Property rights and the mystery of capital: A review of de Soto’s simplistic solution to development

Abstract

De Soto argues that formally establishing individually titled property rights releases value that can assist the poor in lower income countries. I argue Soto’s treatment of property rights is overly narrow, legalistic and individualistic. Second, effective property rights do not exist outside other formal and informal institutions. Third, there is no necessary conflict between informal, traditional and communal rights and economic development. Fourth, evidence suggests establishing individual property rights can harm the poor in some cases. Fifth, studies suggest establishing title does not increase access to credit for the poor. Finally, de Soto’s notion of ‘dead capital’ is questioned.