Business Composition and Development in and Around Native American Areas in the US

Abstract

Despite development efforts, Native Nations exhibit higher poverty rates and associated social concerns than other US areas. Business development is a way to sustainably reduce poverty. This article uses several estimation techniques to provide longitudinal descriptive evidence on business activity in Native Nations sharing geographies with the contiguous United States using county level data spanning portions of the Self-Determination Era (1968–2000) and the Nation-to-Nation Era (2000-present). In doing so, this article contributes to existing work about Native American economic development by assessing business trends in Native areas over time. The analysis yielded three important findings. First, Native American counties have higher firm counts and business churn per capita than other counties. Second, Native American businesses are more likely to be employers than nonemployers on average, suggesting Native American businesses reach the important business milestone of having employees at a higher percentage than Non-Native American businesses. Third, employment in Native American areas is especially concentrated in a few sectors (e.g., construction, retail trade, and accommodation and food services), and while these areas were less concentrated than Non-Native American counties in the early 2000s, there is suggestive evidence that they are becoming more concentrated over time. In terms of implications, policy should continue to take a more progressive stance in Native American areas. Policy should aim to improve entrepreneurship and industrial diversity in those areas to improve economic resiliency. Long-term policies should focus on diversifying the local economies of Native American counties to more sustainable engines of growth.