Settling a contested frontier with co-ethnics has long been a commonplace strategy of state building. But why do some states colonize frontier areas with settlers and others do not? I examine this question in the context of New Guinea, a large island that both Australia and Indonesia attempted to colonize over the 20th century. I have compiled new, detailed panel data on all Indonesian state-sponsored transmigration (in West Papua) and white settlement (in Papua New Guinea) over the 20th century. My findings are twofold. First, colonization is responsive to geopolitics --- both Australia and Indonesia escalated efforts to settle New Guinea in response to new security threats. Second, developing countries are much more effective colonizers. The promise of free land drew 300,000 Indonesians to New Guinea but drew only 1,500 whites there given much higher standards of living for Europeans on the Australian mainland. Shortly after the failure of white colonization, Australia peacefully decolonized Papua New Guinea. This paper therefore shows how settler colonialism is generally only a viable state building strategy for poor countries whose populace can be lured to contested frontiers with the promise of free land. I draw out the implications of these findings for our understanding of why other Western states like Greece, Portugal, the United States, and Russia ceased settling contested lands over the 20th century, and the logic of colonization in territorial conflict more generally.