Cornell is co-director of the Harvard Project on American Indian Economic Development, a long-term effort to understand what's necessary for self-determined, successful economic development in Indian Country. With economist Joe Kalt, other colleagues and students, Cornell has studied reservation economic development and worked with various tribes to make development a reality.

"Out in the field we encounter two very different concepts of economic development. One is a 'jobs and income' approach. . . . The second is 'nation-building.'"

"Out in the field we encounter two very different concepts of economic development," said Cornell. "One is a 'jobs and income' approach, in which a tribe will say, 'We've got a problem here. The problem is not enough jobs and not enough income, and the solution is to get some businesses going on the reservation'.

"Usually that means calling in the tribal planner and saying, 'go get some business going'. The tribal planner goes off and writes some grant proposals or looks for an investor of some sort, and that's supposed to solve the problem.

"The key to economic growth is not resources. It's institutions."

"There's a persuasive logic to this approach," Cornell said. "There aren't enough jobs on most reservations, and there isn't enough income. Too many people are on welfare. So yes, tribes need jobs and income. But most businesses that get started using this approach don't last very long. Those big plans usually don't pan out, and last year's sure-fire winner of a business didn't go much of anywhere.

"The second approach we see to economic development is 'nation-building'," said Cornell. Nation-building puts the spotlight on building Indian nations that can flourish over the long haul. It's a concept that focuses on putting in place an environment in which people want to invest, not just because it's right or because they owe it to the tribe, but because they believe their investment will pay off.

"If investors don't see a possibility of a payoff of some sort, why should they invest?" asked Cornell. "The reward may be monetary profits, the satisfaction of a job well done, or the rising quality of life in the community. It may be in reduced dependence on the feds, or in bolstering tribal sovereignty.

"And those investors aren't just people with dollars," he continued. "Everyone who works for a tribal government, tribal program or tribal enterprise is an investor. Anyone who's started a business on a reservation or is hoping to do so is an investor. Anybody with ideas or time or energy or goodwill or dollars or skills, who's willing to bet those assets on the future of the nation, is an investor.

"Nation-building requires us to think about economic development in new ways and to pursue it very differently. It requires us to talk about what kinds of nations we want to build and how we can set about doing it.

"One of this country's leading economists, a winner of the Nobel Prize in Economics, tells an interesting story about himself and other economists," Cornell said.

"In the 1950s, one of the questions economists wereb eing asked was where the next big burst of economic growth was likely to come. What part of the world is going to take off? The answer, to most economists, was easy. It was Latin America, and the reasons were clear: They had plenty of good natural resources, they had none of the overpopulation problems that Asia had to wrestle with, parts of Latin America already had high standards of living, they had a partly European heritage that lent itself to entrepreneurship. Their answer was Latin America--and the answer was wrong.

"In fact, said this economist, we blew it. The next burst of growth came not in Latin America but in Asia, just where the economists thought it would not happen. It came in places like Japan and Taiwan and Korea and Singapore, some of which had few natural resources. They had population problems, and they had very different cultural heritages. `What we missed,' he said, `is the fact that the key to economic growth is not resources. It's institutions.'

"It's things like stability in government, clear rules governing contractsand responsibilities, effective judicial systems. In Latin America we got instability, chaos, and dictatorship. In Asia, we got governing institutions that worked. That was the difference.

"I like to tell this story for three reasons," Cornell said.

• "First, it points to the critical role that infrastructure plays--and by infrastructure, I don't mean roads. We're talking about the organization of government, the rules that people follow.
• "Second, it's a useful reminder that a lot of the problems that Indian Country is dealing with are not Indian problems. These are problems that countries around the world--from Africa to Eastern Europe to Latin America--are wrestling with. Some are doing a better job of solving these problems than others, but they are problems of sovereign societies everywhere.
• "And third, it seems to me that this economist could have been talking about Indian Country. There's a similar puzzle at work here. We think of Indian reservations as poor, and many of them are. But there are also major successes out there.

"The Mississippi Choctaws are now the fourth or fifth largest employer in the state of Mississippi," said Cornell. "The White Mountain Apaches' forest products, skiing, recreation, and other enterprises have made it the economic anchor of the economy of east central Arizona, and their timber operation is one of the most productive in the western United States. In Montana, the Salish and Kootenai Tribes of the Flathead Reservation have built a successful private sector economy based on tourism, agriculture and retail services.

"There are similar stories that could be told in much of Indian Country," said Cornell. "If economists had been asked twenty years ago where economic development was most likely to occur in Indian Country, I'm not sure they would have picked the Indian nations that are, in fact, successful."