Sunday, July 11, 2010

A Lack of Private Property Rights and Haiti---An impediment to real progress post-earthquake...

This article from WSJ: Six Months On, Haiti Aid Push Falters:  Post-Earthquake Refugee Camps and Rubble Remain, as Promised Funds Are Slow to Arrive; Hold-Ups Over Land Rights is very important for many reasons, but it mentions one that I harp on alot in class--the significance of private property rights.  The article also mentions economist Hernando de Soto, who I think should win a Nobel Prize in multiple categories.  His research on the lack of private property rights (and, more importantly, the mechanisms necessary for securing those rights) in the developing world and how it impedes economic progress in those countries is truly under-appreciated.
    This except sums up a significant and overlooked part of the development. Subsitute any under-developed countries name where Haiti appears below a you get the same result.

""One reason the government has had a difficult time dealing with basic issues such as resettlement: It is often impossible to determine who owns homes and land. A decade ago, 97% of rural residents in Haiti and 68% of city residents lacked clear title to their housing, according to a study by Peruvian economist Hernando de Soto.  Eighty-two percent of real estate and 68% of businesses in Haiti are in the extralegal economy," says Mr. de Soto, who has offered the information to a U.N. commission on legal empowerment of the poor. He estimates the value of the assets to which no one can claim title at about $5.2 billion, roughly the same amount that has been pledged for the first two years of Haiti's reconstruction. The loss of documents in the earthquake makes that situation worse. Most Haitians seeking to start over can't access bank credit because they have no collateral to offer up. The failure to demonstrate clear title acts as a brake to development, affecting small investors and multinational lenders alike.
I recommend "The Mystery of Capital" by  Hernando de Soto for anyone interested in one of the root causes of poverty in the world (not the ONLY cause, but one that must be addressed if significant progress is to be made).
View My Stats