Dead Capital & the Poor (De Soto, 2001)
8 important questions on Dead Capital & the Poor (De Soto, 2001)
What does this paper by Soto describe?
This paper broadly outlines the conceptual lags and the concrete obstacles which impede formalization. It provides evidence from the case of Egypt and contains some policy suggestions that may assist the governments of developing countries.
Why is There So Much Dead Capital?
- The issue of poverty
- For a real shift to occur, the lives of ordinary citizens in countries embarked on economic reform programs must improve noticeably.
- access to formal property.
- Property right must be formalized
What to do to become ''live capital''
To become “live capital,” these assets
must first be formalized so that ownership can be traced and validated and exchanges can be governed by a legally recognizable set of rules.
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Why Has Property Formalization Not Been Addressed? Name 4 lags
2. Political lag
3. Cultural lag
4. Technocratic lag
From Political lag: Why Has Property Formalization Not Been Addressed?
- The problem is not that governments of developing countries are unwilling to recognize property rights.
- the systems that there are for formalizing property are very slow, bureaucratic and complex.
From Cultural lag: Why Has Property Formalization Not Been Addressed?
- One of the main problems today is that economists and policymakers do not fully realize that property exists in a social and not a physical space.
From Technocratic lag: Why Has Property Formalization Not Been Addressed?
- Property, like all institutions, is built by human agreement for specific purposes.
- Not enough resources have been dedicated to understanding how it is created, its social underpinnings and their implications.
- Resources are instead spent on technological devices and services that did not even exist when the West created formal property.
The basic problems that must be resolved if formalization of real estate and business in LDCs and FCNs is to be successful can be grouped into three categories:
- Most property is in the informal sector and cannot be formalized
- Existing formal organizations and institutions are not designed to deal with informality
- Ownership is only one segment of the larger formalization process that converts “property” into “capital.”
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