Lifting the bell jar for poverty reduction : A clarification on the discussion around the development theory of De Soto

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Over the years socio economic progress in developing countries obtained a lot of attention. Several theories appeared with the aim to explain why Third World countries were lagging behind and how poverty best should be solved. Hernando de Soto, a Peruvian economist, developed a theory which suggests that poverty is a matter of integrating the poor into a capitalistic system. This could be done by means of giving them legal property rights which will bring their „dead assets‟ to life. Registering capital is believed by De Soto to bring forward increased production, investments, access to credits and economic progress. This in turn will lead to poverty alleviation. The theory of De Soto has been welcomed with applause, but the effectiveness also has been seriously questioned by several researchers. A lot of literature is available on the theory of De Sot but no overview exists of the different critiques and comments within the debate. While De Soto is nowadays still involved with the implementation of property systems in several countries, there is no clear view whether his theory should be falsified of verified. The main goal of this research is to contribute to the clarification of the scientific discussions around the development theory of De Soto by examining the comments and corresponding evidence that has been given on the assumptions of the theory. The main question which has been dealt with is: “To what extent contributes the discussion around the development theory of De Soto to the verification or falsification of the theory?” The outcomes of this research may help to overcome problems and mistakes at the level of implementation by showing the difficulties, advantages and disadvantages of the theory. The research is a qualitative research which mainly exists of desk research, because secondary literature on the theory of De Soto had to be studied. Texts have been analyzed by means of a conceptual content analysis. The study is initially not an empirical study, but empirical elements have been implemented as additional information by means of qualitative interviews with experts.
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