How economists have failed to address economic woes of indigenous peoples

By some estimates, 350 million people qualify as “indigenous”— individuals bound together by their ancestry, lands, culture, language and, ultimately, self-identification.

Think of Bolivia’s Aymara, Canada’s Inuit, Congo’s Pygmy, India’s “Scheduled Tribes,” Laos’ Hmong, New Zealand’s Maori, Niger’s Tuareg, or the United States’ Navajo.

Common wisdom has it that they are among the poorest of the poor, trapped in poverty by the combined effects of their remote location, lack of education, poor health and, yes, discrimination.

There must be some truth to that: The indigenous account for only five per cent of the World’s population, but for ten per cent of the World’s poor.

Their plight has been passionately recorded by countless academicians. A new book edited by Gillette Hall and Harry Patrinos, Indigenous Peoples, Poverty and Development, Cambridge University Press, puts passion aside and meticulously reviews the evidence from both developed and developing countries. The conclusions are eye-opening.

First, in most cases, it is true that, if you are indigenous, you are more likely to die as a child, drink unsafe water, suffer from stunting, or never enrol in primary school.

The “development gap” between indigenous and non-indigenous people does not close — and may actually get larger — as a country gets richer. It is indeed larger in Australia and Canada than in Bangladesh and Mali.

Second, geography and discrimination are probably bigger impediments to indigenous peoples’ development than lack of human capital. Yes, too few of them reach the educational level necessary to occupy well-paying jobs, and too many suffer from preventable diseases that limit how productive they can be.

But education and health are of little help if you insist on living isolated from the rest of society days away from the closest market, or if you migrate to a city where racial prejudice shuts you out of the formal economy.

Interestingly, globalisation and the pressure it puts on local firms to attract top talent if they want to survive foreign competition, do not seem to have pushed back, let alone ended, ethnic discrimination.

Third, China drilled a hole through the idea that all indigenous peoples are “trapped” in poverty. Chinese “ethnic minorities” — essentially, anyone that does not belong to the Han majority — have, for the past couple of decades, ridden the country’s wave of super-fast growth and have seen their poverty levels fall faster than the national average.

Some of this was due to increased access to education and health for groups that previously lacked it.

But the bulk of the improvement is due to a combination of massive public investment in regions where the indigenous happen to live, and rural minorities moving to cities where the better-paying jobs are. No magic bullet there.

Fourth, the Internet has been both good and bad for indigenous peoples. It helped them with their claim for the four “Rs” — Recognition, Representation, Rights and Resources.

Nothing beats YouTube in shaming governments into action. But preservation of identity is tougher when local traditions delivered orally by the old have to compete with online global trends directed to the young.

Fifth, not all indigenous leaders are radical Marxists, squeaky-clean administrators, sensitive environmentalists, or human rights advocates.

If you judge by the discourse heard in the Andean mountains of Latin America, for example, you would think that capitalism and colonialism is one and the same bad thing, that nationalisation would return control of natural resources to the “original peoples”, and that collective decision-making will both give equal voice to all and keep graft at bay.

Well, you want to rethink this Che-Guevarian nirvana. Some indigenous nations have become conglomerates and embraced markets with gusto — typical case: The Seminole Tribe of Florida.