- i. What are the differences in the income generating strategies between indigenous and nonindigenous households?

- ii. What are the differences in endowments of physical, human, public and social assets between indigenous and other non-indigenous households, and how does this affect income – generating activities?

- iii. What is the potential impact of various public interventions on the welfare (measured by consumption) of indigenous households aimed at increasing access to basic services, markets and infrastructure?

- iv. Are there any potential complementarities or substitutabilities across different interventions aimed at helping indigenous peoples?

- v. What is the role of social networks in the economic choices of indigenous (and nonindigenous) households? For example, do social networks have a positive or a negative effect on the choices of households?

- vi. How does the size of the “social network effect” differ across some key economic choices? Economic choices looked at in the studies include: migration, occupational and sector choice, children’s school attendance and work, use of health services (traditional or modern), and the participation in social assistance programs

- vii. Are the social network effects stronger or weaker for indigenous or non-indigenous households?

# <u>Countries Studied and Data Sources</u>

The countries included in the regional study – Bolivia, Ecuador, Guatemala, Mexico and Peru — were chosen based on the extent to which the indigenous constitute a significant fraction of the population and this selection follows Hall and Patrinos (2006). The empirical analysis combines recent household surveys in each of these countries along with the most recent census data available (for details, see Patrinos and Skoufias 2007).

The paper is organized as follows: section 2 provides an overview of the broad range of views in the literature regarding the causes of the condition of indigenous peoples, and discusses the different approaches to indigenous development that have emerged from these. Section 3 explores findings from the five different country studies in terms of economic opportunity and the constraints indigenous peoples face in taking advantage of these, while Section 4 discusses findings from the analyses of how social networks affect the economic outcomes of the indigenous. Section 5 summarizes findings and discusses implications for public policy.

# **2. ECONOMIC DEVELOPMENT AND INDIGENOUS PEOPLES**

Several hypotheses exist regarding the disadvantaged situation of indigenous peoples and the constraints they face in terms of their access to, and ability to benefit from, economic opportunity. In order to place this work within this myriad of approaches, this section gives a select summary of the literature. We first discuss the asset-based approach, and provide also a review of human capital theory. A set of cultural theories including those that focus on indigenous paths to development is then presented. Not discussed in depth here, is a branch of the literature that focuses on market discrimination, assimilation and the role of stigma. These explanations link closely to a broader set of structural theories commonly used to explain the 3