THE PROGRESSION OF AMERICANS INDIANS

The Progression of Americans Indians

The Progression of Americans Indians

Introduction

Since the mid-1970s, the hundreds of American Indian reservations in the United States have been afforded substantial powers of self-government --from law enforcement and taxation to environmental and business regulation. The result has been a set of diverse efforts to overcome widespread poverty, with equally diverse outcomes. This study reports the results of research into the sources of development success during the "take-off" stage of self-government. Little evidence is found to support hypotheses that resource or human capital endowments hold keys to launching Indian economies.

Introduction: social institutions and economic development

In the aggregate, American Indian reservations are notable for their extreme and persistent poverty -- reservation Indians are the poorest minority in the United States. Particularly since the mid-1970s, however, changes in the U.S. legal and political landscape have allowed tribes to assert substantial sovereign powers for the first time in the century. Although jurisdictional disputes still rage and areas of federal and state primacy persist, federal legislative, executive and judicial decisions have resulted in a policy of relative self-determination for Indian reservations. American Indian tribes are now able to assert significant powers of self-government, including the powers to tax, set up courts and police forces, regulate commercial, social and environmental affairs, and determine the disposition of reservation resources. As the foregoing stories imply, concomitant with the assertions of sovereignty, a handful of reservations have begun to exhibit sustained economic development. What explains this?

Cross-tribe variations in such factors as natural, human and financial capital resources do provide some progress toward answering this question; and the resources-development link certainly has "other things equal" reasoning going for it. Numerous cases, however, illustrate that a tribe's resources can be wasted or go untapped unless that tribe can establish an incentive environment that channels them into productive ends. The resource endowment of the Crow Tribe of Montana (described above), for example, makes the Tribe one of the wealthiest groups in North America, yet the Crow Reservation is a place of stark poverty, social disintegration, and simmering civil unrest.

Akin to the case of natural resource endowments, it does not seem plausible that a society's economic progress is founded primarily on technological advance or the stock of human knowledge. Not only is the stock of human capital endogenous, but side-by-side comparisons leave the questions of why only some societies contribute to and productively utilize civilization's stock of knowledge unanswered. The impoverished Crow, for example, hold education in high esteem and 52% of adult tribal members have graduated from high school. This compares to only 34% at the economically-developing White Mountain Apache Tribe and a national Indian average of 43%.

Resources and knowledge tautologically set the upper bound on a society's potential for growth at any point in time. As is increasingly reflected in the economic development literature, however, how far away a society's performance is from this upper bound depends centrally on the legal, social and political institutions that are imposed on ...