New Delhi: Economist Hernando De Soto has faced death threats and survived assassination attempts from extremist organizations that opposed his movement to offer government guaranteed title over property in Peru. He estimates that the think tank he founded, the Institute of Liberty and Democracy, has received more than 500kg of explosives over time. Eventually, De Soto prevailed in one of the most radical makeovers of a society that brought an informal economy and thereby bulk of the populace within the regulatory fold through the ingenious effort of providing land titles. Ever since, he has been consulting several governments world over to productionize this philosophy and ensure that the growth process becomes more inclusive.
In the capital recently on a personal visit, De Soto spoke to Mint on the subject as well as the challenges and the need for a resolute political will to implement guaranteed land titles. Edited excerpts:
You have pioneered the notion of dead capital and how it can be leveraged? Have you revised your estimates because I read somewhere that it was $9.3 trillion (Rs365.5 trillion). And how do you see it playing out in emerging economies such as Brazil, India, Russia and China?
The estimate is one based on technologies which we have developed in areas where we have worked, where we have actually only included the buildings that have been obviously created outside the law (in the informal economy). Which isn’t very difficult because we know how to estimate them. And we know with quantity surveying, there is a certain amount of bricks and mortar and there’s a certain amount of iron wherever you go. And therefore to be able to expand to places we have not been, it’s a pretty good estimate of about $10 trillion. That doesn’t account for a lot of things…it doesn’t account for the animals, it doesn’t account for the real market price of the land. Since we don’t know it, we don’t include it. It doesn’t account for business organizations and their machinery because we would have to be in the country to do it. So I would say it is an estimate on the lower side. But that exceeds of course, all foreign aid, all foreign investments and points out quite clearly that the poor have done much more than we think. The poor are doing much more than we think, worldwide.
How do you turn this into live capital?
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