Peruvian economist Hernando De Soto is the sort of scholar a classical liberal like myself clings to with complete desperation. If anyone asks me about development issues, I simply reply "go read De Soto - especially the second half of The Other Path, that'll sort you out..."
Of course I should be careful not to fall into the trap of dogma, but most debate on poverty is fatally unaware of De Soto's great contribution: the poor are rich.
Unlike the recommendations of Jeffrey Sachs I do not think that "charity" is a solution. It's naive to think that lasting change will result from trying to transfer as much money as possible from "us" to "them", rather to provide the institutions that will allow developing nations to utilise the capital they already have. Developing nations are rich in ingenuity and hard work but with too little property rights/rule of law and too much bureaucracy/regulation they don't stand a chance.
People use "capital" to mean different things, and we should recognise that capital in the form of knowledge, skills, equipment and machinary is what's needed, not just cash that can easily be laundered.
As a contemporary example of such research, check out Steve Daley and Frederic Sautet's Mercatus Policy Paper: Microfinance in Action: The Philippine Experience.pdf
Stephen Pollard provides an exclusive interview with De Soto on his blog, and I heartily recommend it. Yes, the poverty of the third world is a complex issue. But until people accept that our intention should be to uncover capital, rather than transfer it, i'll resolutely continue to blindly and unashamedly advertise De Soto.
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