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The real problem with Egypt—lack of property rights



I highly recommend the article by Hernando DeSoto in today's WSJ, "Egypt's Economic Apartheid." His research has uncovered a huge source of poverty of misery in many countries around the world, and unfortunately not much has been done to fix these problems. The word needs to get out. Some excerpts:

It is worth noting some of the key facts uncovered by our investigation and reported in 2004:
Egypt's underground economy was the nation's biggest employer. The legal private sector employed 6.8 million people and the public sector employed 5.9 million, while 9.6 million people worked in the extralegal sector.
As far as real estate is concerned, 92% of Egyptians hold their property without normal legal title.
We estimated the value of all these extralegal businesses and property, rural as well as urban, to be $248 billion—30 times greater than the market value of the companies registered on the Cairo Stock Exchange and 55 times greater than the value of foreign direct investment in Egypt since Napoleon invaded—including the financing of the Suez Canal and the Aswan Dam.
Without clear legal title to their assets and real estate, ... entrepreneurs own what I have called "dead capital"—property that cannot be leveraged as collateral for loans, to obtain investment capital, or as security for long-term contractual deals. And so the majority of these Egyptian enterprises remain small and relatively poor. The only thing that can emancipate them is legal reform. And only the political leadership of Egypt can pull this off.

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