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   RED CIENTIFICA PERUANA            << R C P >>        NODO ILD
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		THE INSTITUTE FOR LIBERTY AND DEMOCRACY

The Institute for Liberty and Democracy (ILD), an independent research and 
advocacy institute located in Lima, Peru, was founded in 1980 by Hernando de 
Soto to study the impact of legal institutions on economic development.  The 
ILD's work was initially oriented towards research on the informal sector, 
which has been forced outside these legal institutions.

Based on six years years of empirical studies on the informal sector in 
Peru, the ILD has concluded that informality is the manifestation of the 
spontaneous generation of a market economy. However, this natural 
entrepreneurship is constrained by the lack of adequate legal institutions, 
incentives and legal protection. Informality is, in fact, a symptom of the 
serious institutional dysfunction in Peru.  To remedy this situation, the 
ILD's proposals are geared to create self-sustaining mechanisms for the 
production of good law which reflects the interests of all, to replace the 
existing bad law which is the product of vested interests operating in a 
closed society.  

The ILD has undertaken major research programs which have resulted in 
innovative institutional reform proposals, several of which have been made 
into law.  Its work has attracted considerable international attention among 
governments, institutions and political and social movements throughout the 
world, notably through the publication of the results of its initial 
research on the informal sector in Peru, in the best-selling El Otro Sendero 
(The Other Path), which is now available in Latin America, the United 
States, Canada, Great Britain and Sweden, and have been translated into 
Swahili, Russian, Polish and French.  

The mission of the ILD, simply put, is twofold:

	o	To achieve institutional reform in Peru which will ensure 
the peaceful and deliberate replacement of the existing mercantilistic 
(crony capitalism) system with modern, democratic and market-oriented 
structures;

	o	Through its work in the "laboratory" of Peru, to develop a 
model of institutional reform which may be applied in other developing 
countries in order to promote the evolution of modern market economies and 
participatory democracies. 
	

Based on its empirical studies in Peru, the ILD has emphasized that 
underdevelopment has to be seen in the context of institutions.  It was, in 
fact, the symptoms of the institutional inadequacies in the governments of 
developing countries that initially attracted the ILD's attention; most 
notably the growth of a large, vibrant informal sector, operating outside of 
government control.  Through its nearly ten years of study of the Peruvian 
reality and the observation and comparative study of the experiences of 
other countries, the ILD has a broad understanding of how institutions act 
and what changes are required to promote economic development.  

The ILD's master plan for institutional reform, which it calls its Global 
Program, is aimed at fostering the transition to democratic and 
market-oriented institutions through the political and economic 
enfranchisement of all Peruvians.   

Political enfranchisement requires transparency in government, 
accountability on the part of state officials, and feedback from experts and 
citizens directly affected by decisions made by the State.  Economic 
enfranchisement requires a basic restructuring of the State, including equal 
access to property rights, credit and the market economy by all rather than 
a restricted few. 

The theoretical model for achieving these two objectives is provided in The 
Other Path.

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