Peru's Economy
Hernando de Soto and Dead Capital
How Peruvian economist Hernando de Soto argued that poor people hold dead capital in untitled property, and the land titling programmes that followed.
Hernando de Soto is a famous Peruvian economist.
The Other Path
His 1986 book The Other Path described Peru’s informal economy.
Dead capital
In The Mystery of Capital (2000), he argued the poor hold assets like homes, but without legal titles they can’t use them as collateral for loans. He called this dead capital.
Titling
Peru’s COFOPRI gave legal titles to over a million urban households from the 1990s.
Evidence
Studies found titling increased work outside the home and investment in homes, but effects on credit were modest.
India
India’s SVAMITVA scheme (2020) maps rural properties to give owners legal cards.
A family in a Lima settlement receives a legal title, feeling secure enough to add a second floor.
Credit effects were modest.
- De Soto wrote The Other Path in 1986.
- Untitled assets are dead capital.
- Peru titled over a million homes.
- India's SVAMITVA follows a similar idea.
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