Economic development is the process through which a given economy, whether national, regional, or local, becomes more complex and grows in terms of the income or wealth generated per person. This process is typically accomplished by finding new forms of labour and often results in the creation of new kinds of products. One example of economic development has been the transition from hunting and gathering to a full reliance on agriculture; in this example, the new form of labor comprised the system of sowing and harvesting useful plants, while the new products comprised domesticates such as corn (maize) and cotton. During the 19th century, much of the economic growth of Northern America arose from a shift in which extractive economies, such as farming and mining, were replaced by those that transformed raw materials into consumer goods, as with food processing and manufacturing. In the 20th century a broadly analogous shift from a manufacturing economy to one focused on service industries (e.g., clerical work, entertainment, health care, and information technology) took place.

Economic underdevelopment has been an ongoing problem for many tribes since the beginning of the reservation eras in the United States and Canada. Reservations are typically located in economically marginal rural areas—that is, areas considered to be too dry, too wet, too steep, too remote, or possessing some other hindrance to productivity, even at the time of their creation. Subsequent cessions and the allotment process decreased the reservation land base and increased the economic hurdles faced by indigenous peoples. Studies of reservation income help to place the situation in perspective: in the early 21st century, if rural Native America had constituted a country, it would have been classified on the basis of median annual per capita income as a “developing nation” by the World Bank.

Although underdevelopment is common in rural Northern America, comparisons of the economic status of rural Indians with that of other rural groups indicate that factors in addition to location are involved. For instance, in 2002 a national study by the South Carolina Rural Health Research Center found that about 35 percent of the rural Native American population in the United States lived below the poverty line; although this was about the same proportion as seen among rural African Americans, less than 15 percent of rural Euro-Americans had such low income levels. Perhaps more telling, rural counties with predominantly Native American populations had less than one-fourth of the bank deposits (i.e., savings) of the average rural county—a much greater disparity in wealth than existed for any other rural group. (Predominantly Hispanic counties, the next lowest in the rankings, had more than twice the deposits of predominantly Native American counties.)

Explanations for the causes of such disparity abound, and it is clear that many factors—geography, historical inequities, nation-within-a-nation status, the blurring of boundaries between collectivism and nepotism, poor educational facilities, the prevalence of post-traumatic stress and of substance abuse, and others—may be involved in any given case. With so many factors to consider, it is unlikely that the sources of Indigenous poverty will ever be modeled to the satisfaction of all. Nonetheless, there is general agreement on the broad changes that mark the end of destitution. These typically involve general improvements to community well-being, especially the reduction of unemployment, the creation of an educated workforce, and the provision of adequate infrastructure, health care, child care, elder care, and other services.

During the late 20th and early 21st centuries, Native nations used a suite of approaches to foster economic growth. Some of these had been in use for decades, such as working to gain official recognition as a nation and the filing of lawsuits to reclaim parts of a group’s original territory. Extractive operations, whether owned by individuals, families, or tribal collectives, also continued to play important and ongoing roles in economic development; mining, timber, fishing, farming, and ranching operations were long-standing examples of these kinds of enterprises.

Highway improvements in the 1950s and ’60s opened opportunities for tourism in what had been remote areas, and a number of indigenous nations resident in scenic locales began to sponsor cultural festivals and other events to attract tourists. Tribal enterprises such as hotels, restaurants, and service stations—and, more recently, golf courses, water parks, outlet malls, and casinos (the last of these is also discussed below)—proved profitable. At the same time, Indigenous families and individuals were able to use traditional knowledge in new commercial ventures such as the production and sale of art. The powwow, a festival of native culture that features dancers, singers, artists, and others, is often the locus at which cultural tourism occurs. The provision of guide services to hunters and fishers represents another transformation of traditional knowledge that has proven valuable in the commercial marketplace, and ecotourism ventures were becoming increasingly popular among tribes in the early 21st century. Although the tourism industry is inherently volatile, with visitation rising and falling in response to factors such as the rate of inflation and the cost of travel, tourist enterprises have contributed significantly to some tribal economies.

