Summary:

Following de Soto's main ideas, Ulf Heinsohn demonstrates why different orthodox and heterodox approaches fail to explain the backwardness of underdeveloped and transitional countries. Moreover, the author questions de Soto's theory of economic development by emphasising three points: (i) widespread property rights to land should also be considered for their egalitarian and decentralising effects; (ii) the approach by de Soto lacks a convincing theoretical connection to creditor's money; (iii) by concentrating on the term "capital", his theory does not sufficiently deviate from the neoclassical view of property rights which identifies capital as merely physical "goods". In addition, (iv) the author supplements de Soto's approach by analysing, with reference to English history, the difficulties in overcoming the obstacles for the introduction of property rights.