The master's thesis discusses a development concept inspired by the Peruvian economist Hernando de Soto. It describes this concept and analyzes its potential to work in praxis. It introduces several critical responses addressed from a wide range of stakeholders - from civil society advocates to scholars -- and contends with their critique. Furthermore, the thesis frames this concept within the development paradigm, with a short overview of its evolution from the 50's and an emphasis on the institutional aspect. The last part analyzes results of the property rights formalization reform in Peru. The outcomes of this reform may be of major importance for the development efforts in the future. Although the anticipated connection of formalization and a better access to loans has not been proved yet, there are some other interesting effects to look at.

The rise of neoliberalism in the 1970s played an important role in renewing interest in the role which the rule of law could have in fostering free markets and economic growth in the developing world. One prominent participant in this neoliberal movement, which might be termed the Project for Markets, was Hernando de Soto, a Peruvian businessman who championed the extension of formal property rights as a solution to the developing world’s ills. In so doing de Soto became an international celebrity venerated by global leaders who welcomed a straight-forward free market solution to complex developmental issues. This thesis explores how de Soto’s work on property formalization in the last three decades both reflected the core assumptions of the Project for Markets as well as many of its short-comings. To do this I will rely on a case study of Cairo, a city central to de Soto’s work, to argue that de Soto ignores both the variable ways in which property rights can function “on the ground” as well as the extent to which there is rarely a technical “quick-fix” for serious problems in a nation’s political economy.