Despite the prosperity tribal gaming has brought to some Native nations over the past 20 years, poverty and unemployment rates remain high on many reservations.

How can economic conditions on reservations be improved? Searching for the answer to this question has led some scholars to examine the role of tribal sovereignty. Is tribal sovereignty an obstacle or an aid to reservation economic success?

One school of thought, supported by the extensive research of the Harvard Project on American Indian Economic Development, points to tribal sovereignty as part of the solution. According to this view, economic development is fostered when tribes control reservation resources and economies. That’s because tribal governments are more directly accountable to tribal members for the consequences of their decisions. Moreover, tribal sovereignty will have this positive effect more often when it is used to create sound and legitimate legal institutions, such as courts, that tribal members and others can use to hold their tribal governments accountable.

A contrary school of thought, advanced by economist Terry Anderson, has recently found its way into the Journal of Law and Economics and the Wall Street Journal. Anderson claims that tribal sovereignty is the reason reservation economies languish. To make his point, he draws attention to Public Law 280, a 1953 federal statute that compromised tribal sovereignty by granting jurisdiction over reservation Indians to six states and allowing other states to opt for similar jurisdiction, regardless of tribal consent.

Using census data, Anderson compares the reservations singled out for state civil jurisdiction with those that are not, and finds the tribes with state jurisdiction have had greater economic success during the period 1969 – 1999, as measured by growth in per capita income. In other words, he claims the tribes that lost sovereignty through state jurisdiction gained in per capita income.

To explain his result, he argues that state jurisdiction enables tribes and individual tribal members to make “credible commitments” in economic transactions – commitments that are not possible when the only available enforcement mechanism is a (presumably deficient) tribal court. In the Wall Street Journal, he concludes that if a tribal court system can’t meet strict, federally-devised standards, Congress should impose state civil jurisdiction, as it has in Public Law 280.