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Story involves 2 races, in the same or neighboring star systems, who are both contacted by Earth explorers. One race is reptiloid, somewhat primitive and rather prickly, the other is more humanoid, peaceful, artistic and more "cultured". Earth offers technical aid and cultural contact to both. The leader of the reptiloids refuses this, and I think does something to insure it never happens- he becomes a pariah as a result. Many years later, the humanoids' culture is corrupted, its artworks looted, its people dependent on Earth technology, many of their young addicted to drugs from Earth, etc.

The reptiloids, left to their own devices, developed their own unique technology and spacedrive, have retained their own culture, and are able to stand up to Earth colonialism.

The story really left an impression, though some details may be incorrect. May not actually be Anderson. Possibly also a short novel or novella, though I seem to recall it being in a collection.

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"The Helping Hand", a 1950 novelette by Poul Anderson, previously identified as the answer to this question; originally published in Astounding Science Fiction, May 1950, available at the Internet Archive.

Story involves 2 races, in the same or neighboring star systems, who are both contacted by Earth explorers.

The misfortune was that the suns Skang and Avaiki, forming a system about half a light-year apart, had a third companion which humans usually called Allan, after the captain of the first expedition to the system. And the planets of Allan were uninhabited.

When terrestrial technology came to Skontar and Cundaloa, its first result had been to unify both planets—ultimately—both systems into rival states which turned desirous eyes on the green new planets of Allan. Both had had colonies there, clashes had followed, ultimately the hideous five years' war which had wasted both systems and ended in a peace negotiated with terrestrial help.

One race is reptiloid, somewhat primitive and rather prickly,

Not reptiloid, but prickly:

He stood out in the room, seeming to fill it with his strong, forbidding presence. In spite of coming from a world of higher gravity and lower temperature, the Skontarans were a huge race, over two meters tall and so broad that they seemed stocky. They could be classed as humanoid, in that they were bipedal mammals, but there was not much resemblance beyond that. Under a wide, low forehead and looming eyebrow ridges, the eyes of Skorrogan were fierce and golden, hawk's eyes. His face was blunt-snouted, with a mouthful of fangs in the terrific jaws; his ears were blunt and set high on the massive skull. Short brown fur covered his muscular body to the end of the long restless tail, and a ruddy mane flared from his head and throat. In spite of the, to him, tropical temperature, he wore the furs and skins of state occasions at home, and the acrid reek of his sweat hung about him.

the other is more humanoid, peaceful, artistic and more "cultured".

Ralph Dalton let his eyes sweep over the ambassador. Valka Vahino was typical of his race—humanoid mammal, biped, with a face that was very manlike, differing only in its beauty of finely chiseled features, high cheekbones, great dark eyes. A little smaller, more slender than the Earthlings, with a noiseless, feline ease of movement. Long shining blue hair swept back from his high forehead to his slim shoulders, a sharp and pleasing contrast to the rich golden skin color. He was dressed in the ancient ceremonial garb of Luai on Cundaloa—shining silvery tunic, deep-purple cloak from which little sparks of glittering metal swirled like fugitive stars, gold-worked boots of soft leather. One slender six-fingered hand held the elaborately carved staff of office which was all the credentials his planet had given him.

[. . . .]

"Oh, yes," smiled Vahino. "It is the ambition of all young anamai, men on Cundaloa, to come to Earth, if only for a visit. It is not mere flattery to say that our admiration for you and your achievements is boundless."

"It's mutual," said Dalton. "Your culture, your art and music, your literature—all have a large following in the Solar System. Why, many men, and not just scholars, learn Luaian simply to read the Dvanagoa-Epai in the original. Cundaloan singers, from concert artists to nightclub entertainers, get more applause than any others." He grinned. "Your young men here have some difficulty keeping our terrestrial coeds off their necks. And your few young women here are besieged by invitations. I suppose only the fact that there cannot be issue has kept the number of marriages as small as it has been."

Earth offers technical aid and cultural contact to both. The leader of the reptiloids refuses this, and I think does something to insure it never happens—

Skorrogan is not the head of the planet, but he is Skontar's ambassador to a conference on Earth for the purpose of discussing a recovery program for Skontar and Cundaloa after their war. He did not refuse aid directly, but he achieved the same result by insulting the hosts:

This time the silence lasted a long while. And Dalton realized, with a sudden feeling almost of physical illness, that Skorrogan had damaged his own position beyond repair. Even if he suddenly woke up to what he was doing and tried to make amends—and who ever heard of a Skontaran noble apologizing for anything—it was too late. Too many millions of people, watching their telescreens, had seen his unpardonable arrogance. Too many important men, the leaders of Sol, were sitting in the same room with him, looking into his contemptuous eyes and smelling the sharp stink of unhuman sweat.

There would be no aid to Skontar.

he becomes a pariah as a result.

"I cannot strip you of your hereditary titles and holdings," said the Valtam. "But your position in the imperial government is ended, and you are no longer to come to court or to any official functions. Nor do I think you will have many friends left."

Many years later, the humanoids' culture is corrupted, its artworks looted, its people dependent on Earth technology, many of their young addicted to drugs from Earth, etc.

"You won't find significant art, literature, music here any more—just cheap imitations of Solarian products, or else an archaistic clinging to outmoded native traditions, romantic counterfeiting of the past. You won't find science that isn't essentially Solarian, you won't find machines basically different from Solarian, you'll find fewer homes every year which can be told from human houses. The old society is dead; only a few fragments remain now. The familial bond, the very basis of native culture, is gone, and marriage relations are as casual as on Earth itself. The old feeling for the land is gone. There are hardly any tribal farms left; the young men are all coming to the cities to earn a million credits. They eat the products of Solarian-type food factories, and you can only get native cuisine in a few expensive restaurants.

"There are no more handmade pots, no more handwoven cloths. They wear what the factories put out. There are no more bards chanting the old lays and making new ones. They look at the telescreen now. There are no more philosophers of the Araclean or Vranamauian schools, there are just second-rate commentaries on Aristotle versus Korzybski or the Russell theory of knowledge—"

The reptiloids, left to their own devices, developed their own unique technology and spacedrive, have retained their own culture, and are able to stand up to Earth colonialism.

"You know the result. Dyrin's semantics was developed—Solarian scientists would have laughed it to abortion. We developed the tetrahedral ship, which human engineers said was impossible, and now we can cross the Galaxy while an old-style craft goes from Sol to Alpha Centauri. We perfected the spacewarp, the psychosymbology of our own race—not valid for any other—the new agronomic system which preserved the freeholder who is basic to our culture—everything! In fifty years Cundaloa has been revolutionized, Skontar has revolutionized itself. There's a universe of difference.

And we've therefore saved the intangibles which are our own, the art and handicrafts and essential folkways, music, language, literature, religion. The élan of our success is not only taking us to the stars, making us one of the great powers in the Galaxy, but it is producing a renaissance in those intangibles equaling any Golden Age in history.

"And all because we remained ourselves."

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