06/21/2012 12:58 pm ET Updated Aug 21, 2012

What Have Economists Learned About 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 Touareg, 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 5 percent of the World's population, but for ten percent 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 enroll 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, globalization 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 the preservation of identity is more difficult when local traditions delivered orally by the old have to compete with global trends delivered online to the young. And information has facilitated migration, that is, the abandonment of the all-defining ancestral land.

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 nationalization 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. Others have partnered with multinationals to exploit oil or gas, like in Canada. Corruption, inefficiency and incompetence have festered in indigenous governments as much as in non-indigenous ones. And just ask indigenous women in Africa's western Sahel how much their voices are heard in public affairs -- or at all.

Finally, governments have not had much success in helping the indigenous. Well-meaning policies and projects meant for specific nations, tribes or clans quickly run into trouble. Why? Mostly because such efforts amount to pushing an elephant (a giant state bureaucracy) into a proverbial china shop (a remote village with complex social norms and its own unwritten language). Some countries, like Mexico, have opted to give cash directly to individuals that happen to be indigenous. That seems to work better. But, by and large, the indigenous gap remains difficult to shrink through public intervention. [A curiosity: even public bilingual education is said to have had little impact.]

Which brings us to the core issue: does attachment to cultural values and traditions that never change help you or hurt you in a market economy that is always changing? To find that out, we need to collect data not just on people's intellectual capacity -- things like their IQs, years of schooling and test scores -- but also on their behavioral traits -- like their openness to new experiences, conscientiousness and extroversion. In other words, we need to measure people's "non-cognitive" skills and see how they affect their ability to prosper. [What can get you a better salary: an extra year of education or always showing up to work on time? Remembering more facts or being a bit more curious? Being right or being collegial?] At the moment, very few countries invest in that kind of statistics. That's why the central question in indigenous development remains unanswered.