Hernando de Soto is famous for his work on reducing the size of the informal sector and paving the way for people to be part of the formal economy and to participate in a democracy. But to us at CIPE he is also known as the first person – literally – who walked through our doors when we opened back in 1984. A program with Hernando’s Institute for Liberty and Democracy in Peru was our very first project. And since that first project he remained a good friend of CIPE, a committed supporter of market reforms and democratic institutions around the world.
De Soto gained a lot of global visibility since we first met him in the 1980s – some may even say he has a celebrity status these days. He advises presidents; he is known worldwide for offering economic solutions to terrorism; and he has been nominated for a Nobel prize in economics. Throughout the years, however, much of de Soto’s approach to economic and political reforms remained the same at its core – for market economies and democracies to work, people must have a stake in the system.
In de Soto’s view, reformers must remove barriers to business, secure property rights, provide incentives for people to participate in the economy, and open avenues for political participation. Only then you can expect people to move up the development ladder, from the uncertainty and survival entrepreneurship of the informal sector to prosperity and value creation of the formal market economy. Although de Soto is frequently perceived (and criticized for) as advocating property rights titles – the reality is that he actually talks about broader institutional reforms, of which property rights titles are only a part, albeit an important one. And he not only talks about it – he actually does it – not only in Peru, but in other countries around the world.
Recently, John Sullivan, our executive director, sat down with Hernando to talk about the future of reform in Latin America in the context of his work. Is it reasonable to expect support for free markets in the region? What is the future of democracy in Latin America? What do citizens see as their primary concerns and who can offer best solutions to their problems? You can see Hernando de Soto talk about these topics and his work below.