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Hernando de Soto (economist)
Hernando de Soto (born 1941 in Arequipa) is a Peruvian economist, author of The Other Path (1986) and The Mystery of Capital (2000). He is the director of Peru's Institute for Liberty and Democracy (ILD), located in Lima.
The main thesis of De Soto's books is that people in developing countries have only informal ownership of land and goods, without interaction with the formal legal and economic systems. This makes it impossible for the poor to convert their informal ownerships into capital which De Soto claims would form the basis for entrepreneurship. Hence farmers in much of the developing world remain trapped in subsistence agriculture.
De Soto lived for many years in Europe. He did post-graduate work at the Institut Universitaire de Hautes Etudes Internationales in Geneva. He has served as an economist for the General Agreement on Tariffs and Trade (GATT), as president of the Executive Committee of the Copper Exporting Countries Organization (CIPEC ), as managing director of Universal Engineering Corporation, as a principal of the Swiss Bank Corporation Consultant Group, and as a governor of Peru's Central Reserve Bank.
De Soto was Peruvian president Alberto Fujimori's personal representative and principal advisor until he resigned two months before latter's self-coup in April, 1992. Between 1988 and 1995, he and the ILD were responsible for some four hundred initiatives, laws, and regulations that modernized Peru's economic system. In particular, ILD designed the land reform of Peru's property system which gave titles to more than 1.2 million families and legitimized some 380,000 firms which previously operated in the black market. By granting titles to small coca farmers in the two main coca-growing areas he deprived the Shining Path of safe haven, recruits and money. The leadership was forced to cities where they were arrested. In addition, the ILD initiated the policies for the stabilization of Peru's economy and the taming of inflation, thereby allowing Peru to return to international financial markets.
After the split with Fujimori, he and his institute designed similar programs in El Salvador, Haiti and Egypt and has been contacted by dozens of other heads of state for assistance.
The original Spanish-language title of de Soto's book The Other Path is El Otro Sendero. This was an allusion to countering the Shining Path guerrillas; the Spanish for "Shining Path" is Sendero Luminoso.
On May 6th, 2004 de Soto received the Milton Friedman Prize for Advancing Liberty and a $500,000 cash award for his contribution to the advancement of private property rights in developing countries.
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