The Institute for Liberty and Democracy (ILD) provides governments with the expertise and information to implement institutional reforms in property and business rights that allow citizens to be included in the market economy and thus pull themselves out of poverty and prosper.
The ILD is comprised of a multi-disciplinary team of researchers and analysts, most with graduate degrees from top universities in Peru, the U.S. and Europe.
The ILD’s remedy is to help developing countries make fundamental institutional changes regarding their property and business environments, encouraging people to enter the legal system and offering them as an incentive those essential legal tools that will not only improve their lives and businesses, but also help them transform their society: fungible property rights, forms to organize their businesses and mechanisms to access expanded markets, nationally and internationally.
What is unique about the ILD approach is that they address head-on the challenge of how to systematically and massively bring the extralegal economy into the legal economy in a way that will not only boost growth but also address specific social and policy concerns, such as poverty, exclusion, social unrest, populist attacks against “globalization”, and even terrorism.
The ILD has worked in 23 countries. Heads of state in 35 countries have sought the ILD’s services, and they have personally met with 29 of them to discuss precisely what the ILD might do to help their economies prosper. At the moment, the ILD has 14 new projects underway.
In 1979, Hernando de Soto was running a group of small Peruvian mining companies headquartered in Lima and spending too much of his time grappling with red tape and climbing over regulatory barriers. Having been educated in Europe and having begun his business career in Switzerland, he knew that doing business need not be so burdensome.
And he refused to accept the explanation that Peruvians were just not culturally cut out for business; after all, he himself was Peruvian, and he knew scores of compatriots who were as brilliant and innovative as anyone he had met in Europe. De Soto also discovered that many of his fellow businessmen in Lima were just as frustrated as he was with the legal obstacles to doing business, and several were eager to join him in his effort to find out precisely what the root of the problem was.
Peru, in fact, had become two nations, one where the legal system bestowed privileges on a select few, and another where the majority of the Peruvian people lived and worked outside the law, according to their own local arrangements. How large was this extralegal sector? No one in the government seemed to have a precise idea. In 1981, de Soto and his colleagues decided to form a not-for-profit organization to investigate Peru’s “shadow economy”. They called it, uncontroversially, the “Institute for Liberty and Democracy”