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  1. 1. Indian Heritage for Production and Consumption.
  2. 2. In the early days Indian economy was totally based on agriculture. People used to produce whatever they required for their selfconsumption. There was no need for sale or exchange of goods. But later on, needs of the people increased and so did the production. People began to specialize in producing different items of luxury and daily use and did not have skills and time left for producing others items of their use. 2
  3. 3. They were able to produce surplus items with increase in their efficiency. So, a system of exchanging surplus items with the items of need was evolved. This was the beginning of trade. 3
  4. 4. Capital in modern production  The role of Capital in modern production is to reduce the labor-time required to build any particular commodity. This allows more commodities to be produced with less worker-time, i.e. less wage- labor and therefore less costs and more profits. 4
  5. 5. Lean Production is synonymous with "wasteless" production, allowing any quality defectiveness to be produced in such a production style would be against its definition: because any error, defect and nonconformity would be pure waste. 5
  6. 6. Economic Conditions on Most Reservations  Difficult to exaggerate the overall depressed state of economic development on most reservations, or the sorry history of associated public policies  Unemployment rates on most reservations exceed 50 percent, and many reservations have 80 to 90 percent unemployment, year after year 6
  7. 7. One Explanation for the Lack of Economic Development  Economic resources problems: insufficient access to capital markets, small endowments of natural resources, and low levels of education and job skills  Since at least the 1930s economic development programs have played an important part in Indian policy; U.S. government has poured billions of dollars into these programs  Attempted to provide Indians with capital  subsidized loans or direct capital investments in the form of infrastructure, manufacturing plants, irrigation projects, and so on. 7
  8. 8. Development Programs, Continued   Training and education programs. Natural resources   Some reservations are rich in resources (minerals, timber, agricultural land, natural and historic attractions that could be important for development of tourist industries, etc,) Others are not and to augment natural resources, the US government has begun to buy land to add to reservations, as well as obtaining water rights for Indian agriculture.  None of these programs have made much difference for most reservation Indians  Remain reliant on the government for housing, health services, education, and food. 8
  9. 9. Cultural Explanations offered for the Lack of Development   Indians have "poor work attitudes" Cultural heritage is one of communal property and production rather than private property and capitalism  Actually played a major role in Indian policy for much of the last two centuries  1969, BIA report stated that "Indian Economic Development can proceed only as the process of acculturation allows." 9
  10. 10. Lack of Effective Tribal Government Explanation  Sees tribal decision making, dispute resolution, and regulatory functions as highly politicized and unstable  Tribal governments squander resources and discourage investments by outsiders   Does in fact appear to be a critical factor on many reservations U.S. government has been trying to fix this problem since the Indian Reorganization Act of 1934 10
  11. 11. Failed Efforts to Create Tribal Governments  Policy has ignoring diversity among tribes  Pushed them to adopt more or less generic formal constitutions drawn from larger society models    Have become the basis for most of tribal government institutions which have, as one study suggests, "plague reservation development efforts today.” Governance institutions can be very important, but the generic reforms imposed by the Department of Interior have not been effective Not all reservations are plagued, however 11
  12. 12. Effective Tribal Governments  Some tribes appear to have solved at least some of the problems of governance   E.g., the Flathead in Montana, the Mescalero Apache, and the Cochiti Pueblo Techniques for solving problems vary dramatically  Successful tribes have different types of governments:   Cochiti have a theocracy rooted in indigenous culture, Mescalero have a very strong chief executive, and Flathead have a parliamentary system Some characteristics of tribal government can make a big difference but this explanation is incomplete (BIA remains the dominant decision-making power on most reservations) 12
  13. 13. Structural Production Frontier Good Y Technical Production Frontier Structural Production Frontier 1 Structural Production Frontier 2 Good X 13
  14. 14. Institutions, Productivity and Economic Growth (North)   Stock of knowledge and the endowment of resources determine the technical upper limits for productivity and output - the technical production frontier (TPF) For each institutional structure there is a structural production frontier (SPF)  Set of feasible forms of economic organization is defined by the institutional environment, and the institutional environment, in turn, depends on the social, cultural, and political systems  Some institutional systems create incentives that place a SPF close to the TPF; others do not  economic growth can result from institutional change 14
  15. 15. Cannot Take Advantage of Resources and Technology  Modern technology creates the potential for very high levels of productivity.  High levels of output cannot be reached without elaborate specialization in production and complex webs of exchange extending across both time and space    The more advance the technology, the more complex the transactions, and the higher the transactions costs of utilizing the technology Appropriate institutional structures are needed to reduce transactions costs to manageable levels. Technological or resource constraints often are not the constraints that limit economic growth 15
  16. 16. Institutions often Prevent Economic Development  North notes that the problems of "devising a system of law, justice, and defense are the basic underlying sources of civilization."   Technologically, the world is probably easily capable of bringing everyone up to the standard of living enjoyed in North America and Western Europe, or higher, but political forces prevent it. As North emphasizes, the willingness of individual owners to supply specific appropriable assets, essential for economic growth and utilization of advanced technologies, depends on the rules structure, including clear and secure property rights, enforceable contracts, the availability of relatively consistent and impartial dispute resolution 16
  17. 17. “Failure of Organization”  Overwhelming evidence that governments typically do not supply institutional structures that are appropriate for placing their economies close to the TPF  Many cases of relative and absolute economic decline can be explained only by what North calls failures of organization  Institutional structure of the U.S. economy is probably closer to our TPF frontier than most, but Congress, the BIA, and tribal governments have developed institutional structures for most Indian reservations that are much more like those that failed in Eastern Europe than those that work in U.S. 17