In today's excerpt, Hernando De Soto and his research team, rigorous and quantitative explorers of the economic failures of poor countries, dismiss the suggestion that these failures have anything to do with deficiencies in cultural or genetic heritage. They argue that despite the poor having accumulated trillions of dollars of real estate during the past 40 years, it is their lack of property rights--clear title and the legal system to support it--that prohibits them from turning assets into capital through such instruments as mortgages, and thus retards their progress:
"...By our calculations, the total value of the real estate held but not legally owned by the poor of the Third World and former communist nations is at least $9.3 trillion.
...It is very nearly as much as the total value of all the companies listed on the main stock exchanges of the world's twenty most developed countries: New York, Tokyo, London, Frankfort, Toronto, Paris, Milan, the NASDAQ, and a dozen others. It is more than twenty times the total direct foreign investment into all Third World and former communist countries in the ten years after 1989, forty-six times as much as all the World Bank loans of the past three decades, and ninety-three times as much as all the development assistance from all advanced countries to the Third World in the same period.
...The words "international poverty" too easily bring to mind images of destitute beggars sleeping on the curbs of Calcutta and hungry African children starving on the sand. A truer image would depict a man and woman who have painstakingly saved to construct a house for themselves and their children and who are creating enterprises where nobody imagined they could be built. I resent the characterization of such heroic entrepreneurs as contributors to the problem of global poverty.
They are not the problem. They are the solution."
Hernando De Soto, The Mystery of Capital, Basic Books, 2000, pp 35-36