Reservation Poverty - Economic Development

Economic Development

Some have suggested that private enterprise originating on the reservation is the key to poverty alleviation. Once a critical mass of business exists, jobs will be created. By keeping the circulation of money on the reservation, economies will grow. Currently, there are 236,691 businesses in the US owned by American Indians and Alaskan Natives, most located off reservations. Although 1.5 percent of the population identifies as American Indian or Alaskan Native, these businesses represent less than one percent of all businesses in the nation. Native-owned businesses tend to be very small, with only 10 percent of them having any employees, and only 162 having more than 100 employees. However, trends suggest the number of natively owned businesses is growing. The number has risen 18 percent in the past decade, and native-business profits rose nearly 30 percent.

Some Native entrepreneurs have brought economic development to their reservations. Small businesses thrive on reservations throughout the country. For example, the Native American Natural Foods Company of Kyle, South Dakota on Pine Ridge produces energy bars using buffalo meat and cranberries that are sold in gourmet grocery stores throughout the country. They serve as a model for other reservation-based businesses. An artists’ cooperative on the Siletz Reservation in Oregon sells Native artwork and is staffed by young reservation residents, providing the artists with business and the employees with important work experience.

In some areas, reservation residents have developed professional networks to share resources as they develop businesses. For example, four tribes in Oregon created the Oregon Native American Business and Entrepreneurial Network, which offers training to assist tribal members start, fund, and operate business ventures. The organization has assisted more than 10,000 individuals since its founding in 1993. Unfortunately, for every successful business, there are many that are not able to sustain themselves, and many more ideas without the resources needed to implement them.

The federal government has taken an active role in fostering business on native lands through the creation of Alaska Native Corporations (ANCs). These corporations, created by the Alaska Native Claims Settlement Act of 1971, were created to settle land disputes with Alaska Natives. Rather than creating reservations, the government divided Alaskan lands into corporations, each of which owns a segment of land on which tribal members reside. In addition to owning tribal lands, these corporations have a business relationship with the government, who can contact with them for any number of tasks. Alaskan corporations have held federal contracts to deal with defense, sexual harassment regulation, and more. Unfortunately, such contracts have not brought substantial money or economic activity to Alaska. Frequently, large, non-natively owned corporations in the continental United States will subcontract with the Alaskan Native Corporations. Due to the circumstances of their creation, contracts with ANCs are free from much of regulation conventional contractors face, such as requirements for competitive bidding and spending caps. As such, the subcontractors are able to avoid regulation, while only passing on a very small portion of funds to the native shareholders of the Alaskan Native Corporation. Although in practice the Alaskan Native Corporation system has done little to reduce poverty among Alaska natives, it does represent a substantial effort to provide native tribes with opportunities for economic activity.

There are many challenges facing business leaders on reservations. As discussed above, the substandard educational system leaves many aspiring entrepreneurs without necessary skills to fulfill their visions. The concentration of poverty and geographic isolation of many reservations severely limits the human capital from which business owners may draw to develop their business plans. The lack of disposable income of residents, furthermore, leaves reservation businesses with a limited customer base, while the shortcomings of telecommunications technologies can prevent expansion beyond reservation borders. In addition to material challenges facing economic development, some have criticized the ideological view of business ownership and development as solutions to reservation poverty. These critics have stated that conventional capitalist business plans run counter to many Native traditions, which stress community and interdependence rather than individualism and competition.

It is often noted that the reservation system needs change. Some have asserted that the entire system needs to be eliminated, but disagree on what should take its place. Anthropologist Shuichi Nagata has stated that both the reservations and modern American cities clash with traditional Native lifestyles. What is needed, he writes, is something separate from either that combines the cultural richness of reservations with the opportunity of contemporary urban centers. As tribes, families, and communities work to improve conditions of the reservations, leaders can hope to learn what most effectively reduces poverty, improves quality of life, and preserves Native cultures. The historically rooted and deeply persistent poverty is troubling. The question of whether the reservation system can persist, or needs to be completely overhauled has no easy answer. In the face of extreme adversity, historical abuse and neglect, and severe hardship, reservation residents have preserved their culture as much as possible and will continue to fight for an improved quality of life.