Living in Peru : your everyday companion

Hernando de Soto: Fighter against shadow economies

Hernando de Soto advises governments who want to get a clearer picture on the economic potential of their own countries. To achieve that he and is co-workers use their experience gathered in Peru in the 80s. Back then the Institute for Liberty and Democracy (ILD) found out that nine out of ten small businesses weren’t registered; 85 percent of all taxis and buses were driven without a license, six out of ten shops were operated unofficially. And these businessmen also informally created the greater majority of real estate and companies in this country – without ever being annotated in a cadastral or trade register. Officially they owned nothing. In reality they possessed great values.

Since then, in all countries de Soto and his team went to work meticulously, they discovered possessions of immense values that were disavowed by the State. In particular the value of unregistered land and real estate property in “third world” countries and the ex-Soviet Union is, according to de Soto’s estimates, about 9,300 billion US dollars.

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