Alaska Natives and the "New Harpoon": Economic Performance of the ANCSA Regional Corporations

Abstract

In this paper I develop and analyze 20 years of data on the economic performance of the 12 regional corporations created by the Alaska Native Claims Settlement Act of 1971 (ANCSA).The act was a radical departure from previous U.S. policy toward indigenous peoples. Alaska's 75,000 Aleuts, Eskimos, and Indians received almost $1 billion in cash and acquired clear title to more than 40 million acres of land, an area larger than New England. This wealth was vested in 12 regional and almost 200 village-level business corporations. As a group, the 12 regional corporations lost 80 percent of their original cash endowment -- about $380 million -- in direct business operations between 1973 and 1993. But behind this poor overall financial performance is a surprising amount of cross-sectional variation. I first show that allocation of business assets to different economic sectors plays a statistically significant but empirically minor role in explaining this differential performance. I then construct panel data on shareholder employment, wages, and quasirents and test the hypothesis that the regional corporations traded off business profits for Native jobs. The data strongly reject this hypothesis. Quasirents from Native shareholder employment were important to only three firms -- the rest lost money without any countervailing employment. Case history evidence suggests that internal sharing networks and common preferences helped the high-employment firms to deliver both jobs and dividends. Overall, these results suggest caution in the use of group-based lump-sum transfers as economic development tools.

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