Susana Lastarria-Cornhiel, Grenville Barnes (1995):
Assessment of the Praedial Property Registration System in Peru

II. Brief History of ILD’s Formalization Program in Peru

A brief history of ILD's activities is outlined below in order to provide a broader understanding of the context within which the Registro Predial was created.

A. ILD Philosophy

The praedial property registration system in Peru grew out of a general philosophy towards land formalization proposed and promoted by the ILD. The ILD philosophy is based on the belief that the key to resolving many of the economic, social, and political problems facing developing countries is to formalize property rights. This belief stems from some ground-breaking research on informality in the housing, trade, and transportation sectors in Peru. The results of this work were published in a book, The Other Path, authored by the president of ILD, Hernando de Soto. This book suggests that the most effective path away from poverty in developing countries is to reform the legal system and the procedures for formalizing property so that the informal sector's rights are recognized, thereby giving them a sense of place in the country's economy.

The current status of property informality in developing countries has been described by the ILD as follows:

Property rights in land represent a large portion of the wealth of people throughout the world.... [I]n developing countries at least 80% of family assets consist of land. Yet ... more than 90% of rural and 50% of urban property rights ... are not protected by formalized titles, that is, they are "informal."... [A]nd therefore exchange is restricted to closed circles of trading partners which keep the assets of most people in developing countries outside the expanded market. (Path to Property, nd: 2-3)

 

The majority of landholders do not have the tenure security provided by the formal legal system with the result that land cannot be used as collateral for mortgage credit. Furthermore, tenure insecurity acts as a disincentive to improving the land and increasing agricultural productivity.

The ILD also sees formalization of land rights as a key to solving a host of other problems, including the drug problems in Latin America, human rights abuses, and terrorism.

When poor people have confidence that land is formally theirs, their respect for other people's land increases. The Viet Cong yesterday in Vietnam and the Shining Path today in Peru made gains among informal peasants by settling boundary disputes and protecting them from abusive expropriation. Formal title gives the poor of the Amazon basin legal alternatives to selling coca leaves to drug traffickers. (Path to Property, nd: 3)

 

The ILD also asserts that formalization of land rights can lead to (1) improved environmental protection through better land-use practices, (2) more effective environmental regulation, (3) substitution of legal crops in place of coca, and (4) macroeconomic stabilization (Path to Property, nd: 3-4). In other words, they see the property formalization process as a central mechanism for countering the many problems that are being experienced in Latin America and elsewhere in the developing world.