This paper investigates the persistent effects of the colonial state (or Real Audiencia) in Mexico. In regions further away from its control, Spanish settlers faced weaker accountability to coerce native populations and extract natural resources. Using a spatial regression discontinuity design, I document that regions with weaker colonial state presence exhibit lower historical and contemporary economic prosperity. After Independence, suggestive evidence indicates conflicts were more prevalent in these regions as the state struggled to monopolize violence. Meanwhile, communities (or pueblos) developed norms of parochial cooperation - higher in-group cooperation but lower trust towards the state. I argue this environment weakened property rights in the long-run.