Hernando de Soto (economist) facts for kids

In this article, the family name is de Soto.

Quick facts for kids Hernando de Soto
De Soto in 2014.
Personal details
Born	Hernando Soto y Polar (1941-06-02) 2 June 1941 (age 84) Arequipa, Peru
Education	University of Geneva (BA) Geneva Graduate Institute (MA)
Academic career
Spouse(s)	Gerarda of Orleans-Borboun and Parodi Delfino María del Carmen Toro

Institution	Institute for Liberty and Democracy
Field	Informal economy and property rights
Influences	Milton Friedman Friedrich Hayek Bruno Leoni
Contributions	Dead capital

Hernando de Soto Polar (born June 2, 1941) is a famous Peruvian economist. He is well-known for his ideas about the informal economy and how important it is for people to have clear legal rights to their property and businesses. He leads the Institute for Liberty and Democracy (ILD) in Lima, Peru. This organization works to help countries grow economically.

In Peru, de Soto's advice helped shape economic rules, including making business easier and using new economic ideas. These ideas were adopted by the government of Alberto Fujimori and included in Peru's 1993 Constitution. De Soto also advised Alberto's daughter, Keiko Fujimori, during her presidential campaigns. He worked with different Peruvian governments and even helped negotiate a trade agreement between Peru and the United States.

De Soto ran for president of Peru in the 2021 Peruvian general election, finishing fourth. He met with Pedro Castillo during his time as president and asked Dina Boluarte to step down during social protests. He also tried to run in the 2026 elections but later withdrew his candidacy.

Internationally, de Soto's ideas influenced important economic plans like the Washington Consensus. He also supported the North American Free Trade Agreement (NAFTA). Many world leaders, including George H. W. Bush, Bill Clinton, Vladimir Putin, Emmanuel Macron, Ronald Reagan, and Margaret Thatcher, have recognized his work. The ILD has also received praise from important figures like Nobel Prize winner Milton Friedman and former UN Secretary-General Javier Pérez de Cuéllar.

Growing Up and School

Hernando de Soto was born on June 2, 1941, in Arequipa, Peru. His father, José Alberto Soto, was a diplomat and lawyer. After a military change in Peru in 1948, his family moved to Europe. His father worked for an international organization, and Hernando often visited Peru during his summer breaks.

De Soto went to school in Switzerland at the International School of Geneva. He studied social psychology in Peru and later earned a bachelor's degree in economics from the University of Geneva. In 1967, he received a master's degree in international law and economics from the Graduate Institute of International Studies in Geneva.

His Work in Economics

After his studies, Hernando de Soto worked as an economist for international trade organizations. He also led a company and worked for a Swiss bank.

Starting the Institute for Liberty and Democracy

De Soto returned to Peru in 1979. He met with important thinkers who believed in free markets. With their help, he started the Institute for Liberty and Democracy (ILD) in 1981. This organization aimed to help developing countries improve their economies. The ILD received support from various international groups to promote its ideas in Peru. They focused on helping people who lived in informal housing.

Advising the Fujimori Government

Between 1988 and 1995, de Soto and the ILD played a big part in changing Peru's economy. They introduced many new laws and rules. De Soto became an important advisor to President Alberto Fujimori. He helped Fujimori deal with Peru's economic problems from the 1980s.

De Soto suggested big economic changes for Peru. He helped Fujimori meet with leaders from international financial groups. These meetings led to new economic policies, including changes to prices and selling some state-owned businesses. These policies helped stabilize Peru's economy and reduce inflation.

De Soto's ideas also influenced efforts to address groups causing conflict in Peru. By giving legal property titles to farmers, his work helped reduce the influence of these groups. This made it harder for them to find safe places and new members.

Helping People Own Land

From 1992 to 1994, the ILD started a program to help people legally register their homes. This program helped over a million households get official land titles. The goal was to give poor Peruvians more security and opportunities. The ILD believed that owning property legally would help people work more and improve their lives.

Leaving the Fujimori Government

De Soto left his advisory role in January 1992. He expressed concerns about the government's direction and issues with illegal trade. He also spoke out against Fujimori's actions that were not democratic. De Soto later helped pressure Fujimori to hold democratic elections to prevent further economic problems.

International Influence

The Washington Consensus

De Soto was a key contributor to the Washington Consensus. This was a set of economic ideas suggested by international organizations for countries facing economic difficulties. Economists in the United States used de Soto's ideas to promote these policies. His work helped explain why some countries struggled economically.

However, these policies sometimes led to social problems and weakened worker groups in Latin America. This caused many people to become unhappy with these economic approaches.

North American Free Trade Agreement (NAFTA)

De Soto supported the creation of the North American Free Trade Agreement (NAFTA). This agreement aimed to make trade easier between North American countries. President George H. W. Bush praised de Soto's ideas when announcing NAFTA in 1989. Bush said that de Soto's work helped people understand how economic freedom could lead to progress.

De Soto believed that NAFTA would help bring modern ways of doing business to Latin America. He thought it would help countries like Mexico grow economically.

Advising Other Countries

Hernando de Soto and Muammar Gaddafi in 2008 after Libya signed a contract with the Institute for Liberty and Democracy

After its start in Peru, the ILD worked in many other countries. Leaders in over 35 nations asked for the ILD's help. They wanted to learn how de Soto's ideas about property rights could improve their economies. De Soto advised various leaders, focusing on economic solutions.

In 2006, de Soto helped negotiate the Peru–United States Trade Promotion Agreement. This was a free trade agreement between Peru and the United States. In 2009, the ILD also looked into the problems faced by indigenous people in the Peruvian Amazon. They studied how property rights could help these communities.

