Hernando de Soto Polar (; born 2 June 1941) is a Peruvian economist. He is known for his work on the informal economy and on the importance of business and property rights. He is the current president of the Institute for Liberty and Democracy (ILD), a think tank located in Lima, Peru, that is devoted to promoting economic development in developing countries.Institute for Liberty and Democracy, "Hernando de Soto – Detailed Bio". (accessed 16 March 2013)
In Peru, de Soto's advisory has been recognized as inspiring the economic guidelines—including the loosening of economic regulation, the introduction of austerity measures and the utilization of neoliberal policies—that were ultimately adopted by the government of Alberto Fujimori and established in the 1993 Constitution of Peru. De Soto would go on to support Alberto's daughter, Keiko Fujimori, serving as an advisor during her presidential campaigns. De Soto worked closely with various Peruvian governments, even serving as a negotiator for the Peru–United States Trade Promotion Agreement. After years of speculation, de Soto ran for the Peruvian presidency in the 2021 presidential election, placing fourth in an atomized race of 18 nominees. He subsequently held meetings with Pedro Castillo during his administration, asked Dina Boluarte to resign from the presidency during the social unrest, and attempted to run in the 2026 elections for the Progresemos party, although he ultimately withdrew his candidacy.
Internationally, de Soto helped inspire the Washington Consensus macroeconomic prescriptions and was credited by economist John Williamson, who coined the consensus' name. He also supported the creation of the North American Free Trade Agreement (NAFTA), with George H.W. Bush praising his promotion of free trade when announcing the North American agreement.Source for President George H. W. Bush's remarks: Text of Remarks by the President to the World Bank/International Monetary Fund Annual Meeting, 27 September 1989, announcing NAFTA. Press release. Other heads of state have recognized de Soto, including Bill Clinton, Vladimir Putin, Emmanuel Macron, Ronald Reagan and Margaret Thatcher. The ILD has received praise from other people including Nobel laureate Milton Friedman, World Bank President James Wolfensohn, and former UN Secretary-General Javier Pérez de Cuéllar.
Early life and education De Soto was born on 2 June 1941 in Arequipa, Peru. His father José Alberto Soto was a Peruvian diplomat and lawyer. After the 1948 military coup in Peru, his parents chose exile in Europe, taking their two young sons with them. His father worked for the International Labour Organization following their exile and would often send de Soto back to Peru during the summer months.
In exile, de Soto was educated in Switzerland where he attended the International School of Geneva. He studied social psychology in National University of Saint Augustine in Arequipa, Peru. He returned to Geneva and received a bachelor's degree in economics from the University of Geneva. In 1967, he earned a master's degree in international law and economics from Graduate Institute of International Studies, also in Geneva.
His younger brother Álvaro served in the Peruvian diplomatic corps in Lima, New York City and Geneva and was seconded to United Nations in 1982. He retired from the U.N. in 2007 with the title rank of Assistant Under-Secretary-General; his last position was as the UN Special Coordinator for the Middle East Peace Process.
There is some controversy around his surname, as his father's surname is Soto, while Hernando's one is de Soto. According to the Peruvian writer, and Nobel prize winner, Mario Vargas Llosa, he changed the surname in order to sound more "aristocratic".
Economics career Following his post-graduate studies, he worked as an economist for the General Agreement on Tariffs and Trade, a precursor to the World Trade Organization, as well as president of the Committee of the Copper Exporting Countries Organization, CEO of Universal Engineering Corporation and a principal for Swiss Bank Corporation.
Founding of the Institute for Liberty and Democracy De Soto returned to Peru on the behalf of gold placer investors at the age of 38 in 1979 at a time when neoliberal policy was moving from the fringes of economic theory to mainstream practice.Source: Investors Business Daily, Monday November 6, 2006. p. A4. Leaders & Success. Article by IBD Reinhardt Kraus. Upon de Soto's return in 1979, he met with Friedrich Hayek, a free market proponent who helped create the Mont Pelerin Society. Hayek, who sought to promote neoliberalism through a network of "second hand dealers", choosing de Soto. After making connections with Hayek, de Soto was acquainted with Sir Antony Fisher, a British businessman who created the Atlas Network, a nonprofit libertarian umbrella group that consolidated funds and research from businesses in the United States and Europe in order to create neoliberal organizations in developing countries.
With the assistance and funding of Fisher and the Atlas Network, de Soto created the Institute for Liberty and Democracy (ILD) in 1981, one of the first neoliberal organizations in Latin America. De Soto would later state "Anthony gave us enormous amounts of information and advice on how to get organized. ... It was on the basis of his vision that we designed the structure of the ILD". In 1984, de Soto received further assistance from the United States president Ronald Reagan's administration, with the National Endowment for Democracy's Center for International Private Enterprise (CIPE) providing ILD with funding and education for advertising campaigns. In 2003, the CIPE would later describe the ILD as being one of its most successful programs. Other funding was then provided by United States Agency for International Development (USAID) and the Smith Richardson Foundation, with USAID assisting the ILD with staging international networks to propagate their ideals. The ILD would then seek popular support in Peru by making informal housing their main concern.
