I wanted to add a couple of points about the nature of property rights (PR) that are often forgotten as de Soto’s model sounds really great and is very intuitive but is in reality overly simplistic.

In particular, he oversimplifies the informal economy and the related property relations: what can be observed in a specific setting is not necessarily the whole truth. There are often a lot of secondary rights on land (or other resources). That means the land is used by more than one person and for more than one type of use. The case where a squatter family is occupying the same plot for 20 years without a title is not the norm in many situations. Examples of secondary rights are the poor in a village being allowed to fish in the rice paddies during rainy season, or that everyone is allowed to fetch water or collect medicinal plants on someone else’s land.

What happens when you codify rights? In most cases secondary rights are overlooked or pushed aside by local elites and the ones losing out are the poorest and most marginalized. In many cases women who bear most of the burden to feed their families in many countries are hit hardest. They are forced to go further to fetch water, their access to firewood, wild fruits and medicinal plants is cut, etc. in other words they lose the few rights they enjoyed prior to formalization.

All PR scholars will agree that rights of local people need to be secured, the point of contention is how to do this and if the concept of private (often individual) PR is the best to fight poverty and protect the poor.

There is a lot of material discussing which approach to take to secure land rights on http://www.landrightswatch.net/ including more critical material on de Soto’s approach.