Understanding Globalization in Tribal Economies

Globalization has gotten a bad rap recently as dependence on foreign goods – and their attractive prices – has made the United States a net importer for decades.  But it’s not necessarily the dirty word that it’s been made out to be, especially if you look at it like Eric S. Trevan does in Indian Country.

Trevan, now in his third year as a tenure track professor of Public Administration at Evergreen State College, believes some globalization might be good for what ails Indian economies, depending on how it is defined.

“The definition really depends on the context.  But basically, it’s to apply a global standard to economic conditions. So, things that happen somewhere else impact things here,” in Trevan’s framework.

To completely oversimplify it:  the leg bone really is connected to the knee bone.

And Trevan ought to know given his scholarly work on economic theory and how it translates into tribes developing a competitive advantage in a good or service that promotes “building quality of life” in tribal communities.

For Trevan that means a couple of things.

One, tribes should take a more strategic, data-driven look at what businesses, people, and governments are spending money on, and capture those dollars from the sale of consumables – gas, insurance, healthcare, food – that the tribe and its entrepreneurial members can provide on the reservation and surrounding community at competitive prices. The goal is to keep tribal money circulating for as long as possible within its own community. “Prevent leakages,” in Trevan’s words. More simply put, buy local to create a tribal GDP.

Two, it means trading goods and services across tribal and other national boundaries to capture money from the broader market. But, for Trevan, tribes don’t necessarily have to trade globally to profit from their competitive advantage. They can – and in his mind should – trade more intertribally or more locally or regionally to keep money circulating on tribal land or in their surrounding communities. This constitutes a rather unique form of globalization – and one that does not necessarily exclude potential tribal nation to nation-to-state trade, as Trevan explains – but one whose scope is a little closer to home.

Global economic conditions do matter, but in order to drive tribal economy, we need to look at what people like Paul Krugman have said.”

Briefly, Krugman, a strong proponent of international free trade for developing democracies in the 1990s, is now convinced that “inward-looking policies” for economic development might, after all, be better than free trade. In other words, tribes – and other developing countries – should grow their economies by keeping more money circulating at home. Something more akin to the theory of import substitution – but that includes trading for items that you simply cannot make. Balance.

Krugman bolsters his argument using the case of Mexico. Nearly overnight Mexico went from exporting oil and tourism to a major manufacturing exporter. But its GDP (Gross Domestic Product) per capita actually fell during the same time period. Policy fail. A concern that Trevan shares with Krugman.

Back to the leg bone and knee bone. Policy should connect them in this analogy, but “Part of the narrative that talks about the impacts of globalization ignores the different structures – policy for one – around us that impact our ability to do this in Indian Country,” Trevan cautions. Even federal mandates such as the Buy Indian Act have done little to enhance the quality of life in Indian Country to date.

Moreover, Trevan laments, “It’s difficult to look at tribal GDPs. We can gather indicators through the Department of Commerce, but the data doesn’t exist at the tribal level due to how tribes protect their data.” That amounts to making policy in the dark at the federal and state levels with regard to promoting tribal economic development and facilitating any type of globalization.

Trevan understands the reflex for tribes to protect sensitive financial and demographic data, “But if you’re going to build your economy, you have to at least have that data and understand what it means. In the U.S., 70% of all money is spent on consumption, and 16% on investment. So, if you’re going to build your economy, if you’re going to reduce imports and have net exports, you have to more in the direction of consumption. You need to be more strategic in what tribes specialize in that other tribes or nations want to buy. Gaming has been a great catalyst for some tribes, as has cannabis and investing in other businesses. But not until you have multiple economic actors can you build a self-sustaining economy.

But there’s no magical solution and no one size fits all model that tribes can copy and paste. “People are looking for places where they are in close proximity to goods and services. Intuitively, they’re going to spend nearby,” Trevan believes. “Even if you have a relationship with another nation or tribe, it’s still going to take finding those economic opportunities to leverage. It really takes political will and knowledge on how to create those relationships to benefit Indian Country.” And well-informed policy to support tribal economic development and trade efforts as well.

Right now there are few good cases where this is happening, and Trevan expressed some concern that tribes may not be approaching the issue as strategically as required.  Nevertheless, he is sanguine on tribes’ long game.

“Every tribe has a right way for approaching its economy. Information just provides a foundation for decision making. Tribes are gaining access to much more information, understanding analytics better than ever. And we’re ready to harness this economic power whether locally in tribal economies or globally,” he states as he brings the discussion full circle.

Trevan’s next step will be to examine how policy facilitates or discourages both specialization and trade for tribes. That aligns well with Krugman’s refocusing on inward-looking development policies to develop national economies. And Indian Country could become the test bed.