The Modern Treaty Era
In our previous chapter, we learned how Indigenous businesses and communities can access money. But money isn’t everything that business needs or that economic development requires. Flanagan and Johnson (2015) found that Community Well-Being Index scores were correlated with a community’s Own Source Revenue, but not with a community’s per capita financial assets. Money needs to be put to work.
Think of money and other assets like wood, and business like flame. But flames need oxygen as well as wood. The oxygen is a supportive, business-friendly environment based on good governance. This is essential to business and economic development.
Aspects of a supportive business environment
A business-friendly environment has reliable leadership, complete legal frameworks, quality infrastructure, and prudent taxation. Says the Tulo Institute:
“…possessing access to resources or having a good location is important, but it is not enough to create economic growth. Both Russia and Peru are well endowed with natural resources; indeed, Russia is also well-endowed with technology and human resources. However, neither country provides a high standard of living because they have been unable to offer the supportive public sector input that is also required. By contrast, countries such as Singapore and Japan have achieved very high standards of living with relatively poor natural resources…The barrier to prosperity on First Nation and tribal lands is an inability to provide sufficient certainty to investors. [First Nations and Tribes] must use the powers available to them now to lower the transaction costs of investment.”[1]
This quotation is from Building a Competitive First Nation Investment Climate, the free online textbook of the Tulo Institute[2]. Many of its lessons are reproduced in this chapter.
The Tulo text tells us that in one 1999 comparison, it cost developers an average of 11 months to get the necessary approvals for projects in Calgary/Vancouver/Kamloops versus 48 months on Siksika/Squamish/Tk’emlups reserves. The financial costs differed by approximately the same proportion.[3]
The Table below shows many of the transaction costs and uncertainties that investors face when considering a First Nation site for their business or project.
How can these uncertainties be resolved, and transaction costs be minimized? Communities must provide quality infrastructure, reliable leadership, reasonable taxation, and a complete legal framework. In a word, good governance, as discussed in chapter 19, is essential.
Quality Infrastructure:
Investors like good infrastructure – roads, parking, water pressure, internet; and they need good services – mail delivery, waste removal, and policing. All of these things improve productivity, reduce the costs of business and attract customers, suppliers, and business partners. Good infrastructure promotes business and economic growth while, in a positive feedback loop, business can be taxed or charged fees to