Review of de Soto's The Mystery of Capital
Woodruff, Christopher. 2001. "Review of de Soto's The Mystery of Capital."
Journal of Economic Literature,
In The Mystery of Capital, Hernando de Soto promotes his explanation of why formal capital markets function poorly in developing countries. De Soto argues that much of the population of developing countries lacks access to credit, not because they lack assets, but because ownership of their property is secured informally, which prevents the use of property as collateral. The inability to convert assets into capital keeps the developing world from benefiting from capitalism.
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Woodruff, Christopher (U CA, San Diego)
O16: Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
O17: Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
P14: Capitalist Systems: Property Rights