De Soto also advised Keiko Fujimori during her presidential campaigns in 2011 and 2016. He supported her plans to use his property rights reforms.

His Political Journey

Running for President in 2001

Hernando de Soto wanted to run for president in the 2001 Peruvian general election. He tried to form his own political party, but he couldn't register it in time. He was offered a chance to run with another party or become Prime Minister, but he turned down these offers.

The 2021 Presidential Campaign

In September 2020, de Soto announced he would run for president in the 2021 Peruvian general election with the Go on Country party. He put together a team of experts and former officials to support his campaign.

During the campaign, de Soto faced a controversy about vaccine access. He also promised to work with the United Nations to manage who could enter Peru. He wanted to improve Peru's education system and increase funding for health. In the end, he placed fourth among many candidates.

Prime Minister Designate in 2026

On February 22, 2026, the government of José María Balcázar announced Hernando de Soto as the new Prime Minister. However, his appointment was later changed, and Denisse Miralles was sworn in instead.

De Soto's Main Idea

Hernando de Soto's main idea is that countries need a clear system to record who owns property and businesses. He believes that without this, many small business owners and entrepreneurs cannot grow. If people don't have legal ownership, it's hard for them to get loans, sell their businesses, or expand. They also can't easily solve business problems in court.

He explains that when people's assets (like homes or small businesses) are not legally recognized, they become "dead capital." This means these assets can't be used to create more wealth. De Soto argues that many people in developing countries are stuck in poverty because they don't have easy access to a legal system that recognizes their property.

He believes that a strong legal system for property rights helps society in many ways. It allows people to get credit, create insurance, and build better homes and infrastructure. These are all important for a modern economy to work well and help everyone succeed.

His Research and Ideas

Since 2008, de Soto has continued to develop his ideas about how property rights are important for development. He found that many global problems are linked to unclear property rights. He suggested that economic problems in the U.S. and Europe were partly due to a lack of clear information about property.

De Soto wrote that "Capitalism lives in two worlds." One is the visible world, and the other is made of property information in laws and records. He believes this information helps us understand and organize our economy. He argued that fixing these information systems is key for economies to recover.

He also studied the economic reasons behind protests in Arab countries. His research in Egypt showed that most property was not formally owned. He pointed to a street vendor in Tunisia whose protest over his goods sparked wider unrest. De Soto believed these events showed how important it is for ordinary people to have legal rights to their assets.

In Peru, de Soto has also worked on solutions for conflicts related to mining. He supports making informal mining activities legal. He believes this can help solve disagreements between local communities and large companies.

Economic Solutions for Conflict

In 2014, de Soto wrote an article called "The Capitalist Cure for Terrorism." He argued that giving people more economic power could help defeat groups causing conflict. He suggested that if ordinary people have legal ways to earn a living, they are less likely to join such groups. He believed that promoting strong property rights could help bring peace.

Exploring New Technologies

De Soto has also explored how new technologies, like blockchain, could help record property ownership. He believes that blockchain could be a public record system to help formalize property rights for many people, including indigenous communities. He presented these ideas to leaders in the United Arab Emirates.

Awards and Recognition

Hernando de Soto has received many awards for his work. Time magazine named him one of the top Latin American innovators of the century in 1999. They also included him among the 100 most influential people in the world in 2004. Forbes magazine listed him as one of the 15 innovators who would "reinvent your future."

Some of his notable awards include:

The Fisher Prize from the Atlas Network (1990)
The Freedom Prize (Switzerland) (1995)
The Goldwater Award (USA) (2002)
The Milton Friedman Prize for Advancing Liberty (USA) (2004)
The 2006 Bradley Prize for outstanding achievement (2006)
The 2006 Innovation Award from The Economist magazine for promoting property rights (2006)
The inaugural Hernando de Soto Award for Democracy from the Center for International Private Enterprise (CIPE) (2009)
The 2016 Brigham–Kanner Property Rights Prize (2016)
The Global Award for Entrepreneurship Research (2017)

Publications

Books

De Soto has written two important books about economic development. His first book, The Other Path: The Invisible Revolution in the Third World, was published in 1986. A new edition in 2002 was called The Other Path, The Economic Answer to Terrorism. His second book, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, came out in 2000. Both books have been very popular and translated into many languages.

The original Spanish title of The Other Path was El Otro Sendero. This title referred to de Soto's ideas for development in Peru, offering a different way out of poverty than violent groups. Because of his ideas, de Soto and his organization faced threats. In 1992, an attack on the ILD headquarters in Lima caused harm to several people.

He also co-wrote Swiss Human Rights Book Volume 1: Realizing Property Rights in 2006. This book discusses how important property rights are for small business owners, women, and other vulnerable groups in poorer countries.

De Soto, Hernando. The Other Path: The Invisible Revolution in the Third World. Harpercollins, 1989. ISBN: 0-06-016020-9
De Soto, Hernando. The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. Basic Books, 2000. ISBN: 0-465-01614-6
De Soto, Hernando. The Other Path: The Economic Answer to Terrorism. Basic Books, 2002. ISBN: 0-465-01610-3
De Soto, Hernando and Francis Cheneval. Swiss Human Rights Book Volume 1: Realizing Property Rights, 2006. ISBN: 978-3-907625-25-5
Smith, Barry et al. (eds.). The Mystery of Capital and the Construction of Social Reality, Chicago: Open Court, 2008. ISBN: 0-8126-9615-8