On Monday May 15 the 2017 Global Award for Entrepreneurship Research was awarded to Hernando de Soto, founder of the think-tank Institute of Liberty and Democracy (ILD), in Lima, Peru. In his prize lecture, he referred to a large parallel world of five billion people without property rights or evidence of who they are. These five billion are not part of social networks of trust, said de Soto when receiving the award from Minister of Finance Magdalena Andersson. He also showed his own passport and credit card as an illustration of how people in developed countries can easily travel and do business.
Johan Eklund, Managing Director Swedish Entrepreneurship Forum and Professor BTH and JIBS, initially announced the Global Award for Entrepreneurship Research as the foremost global award for research on entrepreneurship with a prize sum of 100,000 euros. The prize rewards research that contributes to increasing entrepreneurial understanding and has been awarded since 1996. Thereafter, the moderator Tove Lifvendahl, Political Chief Editor at SvD, welcomed Minister of Finance Magdalena Andersson up on stage to read the price motivation, which stated:
“For developing a new understanding of the institutions that underpin the informal economy as well as the role of property rights and entrepreneurship in converting the informal economy into the formal sector.”
Read the full motivation.
Watch the prize lecture seminar on film.
Registered ownership is control
Hernando de Soto began to describe how he experienced problems with documenting ownership. One issue is to find out who owns what, especially the owner of small properties.
– Registered ownership means control.
This is clearly shown in war and in today’s terrorist organizations. If you conquer a piece of land and claim ownership, you can hand it out to people you want to recruit to your organization. At the heart of ownership there are registers, all look different and are more or less recognized. The individual’s documentation shows the owner’s view, but the register shows consensus.Johan Eklund and Hernando de Soto
– The main message is that no nation can have a strong market economy without sufficient participation in registered ownership of property.
One of de Sotos largest accomplishment was to reform Perus’s economic system, which gave ownership to millions of Peruvians. This effectively helped to suppress Peru’s long rebel movement.
The importance of social trust
During the subsequent panel discussion, Magdalena Andersson said that the importance of legislation, institutions and administration is evident. Political decisions are crucial.
– We Swedes are inclined to comply with rules and laws. Social trust means a lot to us. One reason for this is that we have a relatively equal society, Andersson said.
Professor Magnus Henrekson, managing director IFN, praised Soto’s efforts in the field of research and said that there was much for Sweden to learn.
– The informal economy is growing very fast here too. But it’s only now that we have really begun to understand what’s really going on.
– We have had social trust because it was rational for us. It’s not a cultural phenomenon, Henrekson said.