Word: soto
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Dates: during 2000-2009
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...think the global economy is vast now, wait until Hernando de Soto is through with it. Where most see Egyptian shantytowns, De Soto sees tiny businesses and homes that together are worth 35 times more than the companies traded on the Cairo stock exchange. That grimy army of Mexico City street vendors, he claims, is part of an underground economy that helps create 85% of Latin America's new jobs. All it takes to jump-start economic growth in poor nations, he insists, is to legalize those clandestine markets, unleashing legions of new creditworthy entrepreneurs who can be trading partners...
...seems too easy a fix for a problem that has bedeviled development experts for a century. But De Soto's commonsense simplicity, laid out in his latest book, The Mystery of Capital, has heads of state from Haiti to Pakistan lining up for his advice...
...Soto, 59, an economist, first cited the potency of shadow economies in his seminal 1989 book, The Other Path. His new work argues that most market-oriented reforms have failed to help the poor because clubby oligarchs and red tape have shut them out. In Peru it takes a year or more to legally start a business--and it costs, in government fees, 31 times the minimum monthly wage. To legally own a home in the Philippines, De Soto says, requires a wait of as long as 25 years and 168 often venal bureaucratic steps. As a result, the Third...
Granting the poor title to their homes and businesses would allow them to use that collateral to borrow or raise capital for business expansion, De Soto says. He notes that the property-title revolution of the 18th and 19th centuries was a catalyst for capitalism's triumph in Western Europe and North America...
With the collapse of crony capitalist regimes like the one in Indonesia, and as oligarchic nations like Mexico elect more democratic presidents, De Soto's timing is propitious. His Third World clients hope that property-title reform will especially benefit industries like clothing, auto parts and agriculture--where the foreign-trade potential for extralegal businesses is enormous. Haitian President Jean-Bertrand Aristide wants to slice through medieval red tape and legalize his nation's extralegal assets, which amount to $5.2 billion--four times its legal assets. "We would," he says, "finally put our people in partnership with the system...