What images come to mind when you think of life on a reservation? Isolated lands, scarce resources, and hardship? It’s time to challenge these stereotypes. Long before European settlement, Native American communities thrived with entrepreneurship and trade. Consider the Native blacksmiths in North Dakota’s

Mandan Villages produced and traded axes

that reached the North Pacific coasts quickly.  Or the ancestral Puebloan culture in New Mexico’s Chaco Canyon around 850 AD, a regional trade and administration hub. These examples underscore a history of economic success rooted in respected property rights.

Despite their rich natural resources,

U.S

. government policies hindered native economic well-being. Since colonization, American Indians have been wrapped in “white tape,” as the late Coushatta Tribal chairman Ernest Stickey calls their bureaucratic quagmire. This has hampered their ability to build new businesses and become entrepreneurs. Since being declared “wards” of the federal government in 1831, Native Americans have faced cultural and religious suppression. This has contributed to the current reality where

one in four reservation Indians live in poverty

, many depending on federal grants.

Federal government interventions have complicated land arrangements, exacerbating economic challenges that persist today. The Dawes Act and the Burke Act intended to “assimilate” Indians into farming but instead worsened social and economic conditions. The Indian Reorganization Act attempted fix some of these problems, but perpetually locked the status of federal trust allotted lands. Today, land cannot be leveraged as collateral for investment because of these historical policies. For example, the

Fort Berthold reservation missed out

on a significant opportunity from fracking because trust land requires 49 regulatory steps before leasing, compared to just four steps off reservation. These legal issues reduce certainty and investment in projects that could benefit reservations.

The

Reservation Economic Freedom Index

offers insights into these challenges, measuring economic freedom across 90 U.S. reservations, which includes 42% of all Indians living on reservations in the lower 48. The REFI evaluates regulatory framework, governance, federal contracts, openness and transparency, and judiciaries, among other factors. It reveals that a 10% increase in REFI score increases median household income by $2,500.

This connection between the REFI scores and economic outcomes is observable in North Dakota’s reservations, each presenting a unique economic profile influenced by natural resources and governance structures. For example, in North Dakota, the measured reservations include Turtle Mountain (6.5), Fort Berthold (6.5), Spirit Lake (7.6), Standing Rock (8.0), and Lake Traverse (8.9). These scores reflect economic conditions and the cultural and historical contexts that shape them. Despite having the lowest REFI score, Fort Berthold, buoyed by oil activities, boasts the highest median income, illustrating how natural resources can offset certain economic freedom limitations.

A multifaceted approach is needed to address the economic challenges faced by North Dakota’s reservations. This includes strengthening bottom-up institutional arrangements that respect each reservation’s unique needs and histories rather than relying on generic, one-size-fits-all legislation. Empowering individual indigenous control over property is crucial, necessitating a critical reassessment and potential repeal of the 1934 Indian Reorganization Act. Cutting through the bureaucratic red tape is another vital step, simplifying governance for more efficient and effective administration.

Further, promoting tribal self-governance and autonomy stands at the heart of these solutions, recognizing the right of these communities to manage their affairs and resources. This empowerment extends to the judicial sphere, where funding independent tribal judicial courts and law enforcement is essential for maintaining order and justice within the reservations. Lastly, delineating and clarifying the overlapping jurisdictions of federal, state, and tribal laws will provide a more stable and predictable legal environment conducive to economic growth and prosperity.

These steps are not just about economic policies but are a recognition of the sovereignty and capability of Native American communities. By impeding business, the current system diminishes income. By embracing policies that encourage business development and entrepreneurship, we can help unlock the economic potential of these reservations, honoring the legacy of innovation, prosperity, and resilience that has characterized American Indian history.

Richard Feir is a research specialist at the Challey Institute at North Dakota State University and Thomas Stratmann is a professor of economics at George Mason University and author of Challey Institute research “Enhancing the Business Climate and Incentivizing Business Development on North Dakota Indian Reservations.”