Fujimori government Between 1988 and 1995, de Soto and the Institute for Liberty and Democracy (ILD) were mainly responsible for some four hundred initiatives, laws, and regulations that led to significant changes in Peru's economic system.The Globalist | Biography of Hernando de Soto The ILD became involved with the Peruvian economy at the end of President Alan García's term. De Soto's group began to grow and advertised to the Peruvian public promoting their legislative goals, borrowing some advertisements from American lotteries.
De Soto then began to serve informally as "the President's personal representative" for the first three years of the administration of Alberto Fujimori. De Soto had originally been a part of the economics advisory team of the unsuccessful presidential candidate Mario Vargas Llosa in 1990, but Fujimori later requested de Soto's assistance in resolving the economic issues that were produced by the crisis of the 1980s. The New York Times described de Soto as an "overseas salesman" for the government of Alberto Fujimori in 1990, writing that he had represented the government when meeting with creditors and the United States representatives. Others dubbed de Soto as the "informal president" for Fujimori.
In a recommendation to Fujimori, de Soto called for a "shock" to Peru's economy. De Soto convinced then-president Fujimori to travel to New York City in a meeting organized by the Peruvian Javier Pérez de Cuéllar, secretary-general of the United Nations, where they met with the heads of the International Monetary Fund, the World Bank, and the Inter-American Development Bank, who convinced him to follow the guidelines for economic policy set by the international financial institutions. The policies included a 300 percent tax increase, unregulated prices and privatizing two-hundred and fifty state-owned entities. The policies of de Soto caused macroeconomic stability and a reduction in the rate of inflation, though Peru's poverty rate remained largely unchanged with over half of the population living in poverty in 1998. Peru would not see increased growth until the 2000s commodities boom.
University of Chicago political scientist Susan C. Stokes believes that de Soto's influence helped change the policies of Fujimori from a Keynesian to a neoliberal approach. De Soto also inspired Fujimori's anti-drug initiatives. The Cato Institute and The Economist magazine have argued that de Soto's policy prescriptions brought him into conflict with and eventually helped to undermine the Shining Path (Sendero Luminoso) guerrilla movement. By granting titles to small coca farmers in the two main coca-growing areas, they argued that the Shining Path was deprived of safe havens, recruits and money, and the leadership was forced to cities where they were arrested. Attacks were launched against the ILD and de Soto in light of the statements by Shining Path leader Abimael Guzmán, who saw ILD as a threat.
Land title initiative Between 1992 and 1994, de Soto's ILD piloted a land title program to formally register 200,000 Peruvian households and two years later, expanded the program to Lima and seven other metropolitan areas that held ninety percent of informal housing developments within Peru. The program concluded in 2004 with 1.4 million households being registered and 920,000 land titles being provided.
Contrary to de Soto's claims, the land title project provided no change to the access of credit to poor Peruvians. The ILD's figures reported that homeowners also saw their hours at work increase by seventeen percent, while working at home decreased by forty-seven percent and child labor was reduced by twenty-eight percent, with the group stating that the latter two statistics were due to homeowners and their children no longer being required to defend their homes from seizure. According to Timothy Mitchell, the ILD's findings were "implausible" since the conclusion was already framed by the ILD, neighborhoods were already collective with limited property conflicts and those included in the project were already pursuing work outside of their homes when they chose to become involved. Following the findings, the ILD would distance itself from advocating credit access and instead promote increased work hours among formal landowners.
Resignation and condemnation of Fujimori De Soto resigned from his post as the "Personal Representative of the President" in January 1992, two months prior to the 1992 Peruvian coup d'état, and condemned Fujimori's motivations being influenced by Director of the National Intelligence Service Vladimiro Montesinos, hinting at signs of corruption. In his letter, he called into question "the validity of the anti-drug agreement" that Fujimori adopted. He stated his reasons to resigning as due to "drug trafficking from within the State that sabotages efforts in the fight against drugs", and reportedly due to differences with Montesinos. Both Montesinos and Fujimori would later be indicted for corruption and violation of human rights.
Two months after de Soto resigned, Fujimori launched a self-coup which de Soto again condemned as "stupid, unproductive and blatantly unconstitutional". According to de Soto, one month after the coup the Minister of Economy Carlos Boloña contacted de Soto in desperation, after dozens of countries sanctioned Peru economically by cutting it off from investment and credit in response to the undemocratic event. Boloña resigned from his ministerial post, and de Soto lastly travelled to the 1992 Organization of American States summit in the Bahamas with Fujimori and pressured him to accept democratic elections to prevent another macroeconomic crisis.
International policy
Washington Consensus