legal institutions to selected categories of non-citizens. They did not, however, extend the franchise. The Athenian tradeoff between political and other forms of inclusion was a response to the conflicting demands of social order and growth. While falling short of full political inclusion, the tradeoff was nonetheless conducive to political and economic development.
Legal Institutions and Economic Development