Business Development and Entrepreneurship on the Navajo Reservation

In this paper, I explore the underdevelopment of the business sector on the Navajo reservation. I investigate why the Navajo reservation continues to be economically depressed and find that institutions unique to the reservation create barriers that disincentivize formal business development. I first conducted a literature review on general barriers to entrepreneurship. Second, I reviewed the institutional analysis of the Navajo reservation to understand how institutions affect potential entrepreneurs. Next, I summarized a three-phased entrepreneurship training program on the reservation. Finally, I assessed the results of the program and how it was effected by barriers to business development. I conclude that there are three main barriers that discourage entrepreneurship. First, red tape and a complicated business license application process disincentivize new business development in the formal economy. Second, a lack of private property rights limit how entrepreneurs can access and develop land. Third, the Navajo reservation lacks access to lending opportunities, restricting the capital that is necessary to start a business. These barriers combine to create a vicious cycle of underdevelopment and poverty