Hernando de Soto: Egypt's 'informal' economy
A few weeks ago Gillian Tett, in the FT Magazine, wrote about how Hernando de Soto, once called “the greatest living economist” by US President Bill Clinton, has been advising the Egypt’s leaders of the Muslim Brotherhood. De Soto disagrees with the suggestion that it was the young and impoverished who kickstarted the Arab Spring. Instead he says that, in Egypt, much of the population has become excluded from the mainstream economy and this was the real root of the problem, which is yet to be solved. Owing to the cost and difficulties associated with working within the system, many budding entrepreneurs choose to function “extralegally”, according to de Soto. He believes that this ‘informal’ economy’s worth is “four times greater than the value of the companies on the Egyptian stock exchange”. One can see why Egypt’s leaders are keen to find a way to re-engage these people within the economy.