Hernando de Soto (economist) facts for kids
Quick facts for kids
Hernando de Soto
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De Soto in 2014
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Hernando Soto y Polar
June 2, 1941 |
| Institution | Institute for Liberty and Democracy |
| Field | The economics of the informal sector and property rights theory |
| Alma mater | University of Geneva (BA) Geneva Graduate Institute (MA) |
| Influences |
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| Contributions | Dead capital |
| Political party | Progresemos (2024–present) |
| Spouse(s) | Gerarda of Orleans-Borboun and Parodi Delfino (div.) María del Carmen Toro (div.) |
| Partner(s) | Carla Olivieri |
Hernando de Soto Polar (born June 2, 1941) is a Peruvian economist. He is famous for his ideas about the informal economy and the importance of property rights. The informal economy includes businesses that are not officially registered or regulated. Property rights are the legal rules that say who owns what.
De Soto's work has been praised by many world leaders. His books, The Mystery of Capital and The Other Path, are well-known. He leads the Institute for Liberty and Democracy (ILD) in Lima, Peru. This group works to help countries grow economically.
In Peru, de Soto's advice helped shape the country's economic rules. These rules included making it easier for businesses to operate and using policies that encouraged free markets. These changes helped Peru become more economically stable after a difficult period. De Soto also advised Keiko Fujimori during her campaigns for president. He worked with different Peruvian governments, even helping to negotiate a trade agreement between Peru and the United States. In 2021, de Soto ran for president of Peru and finished fourth.
Internationally, de Soto's ideas influenced the "Washington Consensus." This was a set of economic policies suggested for countries facing money problems. Leaders like George H. W. Bush, Bill Clinton, and Margaret Thatcher have recognized de Soto's work. Important organizations like the World Bank have also praised the ILD.
Contents
Early Life and Education
Hernando de Soto was born in Arequipa, Peru, on June 2, 1941. His father was a diplomat and lawyer. After a military takeover in Peru in 1948, his family moved to Europe. His father worked for the International Labour Organization, and Hernando would visit Peru in the summers.
De Soto went to school in Switzerland. He studied social psychology in Peru before returning to Geneva. He 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.
His younger brother, Álvaro de Soto, worked as a diplomat for Peru and the United Nations.
Economics Career
After his studies, de Soto worked as an economist for international trade organizations. He also led a group for copper-exporting countries and worked for a Swiss bank.
Starting the Institute for Liberty and Democracy
De Soto returned to Peru in 1979. At that time, new economic ideas about free markets were becoming popular. He met Friedrich Hayek, a supporter of free markets, who encouraged de Soto's work. De Soto then connected with Sir Antony Fisher, a British businessman. Fisher helped de Soto create the Institute for Liberty and Democracy (ILD) in 1981. This was one of the first groups in Latin America to promote free market ideas.
The ILD also received funding from the United States government, including the National Endowment for Democracy. The ILD focused on helping people who lived in informal housing.
Working with the Fujimori Government
Between 1988 and 1995, de Soto and the ILD helped create many new laws and rules in Peru. These changes greatly affected Peru's economy. De Soto became an informal advisor to President Alberto Fujimori. He helped Fujimori deal with Peru's economic problems from the 1980s.
De Soto suggested a "shock" plan for Peru's economy. He convinced Fujimori to meet with leaders from the International Monetary Fund and the World Bank. These groups advised Fujimori to follow certain economic policies. These policies included raising taxes, letting prices be set by the market, and selling off government-owned businesses. De Soto's policies helped stabilize Peru's economy and reduce inflation. However, poverty remained a big challenge.
Land Title Program
From 1992 to 1994, the ILD started a program to officially register homes for 200,000 Peruvian families. This program later grew to include more cities. By 2004, 1.4 million homes were registered, and 920,000 land titles were given out.
The ILD reported that homeowners in this program worked more hours outside the home. They also said that child labor decreased because families no longer needed to guard their homes from being taken.
Resignation from Fujimori's Team
De Soto left his role as President Fujimori's advisor in January 1992. He disagreed with some of Fujimori's actions, especially those influenced by the head of the National Intelligence Service. De Soto called Fujimori's later self-coup "unconstitutional." After many countries stopped investing in Peru because of this, de Soto helped pressure Fujimori to hold democratic elections.
International Policy
Washington Consensus
De Soto was a key person in developing the "Washington Consensus." This was a set of economic rules suggested by groups like the International Monetary Fund and the World Bank. These rules were meant to help countries in economic trouble. Economists in the United States used de Soto's ideas to promote these policies.
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 the United States, Canada, and Mexico. President George H. W. Bush praised de Soto for his support of free trade when announcing NAFTA. De Soto believed NAFTA would help bring modern ideas to Latin America.
Advisory Work
After its start in Peru, de Soto's ILD worked in many other countries. Leaders from over 35 countries have asked the ILD for advice on how property rights could improve their economies. The ILD has worked with the World Bank and designed programs in countries like El Salvador, Haiti, and Egypt. De Soto has advised various political leaders, stating that his focus is on the economic ideas.
In 2006, de Soto helped negotiate the Peru–United States Trade Promotion Agreement. In 2009, the ILD focused on helping indigenous people in the Peruvian Amazon. They studied how property rights could help these communities.
De Soto also advised Keiko Fujimori in her presidential campaigns in 2011 and 2016. He supported her promise to use his property rights reforms.
Political Career
2021 Presidential Campaign
De Soto announced he would run for president in September 2020. He ran under the "Go on Country" party. He had considered running before but worried it might make his work with the ILD seem political.
In late 2020, de Soto presented his team, which included business leaders and former government officials. He faced some challenges during his campaign, including questions about his academic degrees. He also spoke about managing the COVID-19 pandemic.
De Soto finished fourth in the 2021 Peruvian presidential election.
Main Ideas
De Soto's main idea is that countries need clear systems to record who owns property and other economic information. He believes that when businesses and people operate informally (without legal ownership), they cannot easily get loans, sell their businesses, or grow. They also cannot use the legal system to solve problems because their ownership is not official.
De Soto calls housing assets that are not legally registered "dead capital." He argues that this "dead capital" cannot be used to create more wealth. He believes that fixing these "property rights distortions" is key to economic recovery and growth.
He has also linked property rights to global issues like the Arab Spring. He argued that these revolutions were partly driven by people in the informal economy who felt frustrated because they lacked official property rights.
De Soto has also suggested that strong property rights can help fight terrorism. He believes that if ordinary people can legally own and use their property, they will be less likely to support extremist groups.
He has also discussed modern topics like blockchain technology. He believes blockchain could be a useful tool for creating public records of property ownership.
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. In 2004, they included him among the 100 most influential people in the world. Forbes magazine also listed him as one of the innovators who would "reinvent your future."
Some of his notable awards include:
- The Fisher Prize (1990)
- The Freedom Prize (1995)
- The Goldwater Award (2002)
- The Adam Smith Award (2002)
- The Templeton Freedom Prize (2004)
- The Milton Friedman Prize for Advancing Liberty (2004)
- An honorary Doctor of Letters from the University of Buckingham (2005)
- The Bradley Prize (2006)
- The Innovation Award from The Economist magazine (2006)
- The Hayek Medal (2010)
- The Brigham–Kanner Property Rights Prize (2016)
- The Global Award for Entrepreneurship Research (2017)
De Soto is also an honorary co-chair for the World Justice Project, which works to promote the rule of law worldwide.
See also
In Spanish: Hernando de Soto (economista) para niños
- Contributions to liberal theory
- Liberalism
- Milton Friedman
- The Other Path: The Economic Answer to Terrorism
