Land quality, land rights, and indigenous poverty

Agricultural land endowments should contribute positively to economic growth, but in countries colonized by European powers this has not always happened. Productive land attracted colonization, which disrupted Indigenous institutions in ways that can stunt development. American Indian reservations provide a powerful example. Where land quality was high, the federal government facilitated land titling and non-Indian settlement through the General Allotment Act of 1887. The evidence suggests this process caused a U-shaped relationship between American Indian per capita income over 1970 to 2010 and a reservation’s share of prime agricultural land, in contrast to a positive relationship across U.S. counties. The downward slope of the U is due to land ownership fractionation that disproportionately affected reservations with mid-quality land and now requires federal administration. After controlling for fractionation, the effect of prime land is positive, implying land quality has indirectly suppressed income growth through its effects on land rights.