The Economic Development Journey of Indian Nations
A Short History of Economic Development in Indian Country

Less than a decade ago, some Indian nations were forced to make excruciating choices between providing for their people and retaining the cultural or environmental integrity of their people and their lands. For example, in the summer of 1994, a representative of the Mescalero Apaches, the tribe of Geronimo, traveled to Plymouth, Massachusetts, to meet with the operators of a local nuclear power plant. There he proposed that, for a fee, his tribe would store the plant's spent fuel rods on its reservation land in New Mexico. The Mescaleros' plan, which was encouraged by the federal government, would be to store high-level radioactive waste from over thirty nuclear reactors across the country. If successful, they could earn up to $25 million yearly in revenues for their 350-member tribe. The waste would remain in aboveground containers at the reservation for forty years, after which time the U.S. government would move it to a permanent site. Were it not for the rise of Indian gaming in the late 1980's, dangerous paths to economic development like this might have been the only option for many Indian nations.

Obstacles to Economic Development in Indian Country

Many outsiders look at the history of Indian Country and the historical lack of economic development without considering the many obstacles to development that were imposed on Indian nations. It has been said, "The past is not history in Indian Country." There are at least two ways this saying has meaning: (1) that Indian people are more likely to honor the past in what they do, what they believe, and how they live; and (2) that the horrors and obstacles of the past continue to influence the opportunities available to contemporary Indian people (although Indian nations are increasingly empowered when it comes to envisioning their futures). There are many ways that history plays a role in and continues to shape economic development in Indian country. Some of these influences are obvious, some less so, but is important to consider our history as we gather to contemplate our bright future.

Trust Status of Indian Lands

One of the most ubiquitous but less obvious obstacles to economic development has been that of federal trust status for our reservation and homelands. Of course today, trust status is most likely to be considered in the context of a "property tax break" for Indian nations, but we all know that it was originally a way for the federal government to retain the right of ownership (by holding the land "in trust" for Indian nations) and for the tribe to retain right of occupancy for Indian lands. While this system has historically provided some safeguards for Indian nations with regard to outside land speculators, it has been disastrous with regard to economic development because Indian nations have been unable to use their land base as collateral to secure financing. Bankers and other lenders typically secure their loans with mortgages, but this form of collateral is not permitted while land is encumbered under trust status. When people are unable to leverage their greatest asset, their land base, it is difficult to encourage industry or attract financing.

Remote Location of Indian Lands

Another historical obstacle to economic development in Indian country has been the location of retained Indian lands. Many reservations, rancherias, pueblos and other land holdings are located in rural or isolated locations. Again, this isolation was often preferable from a cultural preservation standpoint, but worked against later efforts to develop reservation economies. Access to markets is one of the most important components of economy-building and much of Indian Country is simply too remote. Certainly we can see examples in Indian gaming where location is the key factor in a gaming facility's success.

The Complex Nature of Indian Law

Another obstacle to economic development in the past in Indian country has been reluctance by outsiders to work with Indian nations due to perceived legal and political uncertainties. In some cases, there was a fear or misunderstanding of the meaning and implications of tribal sovereign immunity. In other cases, there has been a lack of financial institutions to promote capital accumulation or serve as credit intermediaries for development on reservations. The impact of these obstacles, most created by outsiders or the Federal government, has been that Indian nations have faced difficult choices, like those of the Mescaleros, with regard to securing basic needs for their people. Things that other Americans take for granted, like decent housing, affordable healthcare, nutritious food, and access to education have been luxuries that Indian nations have had to pursue through round-about means, often being forced to chose between cultural values and economic need.

Indian Gaming as an Economic Stimulus

Since 1988, when the Indian Gaming Regulatory Act was passed, nearly 200 Indian nations have pursued some type of gaming. And for most, gaming has brought jobs, revenues, and some degree of independence and hope. The growth of the Indian gaming industry from $212 million in 1988 to nearly $10 billion in 2000 attests to the fact that, given the opportunity, the conditions and the investment capital, Indian nations can be incredibly successful capitalists.

The Future: Beyond Gaming

The wide-ranging economic and social impacts of Indian gaming serve to attract businesses on many levels. Indian nation investments in schools, hospitals and law enforcement make economic development in Indian country more feasible and attract outside investors, workers and residents.

In addition to community and social impacts, Indian gaming has given tribes access to cash, something that they have been short of in the past. One advantage of gaming is that it allows for the accumulation of capital for investing in other tribal businesses enterprises. Tribal casino profits can be (and are being) invested directly into tribal-owned shopping centers, recreation parks, industries and other new facilities for producing and exporting non-gambling products and services. Alternative businesses have spring up all over Indian country. The "first wave" of non-gaming business is often related to and dependent upon the gaming facility. For example, many Indian nations have developed hotels, RV parks and campgrounds, gas stations, restaurants, convention centers, movie theaters, retail centers or golf courses that cater to casino patrons and tourists. These businesses rely upon gaming customers and directly benefit from the improved infrastructure related to casino development. For example:

• The Morongo Band of Mission Indians in CA has gone into restaurant franchising. They currently operate an A&W Restaurant and a Carron's Restaurant on their reservation.

• The Spirit Lake Nation in North Dakota has opened a marina, a gas station, restaurants and an RV park near their casino in Devil's Lake.

• The Viejas Tribe in Alpine, CA has opened an outlet mall and a bank, among other enterprises.

The "second wave" of non-gaming business often occurs off-reservation or is less dependent upon gaming customers. There is also an emphasis on off-reservation markets, even international markets, for these products. A few of the diverse economic ventures that Indian nations are pursuing include:

• The Mohegan Tribe of Connecticut is planning to invest in an aquaculture program that will include a shellfish hatchery in Stonington, CT, a processing plant on the reservation and fish barns throughout the region. They are also seeking approval to provide local and long-distance telephone service throughout the state.

• The San Manuel Band in California is opening a water bottling plant on their reservation that will focus on national and international markets, and is also building a retail center off their reservation in nearby Highland, CA.

• The Seminole Tribe of Florida has started an Aircraft Company with a vision of manufacturing single-engine, high-performance aircraft. It is the first Native American-owned company to ever gain a production certificate from the FAA.

Written by Kate Spilde, Ph.D. June, 2001