Small Business Economics

, Volume 36, Issue 2, pp 157–168

Economic impact of a private sector micro-financing scheme in South Dakota

  • David A. Benson
  • Aaron K. Lies
  • Albert A. Okunade
  • Phanindra V. Wunnava


While poverty rates on Native American Indian reservations are triple the US average. Small business incubation programs, available elsewhere in the US, scarcely exist on the Native American Indian Reservations (NAIRs). Our unique study tests the effects of the Lakota Fund (LF), a private sector small business development initiative on the Pine Ridge Reservation in South Dakota, on the economic development of the NAIRs. Our objective is to determine whether the SBA-like programs (loans, training, and consulting) can improve economic conditions. The 1980–2006 annual county-level (Shannon Co. is ‘treatment,’and Todd Co. is ‘control’) data are a natural experiment. Results indicate that the LF inception and duration significantly raised real per capita income (RPCI)—suggesting not only the success of the LF, but support for the broader notion that privately funded small business initiatives can be used to support economic development of isolated impoverished groups within the US economy.


Economic development Lakota fund Micro-financing Native American Indian reservations Small business incubation 

JEL Classifications

L26 M21 O16 

Copyright information

© Springer Science+Business Media, LLC. 2009

Authors and Affiliations

  • David A. Benson
    • 1
    • 2
  • Aaron K. Lies
    • 2
  • Albert A. Okunade
    • 3
  • Phanindra V. Wunnava
    • 4
    • 5
  1. 1.Department of EconomicsDuke UniversityDurhamUSA
  2. 2.Department of EconomicsUniversity of MemphisMemphisUSA
  3. 3.Department of EconomicsUniversity of MemphisMemphisUSA
  4. 4.Department of EconomicsMiddlebury CollegeMiddleburyUSA
  5. 5.IZA (Institute for the Study of Labor)BonnGermany

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