Historical Barriers

"Indian Reservation Document 1881", Michael Horse (Yaqui, Mescalero, Apache, Zuni)

Historical Barriers to Economic Suceess in Indian Country

In the Native American context, (i.e. tribal reservations, tribal nations or simply "Indian Country" as the inclusive descriptor) these frustrations are perhaps most visibly demonstrated by the following general set of problems:

1. Native Americans are land rich but cash poor. While land ownership is a critical condition for sovereignty, which as we explain below, has been found to be a fundamental requirement for economic success in Indian Country it is nowhere near to being a sufficient condition for economic success. In fact, a critical component of our model for successful economic activity in Indian country requires the kind of self-organizing networks, external capital, labor market relations and climbing of the value added hierarchy which is well known in the literature of international business.

2. Native Americans living on reservation lands are widely dispersed and lack sophisticated mechanisms of long-distance communication, making community integration either difficult or impossible. The sharing and coordination of information, ideas and technology and the distribution of education, as well as intangible intellectual properties and other similar benefits become the infrastructure necessary for a future success. Michael Porter argues these complex technological linkages are becoming increasingly important over time.

3. The local reservation-based economies lack of a sophisticated financial infrastructure, including corporate governance structures and regulatory bodies consistent with local community culture, orientation and traditions make it difficult to retain capital. Capital inflows to the reservation are often matched by equivalent cash outflows from the reservation leading essentially to no net development and preventing the efficient allocation, concentration and preservation of capital.

4. Because capital does not remain on the reservation, it becomes difficult or impossible for community members through either new or exiting business enterprises to (a) enter value-added production or (b) climb the "value hierarchy" through additions and modifications to existing business, and thereby creating higher order "strategic fit" for the business, the community and the industry.

5. As a result of these limitations, Native American enterprises are rarely able to actively participate in higher value-added economic activities or, outside of certain very narrowly proscribed limits, earn what economists characterize as "extraordinary returns".

6. Social theory models of Native American community development do not easily address these problems, to the extent that they are capable of addressing them at all because the majority of the core business concepts relating to investment returns, capital structure, due diligence, economies of agglomeration, and other critical dimensions of modern finance, applied mathematics and dynamical systems modeling fall outside the scope of the social theory which has historically been used to address development problems.