The Economic Effects of Infrastructure Development in American Indian Tribal Areas with Low Income and High Unemployment

Some of the worst incidences of poverty in the United States exist in American Indian tribal areas, also known as “Indian Country.” It is the responsibility of the Office of the Assistant Secretary for Indian Affairs, at the U.S. Department of the Interior, to promote policies to facilitate the economic development and growth of Indian Country. One of the key ingredients for such growth is improved infrastructure, especially in the most impoverished areas. This paper will provide guidance to economists and policy analysts, both within and outside of Indian Affairs, on how to develop infrastructure-based strategies for promoting economic growth in Indian Country. The paper presents a macroeconomic model that interrelates infrastructure development with household income and consumption and examines the multiplier effects that result from expanded infrastructure in tribal areas. The model demonstrates that states may easily benefit from supporting tribal infrastructure development, by various spillover effects.