2. In the early days Indian economy was totally
based on agriculture. People used to produce
whatever they required for their selfconsumption. There was no need for sale or
exchange of goods. But later on, needs of the
people increased and so did the production.
People began to specialize in producing
different items of luxury and daily use and did
not have skills and time left for producing
others items of their use.
2
3. They were able to produce surplus items with
increase in their efficiency. So, a system of
exchanging surplus items with the items of
need was evolved. This was the beginning
of trade.
3
4. Capital in modern production
The role of Capital in modern production is to
reduce the labor-time required to build any
particular commodity. This allows more
commodities to be produced with less
worker-time, i.e. less wage- labor and
therefore less costs and more profits.
4
5. Lean Production is synonymous with "wasteless" production, allowing any quality
defectiveness to be produced in such a
production style would be against its
definition: because any error, defect and
nonconformity would be pure waste.
5
6. Economic Conditions on Most
Reservations
Difficult to exaggerate the overall depressed
state of economic development on most
reservations, or the sorry history of
associated public policies
Unemployment rates on most reservations
exceed 50 percent, and many reservations have
80 to 90 percent unemployment, year after year
6
7. One Explanation for the Lack of
Economic Development
Economic resources problems: insufficient access to
capital markets, small endowments of natural
resources, and low levels of education and job skills
Since at least the 1930s economic development
programs have played an important part in Indian
policy; U.S. government has poured billions of
dollars into these programs
Attempted to provide Indians with capital
subsidized loans or direct capital investments in the form of
infrastructure, manufacturing plants, irrigation projects, and
so on.
7
8. Development Programs, Continued
Training and education programs.
Natural resources
Some reservations are rich in resources (minerals, timber,
agricultural land, natural and historic attractions that could
be important for development of tourist industries, etc,)
Others are not and to augment natural resources, the US
government has begun to buy land to add to reservations,
as well as obtaining water rights for Indian agriculture.
None of these programs have made much difference for
most reservation Indians
Remain reliant on the government for housing, health
services, education, and food.
8
9. Cultural Explanations offered for the
Lack of Development
Indians have "poor work attitudes"
Cultural heritage is one of communal property
and production rather than private property and
capitalism
Actually played a major role in Indian policy for much
of the last two centuries
1969, BIA report stated that "Indian Economic
Development can proceed only as the process of
acculturation allows."
9
10. Lack of Effective Tribal Government
Explanation
Sees tribal decision making, dispute resolution, and
regulatory functions as highly politicized and
unstable
Tribal governments squander resources and
discourage investments by outsiders
Does in fact appear to be a critical factor on many
reservations
U.S. government has been trying to fix this problem
since the Indian Reorganization Act of 1934
10
11. Failed Efforts to Create Tribal
Governments
Policy has ignoring diversity among tribes
Pushed them to adopt more or less generic formal
constitutions drawn from larger society models
Have become the basis for most of tribal government
institutions which have, as one study suggests, "plague
reservation development efforts today.”
Governance institutions can be very important, but the
generic reforms imposed by the Department of Interior
have not been effective
Not all reservations are plagued, however
11
12. Effective Tribal Governments
Some tribes appear to have solved at least some of
the problems of governance
E.g., the Flathead in Montana, the Mescalero Apache,
and the Cochiti Pueblo
Techniques for solving problems vary dramatically
Successful tribes have different types of governments:
Cochiti have a theocracy rooted in indigenous culture,
Mescalero have a very strong chief executive, and
Flathead have a parliamentary system
Some characteristics of tribal government can make a
big difference but this explanation is incomplete (BIA
remains the dominant decision-making power on most
reservations)
12
13. Structural Production Frontier
Good Y
Technical Production Frontier
Structural
Production Frontier 1
Structural
Production
Frontier 2
Good X
13
14. Institutions, Productivity and
Economic Growth (North)
Stock of knowledge and the endowment of resources
determine the technical upper limits for productivity and
output - the technical production frontier (TPF)
For each institutional structure there is a structural
production frontier (SPF)
Set of feasible forms of economic organization is
defined by the institutional environment, and the
institutional environment, in turn, depends on the
social, cultural, and political systems
Some institutional systems create incentives that place a
SPF close to the TPF; others do not
economic growth can result from institutional change
14
15. Cannot Take Advantage of Resources
and Technology
Modern technology creates the potential for very
high levels of productivity.
High levels of output cannot be reached without
elaborate specialization in production and complex
webs of exchange extending across both time and
space
The more advance the technology, the more complex
the transactions, and the higher the transactions costs of
utilizing the technology
Appropriate institutional structures are needed to reduce
transactions costs to manageable levels.
Technological or resource constraints often are not the
constraints that limit economic growth
15
16. Institutions often Prevent Economic
Development
North notes that the problems of "devising a system
of law, justice, and defense are the basic underlying
sources of civilization."
Technologically, the world is probably easily capable of
bringing everyone up to the standard of living enjoyed in
North America and Western Europe, or higher, but political
forces prevent it.
As North emphasizes, the willingness of individual owners
to supply specific appropriable assets, essential for
economic growth and utilization of advanced technologies,
depends on the rules structure, including clear and secure
property rights, enforceable contracts, the availability of
relatively consistent and impartial dispute resolution
16
17. “Failure of Organization”
Overwhelming evidence that governments typically
do not supply institutional structures that are
appropriate for placing their economies close to the
TPF
Many cases of relative and absolute economic decline
can be explained only by what North calls failures of
organization
Institutional structure of the U.S. economy is probably
closer to our TPF frontier than most, but Congress, the
BIA, and tribal governments have developed institutional
structures for most Indian reservations that are much
more like those that failed in Eastern Europe than those
that work in U.S.
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