DISINCENTIVES TO BUSINESS DEVELOPMENT ON THE NAVAJO NATION

In this paper, we explore the underdevelopment of the business sector on the Navajo reservation. We explore why the Navajo reservation continues to be economically depressed and find that formal and informal institutions unique to the reservation create barriers that disincentivize entrepreneurship. Our examination begins by first conducting a literature review on general barriers to entrepreneurship. Second, we conduct an institutional analysis of the Navajo reservation to understand how formal and informal institutions affect potential entrepreneurs. We then use a comparative case study to analyze how the Navajo reservation’s institutions affect one town on the reservation compared to a similar town outside the reservation’s borders. We conclude there are three main barriers that discourage entrepreneurship. First, a dual bureaucracy and a complicated business license application process disincentivize new business development in the formal economy. Second, the federally held reservation land trust limits how entrepreneurs can access and develop land. Third, the Navajo reservation lacks access to lending opportunities, restricting the capital necessary to start a business. These barriers combine to create a vicious cycle of underdevelopment and poverty.

Modernizing the Navajo

This chapter explores how a new infrastructure of coal mines and power plants on the Navajo Reservation, and of power lines that stretched across the Southwest, changed the landscape of the Navajo Reservation. The political terms in which this infrastructure took place—terms set largely by the belief held by businessmen from Phoenix and elsewhere that the state should facilitate capital location—shaped this infrastructure's meaning and future. These politics meant that private companies, rather than the federal authorities, mined coal and set it alight. They meant that federal policy focused increasingly on unlocking resources on Navajo land rather than ensuring that employment accompanied development. Moreover, they meant that the power lines leading from Four Corners Power Plant became the main supply for the electricity demanded in Phoenix, rather than primarily being a source of Navajo economic modernization.

A Region of Fragments

This chapter looks at the construction of Boulder Dam. Franklin Roosevelt explained the dam as a manifestation of the transformations the New Deal had set in motion. “The largest generators and turbines yet installed in this country, machinery that can continuously supply nearly two million horsepower of electric energy,” Roosevelt explained, would soon “power factory motors, street and household lights and irrigation pumps.” In so doing, the dam's energy would transform the region and the nation at large; it would create industrial modernity. Ultimately, the construction of Boulder Dam, and the politics surrounding it, signaled a change. It suggested that efforts to turn the energy of the river to human purposes had begun to tie the fates of Phoenix and the Navajo Reservation together. Indeed, Boulder Dam had begun the creation of a new region.