Hernando de Soto Polar - Reforms in Peru and Elsewhere

Reforms in Peru and Elsewhere

Between 1988 and 1995, he and the Institute for Liberty and Democracy (ILD) were responsible for some four hundred initiatives, laws, and regulations that changed Peru's economic system.

In particular, ILD designed the administrative reform of Peru's property system which has given titles to more than 1.2 million families and helped some 380,000 firms which previously operated in the black market to enter the formal economy. This latter task was accomplished through the elimination of bureaucratic "red-tape" and restrictive registration, licensing and permit laws that made the opening of new businesses very time-consuming and costly.

Yale University political scientist Susan C. Stokes believes that de Soto's influence helped change the policies of the recently elected Alberto Fujimori from a Keynesian to a neoliberal approach. De Soto convinced then-president Fujimori to travel to Chicago, Illinois, where Fujimori met with several important figures within the International Monetary Fund, the US Department of State, and the Chinese embassy, who convinced him that he had to abide by the rules set by the international financial institutions. These policies led to a reduction in the rate of inflation.

The Cato Institute and The Economist magazine have argued that de Soto's policy prescriptions brought him into conflict with and eventually helped to undermine the Shining Path guerrilla movement. By granting titles to small coca farmers in the two main coca-growing areas, he deprived the Shining Path of safe haven, recruits and money, they have argued, and the leadership was forced to cities where they were arrested. ILD notes a large terrorist attack on de Soto and statements by Shining Path leader Abimael Guzman who saw ILD as a serious threat.

After the split with Fujimori, he and his institute designed similar programs in El Salvador, Haiti, Tanzania, and Egypt, and has gained favor with the World Bank, the World Bank allied international NGO Slum Dwellers International and the government of South Africa.

Since its work in Peru in the 1980s, his institute, the ILD, has worked in 23 countries. Heads of state in 35 countries have sought the ILD's services, and ILD staff has personally met with 29 of them to discuss precisely what the ILD might do to help their economies prosper.

The impact of de Soto's institute in the field of development –on political leaders, experts and multi-lateral organizations– has been widespread and acknowledged. For example:

• The ILD's Institutional reform Program has attracted the interest of strategically key nations concerned with internal conflict and terrorism.
• The ILD has designed successful reforms that have inspired major initiatives in former client countries, such as Egypt, the Philippines, Honduras, and Tanzania.
• The ILD's influence and ideas have also inspired reforms in countries where it has yet to work, such as China, Russia, South Africa, Thailand, and India, which includes two of the world's fastest growing emerging economies.
• The ILD is recognized as the world authority in understanding extralegal economies, influencing the protocols of large multilateral organizations by helping them to understand the realities that the poor and the excluded face, day to day. These include institutions such as the Commission for Legal Empowerment of the Poor, the Inter-American Development Bank (IDB), USAID and the World Bank.

In 2009, the ILD turned its attention back to Peru and the plight of the indigenous peoples of the Peruvian Amazon jungle. In response to Peruvian President García's call to all Peruvians to present their proposals toward solving the problems leading to the bloody incidents in Bagua, the ILD has assessed the situation and presented its preliminary findings. ILD has published a short videotaped documentary, The Mystery of Capital among the Indigenous Peoples of the Amazon, summarizing its findings from indigenous communities in Alaska, Canada and the Peruvian jungle.