The same transportation improvements that allowed tourists to reach the reservation also enabled tribes to connect better with urban markets. Some tribes chose to develop new industries, typically in light manufacturing. More recent tribal enterprises have often emphasized services that, with the aid of the Internet, can be provided from any location: information technology (such as server farms), accounting, payroll, order processing, and printing services are examples. More-localized operations, such as tribal telecommunications operations and energy companies, have also benefitted from better transportation.

In a reversal of the extractive industries common to rural Northern America, some Indigenous nations have contracted to store materials that are difficult to dispose of, such as medical and nuclear waste. For the most part, these projects were not initiated until late in the 20th or early in the 21st century, and they have generally been controversial. Factions within actual or potential host tribes often disagree about whether the storage or disposal of dangerous materials constitutes a form of self-imposed environmental racism or, alternatively, a form of capitalism that simply takes advantage of the liminal geographic and regulatory space occupied by native nations.

While the kinds of economic development noted above are certainly not exhaustive, they do represent the wide variety of projects that indigenous nations and their members had undertaken by the beginning of the 21st century. At that time, mainstream businesses like these represented the numeric majority of indigenous development projects in Northern America, although they were neither the most profitable nor among nonnatives the best-known forms of indigenous economic development. Instead, the most important development tool for many communities is the casino.

In 1979 the Seminoles of Florida opened the first Native American gaming operation, a bingo parlor with jackpots as high as $10,000 (U.S.) and some 1,700 seats. The Seminole and other tribes surmounted a number of legal challenges over the next decade, principally suits in which plaintiffs argued that state regulations regarding gaming should obtain on tribal land. The issue was decided in California v. Cabazon Band of Mission Indians (1987), in which the U.S. Supreme Court found that California’s interest in the regulation of reservation-based gambling was not compelling enough to abrogate tribal sovereignty. Gaming could thus take place on reservations in states that did not expressly forbid gambling or lotteries. The U.S. Congress passed the Indian Gaming Regulatory Act in 1988; the act differentiated between various forms of gambling (i.e., bingo, slot machines, and card games) and the regulations that would obtain for each. It also mandated that tribes enter into compacts with state governments; these agreements guaranteed that a proportion of gaming profits—sometimes as much as 50 percent—would be given to states to support the extra burdens on infrastructure, law enforcement, and social services that are associated with casino traffic.

Although some Native American gaming operations have proven extremely profitable, others have been only minimally successful. To a large extent, success in these ventures depends upon their location; casinos built near urban areas are generally able to attract a much higher volume of visitors than those in rural areas and, as a result, are much more profitable. In order to expand their businesses, some tribes have reinvested their earnings by purchasing and developing property that is proximal to cities; others have filed suits claiming land in such areas. Some groups have petitioned the U.S. government for official recognition as tribes, an action that some antigambling activists have complained is motivated by a desire to gain the right to open casinos. In many such cases the group in question has a variety of reasons to press a claim, as well as ample historical documentation to support the request for recognition; in these cases recognition is eventually granted. In other cases, however, claims to Indigenous heritage have proved bogus, and recognition has been denied.

International developments

In the early 21st century, while many of the efforts of Native American communities focused by necessity on local, regional, or national issues, others increasingly emphasized their interaction with the global community of aboriginal peoples. The quest for Indigenous self-determination received international recognition in 1982, when the United Nations Economic and Social Council created the Working Group on Indigenous Populations. In 1985 this group began to draft an Indigenous rights document, a process that became quite lengthy in order to ensure adequate consultation with Indigenous nations and nongovernmental organizations. In 1993 the UN General Assembly declared 1995–2004 to be the International Decade of the World’s Indigenous Peoples; the same body later designated 2005–2015 as the Second International Decade of the World’s Indigenous Peoples.

In 1995 the UN Commission on Human Rights received the draft Declaration on the Rights of Indigenous Peoples. The commission assigned a working group to review the declaration, and in 2006 the group submitted a final document to the Human Rights Council. Despite efforts by many members of the UN General Assembly to block a vote on the declaration, it was passed in 2007 by an overwhelming margin: 144 votes in favour, 11 abstentions, and 4 negative votes (Australia, Canada, New Zealand, and the United States, all of which would formally endorse the declaration by 2016). Indigenous communities in the Americas and elsewhere applauded this event, which they hoped would prove beneficial to their quests for legal, political, and land rights.