Overcoming Challenges to Business and Economic Development in Indian Country. Conclusions and Key Findings


The results of the efforts of tribes and Native corporations to take advantage of federal programs and initiatives to promote BD/ED and to develop their own resources and opportunities have been mixed. While tribes have taken over most of the responsibility for BD/ED planning from the BIA, they are struggling to improve planning processes, management, and outcomes. Two tribes (Gila River and Mississippi Choctaw) have enjoyed significant success, transforming their economies, creating jobs, and dramatically reducing unemployment and poverty on their reservations. The Citizen Potawatomi Nation, in a very different context and environment, has gradually developed a diverse and strong economy, and has achieved one of the lowest unemployment rates (10 percent) in Indian country. Other tribes, often using innovative and aggressive BD/ED planning and operations, have developed new businesses and industries and have created jobs. Nevertheless, some tribes have been less successful in their BD/ED efforts, and the number of jobs and the amount of wealth created continue to be modest compared to the large numbers of unemployed tribal members and the many families that continue to live in poverty.

In taking over responsibility for BD/ED, tribes have confronted five serious challenges: (1) diffusion of responsibility across tribal programs and offices, (2) coordination among these offices and programs as well as coordination with counties and regional organizations, (3) removing legal, administrative, and other barriers to BD/ED on their lands, (4) monitoring and assessing planning progress and outcomes, and (5) obtaining funds needed to sustain long-term BD/ED. A promising approach to the diffusion and coordination challenges developed by some tribes is the creation of a tribal corporation or other entity responsible for overall BD/ED management. In addition, some tribes have found that federal programs and legislation such as PL 102-477 and the USDA EZ/EC program facilitate improved coordination among tribal programs and between tribes and other political entities. The tribes in the study have been working to overcome legal, administrative, and other barriers by developing commercial codes, zoning regulations, and tax policies designed to facilitate development. While most of the tribes/Native corporations in the study monitored the success of individual tribal businesses, few integrated formal monitoring and assessment with their BD/ED efforts. Such monitoring and assessment are needed for continuous improvement of tribal initiatives. Valuable support for tribal BD/ED planning has been provided by the Economic Development Administration (EDA) in the Commerce Department and by the Administration for Native Americans (ANA) in the U.S. Department of Health and Human Services (DHHS). However, funding provided by these and other federal programs is often made on a project-by-project basis for a fixed period of time (e.g., 1-2 years). Tribes with relatively strong economies can supplement federal funding for BD/ED planning. However, tribes most in need of such funding, those with weak economies, often cannot sustain the planning, at least at the needed levels, after federal grant and funding ends.

The achievements of Mississippi Choctaw are especially impressive and can serve as a model for other tribes. The reservation is remote from population centers (although not as remote as most Alaska Native villages or some tribes in the lower 48 states). While the tribe has thriving gaming and hospitality-tourism businesses, much Choctaw BD/ED occurred before the gaming operations started. The success of Choctaw enterprises has allowed the tribe to become self-reliant while making significant economic contributions to the surrounding non-Indian communities. In 2002, the tribe's economic impact on the State of Mississippi exceeded $1.2 billion. There are 8,900 tribal members, and about 4,000 are in the workforce. The tribe directly employs almost 9,000 people, with a payroll close to $150 million. There are two full-time jobs available for every tribal member in the workforce. The Gila River economy has also experienced significant growth, fueled primarily by its successful gaming operations. The tribe is aggressively investing its profits in infrastructure development needed to support other businesses and in new businesses that will diversify their economy.

Despite their high current rates of unemployment (generally above 50 percent), the efforts of the Cheyenne River Sioux, Colville, Navajo, Three Affiliated, and Turtle Mountain Chippewa tribes have been impressive, and they are making progress in their BD/ED efforts. Because some of the federal and tribal programs and initiatives have only recently been implemented, it is not clear how long it may take these tribes to transform their economies and enjoy the success of the Citizen Potawatomi, Gila River, and Mississippi Choctaw tribes.

The situation of the Alaska Native corporations in the study, Doyon and Bristol Bay, is different from that of tribes. The effects of ANCSA, with the creation of the 12 original regional Native corporations, each funded with multimillion-dollar cash settlements for land claims, have been dramatic. Doyon and Bristol Bay have invested prudently, have been able to increase the value of their holdings, and have regularly paid shareholders substantial dividends. Nevertheless, many shareholders in the Native corporations continue to reside in small villages with very few opportunities for salaried employment, often in substandard housing, and depend to some degree on subsistence fishing, hunting, and gathering.

In summary, federal initiatives promoting tribal BD/ED have produced the following results:

  • The federal government's ongoing commitment to Indian self-determination, tribal self-governance, and tribal sovereignty has had a positive impact on BD/ED in Indian country. This support has enabled tribes to take over operation of many federally funded programs, increased employment opportunities for tribal members, and enabled many tribal members to obtain experience needed to promote BD/ED.
  • There is no single federally sponsored program that works best for all tribes/Native corporations. This is not surprising, given the diversity in the needs and circumstances of the tribes/Native corporations. Among the most valuable programs or initiatives to the tribes/Native corporations in the study were gaming, USDA rural development and EZ/EC programs, and the SBA 8(a) and HUBZone programs.
  • While federal programs and initiatives have been key factors in some significant successes and have made valuable contributions to BD/ED throughout Indian country, many Indian tribes and Alaska Native villages continue to experience levels of unemployment that exceed 45 percent and levels of poverty that exceed 36 percent (NCAI 2003). Of the eight tribes and the areas served by the two Alaska Native corporations in the sample, seven reported unemployment rates exceeding 45 percent, the highest being 80 percent (Doyon and Cheyenne River Sioux).
  • While it is too early to determine their effects, several federal initiatives that aim to attract investment capital to Indian country have been implemented. These promising initiatives create: (1) the New Markets tax credit and the Indian reservation investment tax credit; (2) tax credits for investors in CDFIs; and (3) the authority for tribes to issue tax-exempt bonds.

The combination of tribal self-governance/self-determination and federal programs that promote tribal enterprise, provide funding, and improve access to capital has created a shift in favor of tribal BD/ED, a shift that is still somewhat new. Looking back over the past 10 years, tribes in this study tried many approaches in a range of industry sectors. Success has been mixed and has taken time to materialize. Despite the difficult challenges they face, the tribes and Native corporations in this study are aware of the successes that have been achieved, foresee continuing federal support for their efforts, and thus find reason for optimism about their BD/ED efforts.


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