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This study analyzed investment projects on some of the best situated Indian reserves in Canada and compared them to projects off-reserve. It found that the lack of opportunities on reserve has resulted from the imposed system of First Nation governance, which has artificially raised the costs of doing business. It can cost four to six times as much to put together a major investment project on reserve and it takes much longer to take a project from the proposal to operating stages. As a result, even favorably located reserves have low business presence and see potential investment diverted to adjacent jurisdictions even when these alternative locations are less favorably sited. Keywords: First Nations, Transaction Costs, Economic Development, Market Failure, Investment, 1. INTRODUCTION Canadians often voice disappointment with the results of government spending aimed at improving the economic fortunes of First Nation persons. They see billions of dollars spent each year [...]