Peru's Transitional Economy
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This paper uses Hernando De Soto's "The Other Path" to explain possible reasons for poverty in Peru. The author focuses on the importance of granting property rights to poorer citizens as a means of establishing a successful capitalistic country.
From the Paper:"At the beginning of the 20th century, Peruvian reallocation programs would give land to poor peasants but they were not allowed to sell the land they owned. What resulted from taking away landholder's right to sell their property was that markets - the ones that help economies prosper financially - were not allowed to work. Peasants could not transfer their land; therefore the banks would not accept their land as collateral. Because of this, formal capital markets were underdeveloped and peasants couldn't get loans from banks to help them financially to build their businesses. The only place that poor people could get credit was from producers and sellers of the equipment that they needed. This led to extremely high credit costs for seeds, fertilizer, and hauling their produce to market (FTE 2006). This certainly didn't help the poor, and in some cases, it left them worse off than they were before. Another factor was that the Peruvian Amazon forest was being prematurely harvested and cut down by landholders who hoped to cash in on the immediate value of their shaky property rights. The landholders had no idea what would happen in the future to their land, so they opted to chop down the forests as quickly as they could so they could reap the benefits. "Short-term profiteering dominated long-term investment strategies (FTE 2006). "
Sample of Sources Used:
- De Soto, Hernando. The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. Basic Books; 1st edition. July 8, 2003.
- De Soto, Hernando. "Now Think Small". The Economist. September 13, 2001.
- De Soto, Hernando. "Want to Make the Poor Less Poor? Give Them Proper Title to What They Own". The Economist. May 29, 2001.
- Fernandez-Morera, Dario. "Hernando De Soto Interview". Reason Magazine. November 30, 1999. Retrieved from the Web site: http://www.reason.com/news/show/32213.html on November 18, 2008.
- Foundation for Teaching Economics. "Is Capitalism Good for the Poor?" Retrieved from the Web site: http://www.fte.org/capitalism/lessons/02/appendix1/index.html on November 18, 2008.
Cite this Cause and Effect Essay:
Peru's Transitional Economy (2010, March 28) Retrieved October 01, 2023, from https://www.academon.com/cause-and-effect-essay/perustransitional-economy-119036/
"Peru's Transitional Economy" 28 March 2010. Web. 01 October. 2023. <https://www.academon.com/cause-and-effect-essay/perustransitional-economy-119036/>