EC 045 Lecture Notes - Lecture 12: Daron Acemoğlu, Hernando De Soto
26 Apr 2018
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Document Summary
Hernando de soto- two main works on the informal sector. Peruvian system historically distributed exclusive rights by means of laws and regulations to the elite. Informal sector is an expression stating that most poor peruvians do not lack property but they lack secure property rights. Today around 20% of peruvian economy is the informal sector, in the 1980s it was much higher. De soto argues the reason for this enormous size of informal sector is the large costs of being formal. To operate a formal business you had to get many licenses that costs money. Cannot exercise rights as a corporation, if someone steals from you cannot sue them. A well defined system of property rights fixes economic potential of assets which is essential for markets to work. Institutional legacy- daron acemoglu, simon johnson, james robinson. First scholars to test empirically long term impact of institutions on economic performance. In poor regions private property institutions were more common.
