They are changing the face of modern Peru: Arriving in the city without money, education, or friends, they create their own jobs; they seize large patches of barren land an build thriving suburbs form the ground up; in the face of countless government restrictions, they build hundreds of public market complexes; they drive 93 percent of the public transport in Lima. And, according to Peruvian economist Hernando de Soto, they are the nation's real movers and shakers--more so than the nation's corporate capitalists, more so than the armed Marxist terrorists in the hills--because, in countless ways, they are producing wealth (40 percent of the nation's gross domestic product). They are black marketers, or so-called informals: home builders, vendors, and bus drivers, who operate outside the law and without whom the Peruvian economy would grind to a halt.
The Other Path, de Soto's detailed study of the growth of the informal class since World War II, argues that the informals are quietly leading Peru into a revolutionary and irreversible process of transformation. His book may fundamentally alter the way economists perceive the so-called developing countries of the Third World, especially their ideas about how their internal economies and alliances actually function.
To explore the implications of de Soto's controversial thesis in some depth, an excerpt from the book is followed by six commentaries from experts in the field. First, political journalist Philip Nicolaides provides an overall summary of the book (p. 366); his essay is followed by a comparison of underground economic systems around the world by economic historian Edgar Feige (p. 371). Economist Eliana Cardoso then takes issue with de Soto's claims (p. 380), while
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